Demonetization in India

Two-Wheeler Manufacturers See Contrasting Fortunes In December, 2016 
Some manufacturers saw growth, others saw loss of sales.  This is likely due to serving different market segments.

(emphasis added)

Hero MotoCorp felt the heat of demonetisation as its monthly sales of 3, 30,202 units in December, 2016 was almost 34 per cent lesser than the sales of 4, 99,665 units in the same month last year. 

Although, not all was gloom and doom as the company recorded its highest ever sales in a calendar year by selling a whopping 67, 62,980 units in 2016, which is a growth of 4.3 per cent over the sales of the previous calendar year where it sold 64, 86,103 units.

The cumulative sales of Hero MotoCorp in FY 2017 (April-December 2016), is 50, 24,129 units.

Although it should be noted that the manufacturing plants of Hero at Gurgaon, Neemrana and Haridwar were closed from December 26th-31st for annual maintenance.

 Any corporation that has its highest ever sales in an year, but fires employees because of two months of a temporary downturn is a lousy employer.  A man's wedding postponed because of the in-laws is likely over dowry, which is, technically speaking, illegal.

The All Indian Manufacturers Organization report which claims major disruptions in the Indian economy, also says:

Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March

Nevertheless, exports rose, which is pretty remarkable, considering how the rest of the world is doing (and one wonders how much the exports supply chain can be constrained by lack of cash in Indian hands?)

India's exports continued to grow for the fourth straight month in December 2016, expanding by 5.72 per cent to $23.9 billion compared to $22.6 billion in the same month of previous year.

And here's another headline:
Contrary to fears of slowdown, factory output grows 5.7% in November

I further note that some corporations are probably hiding their other problems behind demonetization, e.g., in this report about two-wheeler sales:

Domestic sales of motorcycles in December 2016 dipped 11% to 1,06,665 units as compared to 1,20,322 units sold in December 2015 while exports dipped 24% to 96,647 in December 2016 as compared to 1,27,460 units exported in December 2015.

Why would export sales be hit because of demonetization?

While the trigger for writing this blog post is a New York Times article, let it not be thought that I did research for this article.  You can read all about demonetization, the good, bad, ugly at BRF, this link will plop you in the middle of the discussion.

There is no doubt that demonetization was an economic shock.  And yes, it most affected the cash-driven sectors that for whatever reason could not turn to cheques or other bank instruments.

FYI, about food prices, remember that annually, the fruit & vegetable market has fresh crop arriving in December ,January.  Anyway, for November 2016, the WPI (wholesale price index) (links can be found in the BRF thread mentioned above):

The index for 'Food Articles' group declined by 1.0 percent to 276.1 (provisional) from 278.8 (provisional) for the previous month due to lower price of fruits & vegetables (7%), moong and masur (4% each), urad (3%), maize (2%) and arhar and condiments & spices (1% each). However, the price of ragi (20%), gram (10%), coffee (10%), wheat (5%), poultry chicken and barley (4% each) and bajra, fish - inland, tea, fish - marine, egg and jowar (1% each) moved up.

and for December 2016:

The index for Food Articles group declined by 2.2 percent to 270.1 (provisional) from 276.1 (provisional) for the previous month due to lower price of fruits & vegetables (9%), arhar (6%), masur and urad (5% each), moong (4%), gram (2%) and poultry chicken (1%). However, the price of ragi (4%), jowar and wheat (3% each), bajra (2%) and egg, barley, pork, condiments & spices, tea and fish - inland (1% each) moved up.

If demand was down because of lack of cash, then the movement of prices should have been uniformly down.  It is not.

PS: also via the BRF thread, this article: Demonetization: Are the Poor Really Suffering?

PPS: Demonetisation: Hero Moto & Honda put 800 contract workers on unpaid leave