Small businesses and roadside shops were particularly affected by the cash squeeze precipitated on Wednesday by the overnight demonetisation of ₹500 and ₹1,000 notes as part of an effort to combat black money.

These small businesses typically feel constrained to keep a fair bit of cash for working capital requirements, and felt blindsided by the government move.

“Our business is done on a daily transaction basis and a sudden withdrawal of currency notes causes huge inconvenience for us,’’ said Sujatha Lakshmi, a vegetable seller in Hyderabad.

Many hawkers at Sultan Bazar-Badi Chowdi, a major retail business hub in Hyderabad, said sales had dipped by 50 per cent. “As only ₹100 notes are accepted, customers appear to have deferred their shopping needs until they get the new currency notes,’’ said Md. Habib, a trader.

Similarly in Kolkata, Mahesh Singhania, Senior Vice-President, Rashtriya Vyapar Mandal, said that sellers were balking at supplying or delivering goods or commodities or offering services against cheque payments. Atma Ram Kajaria, President, Federation of the West Bengal Trade Association, a State-level apex traders representation body, pointed out that daily cash transactions at the retail level had been badly hit. According to him, payments to suppliers had been affected and credit lines impacted.

He cites the example of Posta, the wholesale market in Burrabazar region of Kolkata, where average daily cash transactions typically run to ₹200 crore.

While the organised sector and big businesses carried on their businesses, given their access to electronic payment transactions and credit cards, dealers and agencies were affected by the cash squeeze.

Car aggregator platforms such as Uber sent out messages asking people to use digital wallets for payments.

While people generally accept that the demonetisation decision is good in the long term, the general sentiment was that the government should have done more to insulate the general public from the immediate impact.

(With inputs from G Naga Sridhar and Abhishek Law)

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