Idea Of Demonetisation Wrong, Says Rajiv Bajaj

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New Delhi: With the adverse impact of the note ban continuing to hamper the two-wheeler sales, Bajaj Auto managing director Rajiv Bajaj on Thursday said the idea of demonetisation was itself “wrong” and it is incorrect to blame only the execution side of it.

“If the solution or the idea is right, it will go like a hot knife through butter…if the idea is not working, for example demonetisation, don’t blame execution. I think your idea itself is wrong,” Bajaj said at the annual Nasscom leadership forum.

Prime Minister Narendra Modi had on 8 November last year scrapped all the Rs500 and Rs1,000 notes, with a view to check the black money. Massive cash rationing was introduced as the new replacement notes were in short supply.

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The ban on 86% of the total currency worth Rs15.55 trillion in circulation impacted economic activity across sectors with the consumption-driven ones being the most affected. Notably, the two-wheeler sales are yet to recover from the impact of demonetisation and industry data releases over the last two months have been showing a slump. The industry was looking forward to better sales on the back of good monsoon and an acceleration in rural economic growth, which drives consumption. Bajaj Auto’s total domestic sales, including those of two-wheelers as well as three-wheelers, were down 16% to 1,35,188 units in January from 1,61,870 units sold during the year ago period.

For December, when the cash crunch was the highest, Bajaj Auto saw its domestic bike sales contracting by 11% at 1,06,665 units as against 1,20,322 units in the same month a year ago. Industry body SIAM had said in November that two-wheeler sales were at 12,43,251 units as against 13,20,552 in the year-ago month, down 5.85 per cent.

Motorcycle sales were also down 10.21% at 7,78,178 as compared to 8,66,696 units in December 2015. Likewise, scooter sales, which are urban-centric, were also down 1.85% at 3,88,692 units as against 3,96,024 units in November 2015.

Before demonetisation, the two-wheeler sales in October were up 8.72% at 18,00,672 units as compared to 16,56,304 units in the year-ago month. Motorcycle sales were also up 7.37% in October 2016 at 11,44,516 units as compared to 10,65,925 units in October 2015.