Bracing For Pay Day, Entrepreneurs Press For Cashless Salaries

Noida: As the government's sudden move to ban old 500 and 1,000-rupee notes crosses the three-week mark, many view the first week of December as a crucial threshold for evaluating the success or failure of the scheme.

With pay day on the brink, workers and entrepreneurs in the small and medium enterprises industry of Uttar Pradesh, whom NDTV spoke to, are gearing up to deal with any unintended impact of the cash-crunch.

In Noida near Delhi, the Prime Minister's bold cash reform does seem to have public support, ironically from those whom it affects the most - nearly 10 lakh workers employed in the small and medium-sized enterprises or SMEs sector. For these workers, cash crunch means pay day no longer implies cash in hand. Yet they tend to support the move.

"The (demonetisation) move came as a hurry but yet I think they (government) rolled out a good scheme," said RV Nayar, a worker at a local electronics moulding company.

For entrepreneurs, the main challenge is now to go cashless as soon as possible. However, instalments still have to be paid for workers.

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"We are trying to withdraw maximum cash from banks so we can give small amounts to workers every week. We are giving payments in new (notes); they should have cash in hand," said Harish Joneja, factory-owner and vice president of the Noida Entrepreneurs Association.

For entrepreneurs like Subhash Jawa who owns a plastics factory near the Noida Special Economic zone (NSEZ), demonetisation is a delicate moment that can be turned into a vast opportunity for labour reforms.

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"Our process is already on to open salary accounts for our employees. They will also be given ATM cards which they can use in off-shift hours to withdraw money," said Mr Jawa, emphasising the need to begin harnessing the need for a cashless system of payments.

Banks on their part are encouraging this step. "A cashless economy is the PM's vision. We have also suggested to companies that those employees who don't have bank accounts should get them as soon as they can so that companies can transfer money directly to them," said an assistant manager at Oriental Bank of Commerce in Noida.

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These steps being taken by banks and entrepreneurs are directed towards assuaging the concerns of workers about payments on time during the upcoming pay day week and transitioning to a system of cashless salary transfers in the SME sector.