Model code stirs fear of cash seizures in Surat’s biz circles

Surat: The recessive textile, real estate and diamond market is expecting further slump in the business spirit in the coming days with the implementation of model code of conduct. The reason for fear stems from the fact that unlike Mumbai and Ahmedabad, Surat’s business is still cash-driven and an estimated Rs 700 crore transaction in various sectors takes place on a daily basis. Therefore, the fear of cash seizures by the flying and static surveillance squad loom large on all the three segments.
An Angadia who deals in diamond and cash transfer of two major diamond barons told TOI, “Who has the time to go and explain the nitty-gritty of our trade to the surveillance squad members when our men are caught ferrying couple of lakhs in cash and bundle of small chits with figures written on it? In fact, people are more scared of being caught with chits, because these are the proofs of our dealing with the industry and can harm us in a big way!”

A textile trader at Ring Road market, Vilas Agarwal said, “With the model code of conduct in place, cash transaction will get limited. Our buyers who come from other states use both cash and credit for purchase. Now, they will buy only on credit thereby stopping flow of cash completely. This, in turn, will greatly affect the running of operations of the textile trade.”

Again, there are certain financiers in the textile market areas who provide advance cheque payments to traders after discounting the amount. Explaining how the model code will also impact this cheque discounting business, a trader said, “Suppose a trader has a post-dated cheque of Rs 5 lakh for April. He will get it discounted at the rate of 3% with the financier and get the rest of the amount in cash.”

Devkishan Manghani, former president of Federation of Surat Textile Traders Association (FOSTTA) said, “Cheque discounting business has come to a grinding halt. Textile traders now will have to wait for the cheques to be cleared by the banks. This will stop flow of cash in the market in the days to come.”

A trader in polished diamond, Rajesh Mevani, said, “The industry is already facing severe liquidity crisis due to weak rupee and the increasing prices of rough diamond. However, the manufacturers want cash for working capital in sufficient amount. If the authorities start cash seizures, the going will become extremely difficult.”