November 8th, 2016 the government of India declares that henceforth the currency of rupees 500 and 1000 will be banned, as it was a part of efforts to curb down the corruption and black money. This demonetization Act affected many industries in India, the major affected industry was the logistics industry which is one of the largest cash-based and unorganised sectors of India. In this unorganised sector where most of the transaction is done through cash faced immense problems, many of the workers have been laid off. As this industry uses cash to pay their daily activities, like drivers, workers, toll-tax, diesel.
Demonetisation also affected the last mile sector of the logistic industry. As good to know information Last mile logistics occupies almost 30-40% of overall logistic cost.
The major population in India that is 80% of people prefers COD over online payment methods.
Impact on SME’s
Typically, Small and Medium Enterprises entirely run-on cash. So, the initial few days they tried to figure out what to do with the old notes of Rs 500 and Rs 1,000. They could deposit Rs 2.5 lakhs in their accounts and also in those of members of their families. But later on, they realised that they don’t have money to pay suppliers, transporters, loaders and labourers. Different tax rules which were prevailing in different states added multiple complications to the existing taxation policy. But with a centralized policy, GST has eased the processes of starting new businesses and even the existing expansions.
Demonetization a boon or curse for Logistics industry?
After the implication of demonetization Act, many people looked forward and accepted the new currency. The workers, drivers and all the employees in the company whose payment was based on cash had no other option to open a bank account and deposit their income to their bank account, this step lead maximum people in India to go cashless.
The logistics accepted the government’s idea promoting digital economy curbing down ongoing corruption and theft.
Misplacing of cash, theft of cash was the major issue for the logistics companies, with the integration of digital economy all the problems have come to a standstill. The payment of workers is now done digitally though various options like RTGS, bank transfers, many of the customers do their payment through online. Hence demonetization has been a boon for logistics industries.
How can we help you ?
As we know the companies invest about 30% to 40% in last mile logistics, taking the problems under consideration that are caused in every industry LogiAngle can help you to optimize your last mile delivery and enhance the way you manage your day-to-day business operations. In the quickly changing tax scenario, the adaptability of ERP technology to GST will help in adapting to LogiAngle Businesses management software.
