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Key mines, mineral sectors not affected by Demonetisation

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Source: TNN
Friday, January 27, 2017
Key segments of the mines and mineral industries, which provide raw material for a range of manufacturing activities, remained unaffected by demonetisation and posted a sharp increase in output in November-December after the government scrapped high-value notes.
 
Latest data from the coal and mines ministries are well supported by a record rise in electricity generation and bill collection by state distribution companies, indicating the government's decision to scrap 1,000 and old 500 rupee notes did not significantly affect the economy's appetite for energy -considered a bellweather for industrial activities.
 
Opposition parties have criticised demonetisation, saying the resultant cash crunch crippled the informal sector consisting of small-and medium-scale enterprises and cost lakhs of jobs. Purchasing Manager's Index (PMI) surveys have also shown that demonetisation has taken a toll on the manufacturing sector.
 
Government officials said critics have got it wrong. “Electricity cannot be stored. So, if generation has risen, consumption is coming from somewhere -domestic use, ma nufacturing or farming. It is well known that industrial activity makes up the bulk of power consumption. Mind you, generation has grown in spite of an annual energy saving of about 4,000 MW from the LED bulb programme,“ a senior power ministry official told TOI. Mines ministry officials pointed to the growth in copper and aluminium production to blunt arguments that demonetisation has dented industrial growth. They said the small and medium enterprises, which are making tubes, wires, plates and other alloys, make up a large chunk of copper and aluminium demand. “If demand for these metals has risen post-demonetisation, it indicates a shift to electronic payments ecology ,“ an official said.
 
Economists said they would prefer to wait for more data to establish a trend and not jump into any conclusion.“The data on these segments is generally volatile and some segments of the economy such as the auto sector have shown a decline,“ D K Joshi, chief economist at Crisil said. “We would need more data to derive a trend.“ Power ministry officials said demonetisation helped discoms improve bottomline as people rushed to clear dues during 60-day window allowing use of scrapped notes.

 



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