Demonitization woes and victories

It would be fair to say that since the tenure of the current government began in 2014, perhaps the most striking and debated action it has taken was demonization. Just over a year ago, when the Prime Minister appeared on TV and declared the Rs 500 and Rs 1000 notes tendered illegal effective immediately, the country went into a tailspin of debates as to whether the action was a good one or bad one for the economy. A year on, these debates continue to rage, and the Entertainment business is just one of the places which is undecided on the pros and cons of demonization.

There can be little doubt that the aftermath of the historic announcement was confusion and panic. Long lines formed outside ATMs, cash was rationed as ATM machines and Bank saw their ability to meet panicked customers' needs rapidly depleted. The old notes were gone but they were not immediately replaced by new ones and that meant in the interim, cash transactions suffered badly. For the film business, this was seen to affect shootings, where daily wage earners could not be paid in cash as they had been accustomed to and were not ready to accept other methods as perhaps they were not able to. Also in the small towns, cinemas dried up in terms of patrons as people began to prioritize their depleted cash and entertainment in terms of movies, was not high on the agenda.

The affect in the larger towns and big cities was less as these were areas where mobile technology had hastened the transition to mobile wallet payments and online transactions. People were anyways consuming their entertainment without cash, so perhaps there was no big jolt, but even here the perception of less cash around the economy will have made consumers wary about going to cinemas. Films bombed in the initial period after demonetization and some producers were quick to blame the change in policy for their films failure. Perhaps though the reality was that the films just didn't pack a large enough appeal and therefore people were easily able to shift away from the products on screen at the time.

An example of this was 'Dangal'. When it released, even almost two months after the announcement, there was still a cash crunch and ATM woes continued but the content was strong and inspirational enough that people piled in to watch. Yes, the switch over to mobile payments had been very successful with Book My Show, PayTM, MobiKwik and others using the decision to swiftly market their services and they were rewarded as people patronized them in greater numbers fueling the growth in mobile payments in our business. But the content was also excellent and that meant that people found a way.

Almost a year on and after those initial months of hardship and confusion, there are plenty of positives to dwell on as well. The switch from cash payments to mobile and electronic transactions has certainly helped transparency and has made the entertainment industry's revenue generation much more accountable. Again, naysayers can point to the fact that this was pretty much happening pre -demonetization as well, but even a small growth in this area is a great benefit for the industry. Many more daily wage earners now have bank accounts and the ability to accept payment in more than cash and this gives more security and stability to so many more people in our business. It's a good thing for the industry and the country. Whether the scourge of black money being used in the business has totally vanished is something a qualified economist can better answer but I will say that for a time, it certainly had people funneling that cash into the entertainment business spooked. This cleans up much of the reputation of the business, which is a priceless thing indeed.

Overall when the film business looks back on demonization perhaps the best way of summing it up was that an initial period of hardship has led to gains in the current as well as future time to come. How big or small these gains are, can be debated all day but I would like to think that any gain, is a positive one.

- Rahul Puri is the MD of Mukta Arts Ltd.