No Pay Day: Impact Of Notes Ban On Gujarat's Diamond Hub In Surat

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The diamond industry in Surat depends largely on cash payments.


Surat:  Pay Day brings little joy this month to Gujarat's diamond hub in Surat, with business having ground to a halt amid the cash crunch that has followed the centre's ban on 500 and 1,000 rupee notes announced earlier this month.

The diamond industry in Surat - which some estimates say polishes nearly 80 per cent of the world's diamonds - depends largely on cash payments and only about 30 per cent of the five lakh workers employed in the 10,000 odd units have bank accounts.

The industry reopened on November 15 after a Diwali break, a week after Prime Minister Narendra Modi announced the notes ban aimed at eliminating corruption and black money. But units soon began to close as there was little business activity.

With access to limited cash in new currency, traders have put orders on hold and are also unable to pay workers, many of who are refusing their employers' offers to help them open bank accounts.

Diamond polisher Mukesh Rathod, 40, says workers like him are desperate for work so that they can meet basic needs of their families.  

"We have to pay rent..fee for my two children...buy grocery for our sustenance...but since the unit is shut there is no work so no pay," the diamond polisher said, adding that he will soon have no option but to return to his village in Junagadh.

Mukesh Rathod would have earned 7,500 rupees for 15 days on December 1, but there will be no salary now. It's a deep contrast to the days when a polishing company handed hundreds of employees cars and apartments in bonus.

"This industry has been working on an illegal mode of payment in cash until now and to shift to a cashless system will take at least four to six months," said diamond unit owner Haresh Narola, who is confident that the move to cashless will eventually benefit both merchants and workers, once the latter open bank accounts.

Broker Alpesh Pachani says he does not expect the industry to resume work at least the next one and a half months. "This industry used to work on cash mode. Traders are now busy clearing old order payments,'' he says.

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