Sunday, 10 May 2009

Market Mantra : Barter when you can't buy

When Delhi housewife Lata Chauhan allowed a widow to live in her home in exchange for household work, she was simply trying to stretch a budget slashed by pay cuts and price rise. But in so doing, Chauhan had become part of a global trend towards barter, which is reviving the world's oldest form of payment — goods or services in lieu of cash.

Chauhan is part of the droves — homemakers, professionals, small traders and companies in India and abroad — who are holding on to precious cash reserves by doing business in kind. Ruby Agarwal, director of Mumbai firm Benefit Barter, says, "Companies are flooded with unsold goods because of low sales. Barter is a boon for them to reduce surplus stock."

She says, "Many companies which were on the verge of collapse have survived." But Anup Dutta, chief operating officer of Delhi Company BBX India, says "barter is still just a fraction of Indian trade". He says 30% of world business is barter; Indian barter is a mere 10-12% of trade. America's Universal Barter Group claims 65% of the companies on the New York Stock Exchange are involved in barter.

From an East London pub that accepts goods and services for a pint of beer to teens swapping clothes and books online, to ad executives in Singapore offering advice to hair salons in exchange for a perm, swap is the new global money. Just check out the client profile of Indian firms engaged in barter big companies, hotels, and travel firms. Indian professionals such as architects, doctors, web designers and tutors are also signing up.

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