Tamil Nadu's fledgling recovery in 2016 from a deadly deluge in December last year was set back by a few notches by the impact of the surprise currency withdrawal, compounded further by the cyclonic storm Vardah.
Most sectors, including MSME, manufacturing and automobile, had been trying to get back on their feet, badly hit by the flooding. There was more pain as the Centre's proposal to levy one per cent tax left the jewellery industry high and dry.
In fact, micro, small and medium enterprises, which constitute a big chunk of trade in the state, and the services sector continued to stay in the slow lane in 2016.
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It is just not the MSME units at famous industrial estates in Guindy and Ambattur in Chennai, but several IT companies and automobile majors that put up a lacklustre show following demonetisation.
The junking of old currency made things difficult for the banking sector, which had to bear the brunt of public anger due to shortage of funds -- mostly at ATMs -- which affected banking operations. Public and private banks alike across Tamil Nadu found themselves at the receiving end, waiting for a host of issues to be resolved.
"Almost all the counters at banks were dispensing only cash and exchanging the notes. So, the normal transactions got affected," a bank official said.
The Centre's currency exercise came against the backdrop of checking black money, but the narrative shifted to a push for cashless transactions, which is yet to gain traction in Tamil Nadu.
The jewellery sector in the state faced a "double whammy" in the form of 1 per cent excise duty as proposed by Union Finance Minister Arun Jaitley in the budget and the subsequent notes ban that dealt a big blow to the industry.
To put things in perspective, Tamil Nadu and the neighbouring Puducherry are home to nearly 36,000 showrooms and the jewellery industry employs about 8-10 lakh people.
The gold traders opposed to the move shut shop for close to 18 days, which took a Rs 6,300-crore business hit. So much so that most reported only 20 per cent of business compared to a normal day. Even other core sectors were not immune to a slowdown in 2016.
Even jewellery retailers felt the heat as customers chose to visit showrooms only when there was a need to purchase gold for special functions or those who came for exchange.
A strong fluctuation marked gold prices soon after the withdrawal of old high-value notes, but Madras Jewellers and Diamond Merchants Association officials call it "only a temporary blip" which would not have a significant impact.
Automobile companies, a prominent fixture on Tamil Nadu map, also felt the ripple effect of demonetisation and the cyclone Vardah.
While the notes pullout led to sluggish car sales besides making customers adopt a wait-and-watch approach, the cyclone Vardah forced auto companies' hand to suspend operations at manufacturing facilities following the trail of devastation.
Chennai and its neighbourhood serve as a hub of several auto majors that include US' Ford, Korea's Hyundai, German BMW, commercial vehicle manufacturers Ashok Leyland and Daimler.
Infrastructure of software companies and major telecom operators such as Bharti Airtel, Aircel and Vodafone too was adversely affected by the cyclonic event.
The cyclone, which made its landfall on December 12, threw normal life out of gear, mainly in Chennai, Kancheepuram and Thiruvallur districts.
Several IT companies with offices at these locations had to suspend operations for more than a week as employees were unable to reach office due to connectivity issues. Even a few asked employees to go on leave till things stabilise. Besides, power and other communication services remained paralysed for days on end.
Federation of Indian Exports Organisation (FIEO) pegged the loss of exports due to Vardah at about Rs 300 crore in Tamil Nadu.
"In 2015-16, exports from Tamil Nadu were USD 31.25 billion and for April-September 2016, exports were USD 13.27 billion, which shows signs of a negative trend," said FIEO Regional Chairman A Sathivel.
"FIEO estimates that export from Tamil Nadu will be in the negative zone to the tune of 15-20 per cent due to the impact of last year's deluge and the cyclone Vardah," he said.
Tirupur Exporters and Manufacturers Association, which represents the garment and textile industry of southern industrial belts of Tamil Nadu, feels that the demonetisation has made it hard to make business transactions.
"Our industries faced so many problems in the past. But they revived now. Even though the demonetisation is very good for future of each and every Indian, there is a severe problem in business transactions," President of the Association M P Muthurathinam said.
"Christmas, New Year and Pongal (harvest) festivals are approaching fast. Because of the severe problem in currency distribution, we were unable to meet the orders. We expect a total business loss of Rs 1,000 crore in November alone," he added.
He urged the central government to send enough currencies to Tirupur and the neighbouring district alone with the hope that it will improve the situation.
