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Jewellers face cash crunch due to Nirav Modi & demonetisation

Jaipur, June 1: The ghost of Nirav Modi scam is stalking the jewellery markets in Jaipur, even as traders were trying to bury the memory of bad days triggered by demonetisation. Added to their woes are the compliance requirements under the goods and services tax. Traders in the once busy streets of gems and jewellery market in the city are trying to cope with the sense of emptiness brought about by the severe financial crunch, as customers are not easy to find. The traders need upfront cash to buy diamonds and gold, which is not coming in. Banks — still staggering under revelations made in case of the Punjab National Bank fraud case involving Nirav Modi — have set up new limits on lending to jewellers, further curtailing cash flows. Those applying for loans have been asked to reduce their limit and told that they cannot demand big amounts against the securities provided. The twin deprivation — from banks and market lenders — has made life difficult for traders. Liquidity is suddenly the most difficult thing to get.

According to Jagdish Tambe, past president of the association, demonetisation was responsible in squeezing the money out of the market. “The government could have come out with a better alternative to demonetisation. It should have asked traders to deposit all the money and they could have charged certain amount of tax on the same. There would have been no need to print new currency notes,” he said. GST made matters worse. “Even at this point, the government should realise its mistake and bring in a taxation policy which should be soft. It should think of other areas from where it can generate money,” Tambe said adding that what was needed was a liberal taxation policy and soft export-import regime.

Tough times call for tough sacrifices. “Traders should make all-out efforts to sell their old and dead stock at a heavy discount. They should explore new markets where they might earn lesser profits, but can earn immediate cash. This will help in building cash flow into the market,” says Nirmal Baradia, former President of the association. (IANS)

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Ankur Kalita

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