Marico faces brunt of demonetization

Amidst the list of PSU bank topping the loser chart on the BSE, there is one desi FMCG company, Marico, which is the third top loser currently, down over 2% at Rs.250 levels.

The reason for this fall – it is going to be FMCG companies and more so the local and Indian bred soap/shampoo and detergent companies which will face the brunt of the demonetization drive. Farmers and traders in rural India earn their income almost only in cash – but now with unofficial lenders and farm owners also running out of cash, their income is deeply cramped.  The informal sector accounts for 20% of India’s GDP and provides 80% of the employment. 

A report in Reuters says that India's informal credit system has ground to a virtual halt wherein not only are money lenders struggling to lend; they are also struggling to get paid.