ET INTELLIGENCE GROUP: Amid an uncertain economic climate, southern India seems to have outshone the rest of the country. Key sectors such as auto consumer goods , power consumption and cement have grown this fiscal in Tamil Nadu Telangana and Kerala The currency-replacement scheme doesn’t seem to have made much of an impact in these states, suggesting that the remonetisation theme will resonate most strongly in this part of the country. Passenger car sales grew 20.7% in first half in the south, nearly twice the all-India average of 12.3%, according to the Society of Automobile Manufacturers (SIAM).“South India has been least impacted regarding sales volumes,” said RS Kalsi, executive director of marketing and sales at Maruti Suzuki India. Maruti cars sold to customers by dealers rose 12-13% in the south, compared with 4% overall in December 2016. Its retail sales touched an all-time record of 183,000 units in December.UltraTech, India’s largest cement company, reported volume growth in south India in the December quarter, in contrast with a 2% drop overall. In a postearnings call, UltraTech management said it’s expecting demand to improve in the south and east, while elections in UP and elsewhere could hit demand in the north.The south accounts for a fifth of the total cement market.Consumer goods companies such as Hindustan Unilever, Asian Paints and Jyothy Laboratories also appear to have fared better in the south with weak demand elsewhere due to currency swap exercise announced on November 8.Power generation data compiled by the Central Electricity Authority implies that industrial activity was unaffected in south India even after demonetisation. It grew 11.3% to 19,696 gigawatt hours in December, exceeding the all-India average of 6.13%.Experts ascribed several reasons to the southern surge. The degree of demonetisation’s impact is linked to banking density, which is higher in the south. For instance, out of more than 200,000 cash dispensers across the country, a third are located in south India, according to RBI data.The south also accounts for nearly 28% of bank branches in rural and semi-urban areas, perceived to be the most impacted by demonetisation.These factors, along with the adoption of digital payment modes, attenuated the impact of demonetisation in the southern states, said SG Murali, chief financial officer at TVS Motor. As rural areas in the south are not as dependent on agriculture as they are in the north, incomes were more stable despite two drought years before a good monsoon last year. Also, several programmes launched by the governments of Andhra Pradesh and Telangana to boost infrastructure have created a multiplier impact on the rest of the economy.Besides this, Tamil Nadu benefited from a low base effect—with Chennai and other parts of the state having been hit by floods in December 2015.