Make do with the demon(etisation)
Chennai: On November 8, when phones were buzzing with regular news updates after a long day’s hard work, Prime Minister around 8’o clock gave in what seemed to be a delayed Diwali gift to the nation which was still hung over with Diwali celebration; business houses had, what they thought, started their new financial year. In a televised address to the nation, he announced 500 and 100 currency notes as invalid. It was eight at night, many were returning from their offices, small business owners were close to shutting their shops in an hour, and vegetable vendors with their day’s collection were home.
With the dawn of November 9, 500 and 1000-the lime green and faint orange currency note became obsolete. Prime Minister’s various assurance such as exchange at banks of old currency with the new ones at a limit of 10,000 per day, ATM which were shut the following day would open the day after with Rs 2000 currency and more of Rs 100 notes. Moreover, old 500s and 1000s at pharmacy, government hospitals, petrol station, dairy booths, railway and airline ticket counters and bookings would be accepted.
Like hawks, the national population waited anxiously to exchange their currency the following day. Reasons cited were capturing black money, counterfeit currency and to curb terrorist funding. While many applauded the motive, the method of capturing met with criticism. “Though it’s a great move, it should have been systematic. The currency difference between Rs 100 and Rs 2000 is a lot. They should have ideally removed 1000 instead of 500. Though this step will remove the black money at one go, however the effect on the common man might be longer. Had it been systematic so much of confusion could have been avoided,” said Amitava Sinha, a chartered accountant.
What followed within a week was utter chaos and confusion, says Ravi Kumar, “I went to three ATMs at Adyar, there was no money, while line at some ATM was so long that money finished, this is the fourth ATM, I am trying.” When asked about the recent demonetisation to curb black money which comes at the cost of inconvenience for a middle class office going like him, he quipped, “There is a little inconvenience but if it’s good for long term, the attempt is good.” However, while those like Ravi who keeps faith over the prime minister’s initiative, small business ventures beg to differ. “Since there is no money, there isn’t sufficient support. Till the time market does not improve we have to depend upon credit. We have to adjust quite a bit, for instance today unlike other days, today I will not have green vegetables, I would choose to have only dal. The conditions are difficult. Unlike the previous week, this week the sales have dropped drastically. Like today, he told me not even a single customer has come. By fluke one or two might come otherwise, even we know there won’t be any sale. I don’t know when the black money will captured, for me as a supplier my earnings are not smooth. I stood at first at Indian Bank and then HDFC bank to withdraw 4000 for four hours Sunday, Monday, Tuesday, said Manoj, a footwear supplier to Assad’s shop, the owner. For small business ventures both for the supplier and the retailer is likely to sustain on factor like trust. Hameed, a shop owner, who deals with selling of needlework and embroidery, his usual sales of 8,000 to 9,000 dropped to 1000 to 2,000. “One of the biggest problems we face as owners is for the payment of workers,” he says. Sandhya Ramchandran, who manages the tailoring section at Nalli Silk Centre, never felt the need of keeping a card swiping machine, however, considering the proximity of wedding season where they have orders before the demonetisation was announced. Even government operating associations like Tamil Nadu State Marketing Corporation, according to the Hindu went through 100 crore loss. In TASMAC Elite, Adyar, according to the official there was a loss of around 45%.
Talking of workers within these shops, Sandhya Ramchandran says, “Keeping swipe cards for transaction is easier not only for us as employers or for consumers, even for the tailors it is, where we deposit the money in their accounts directly, this way we don’t have to worry about 100s and they get their pay on time.”According to lawyer cum activist, Subhash Bhatnagar, who works for the rights of construction labourers the most affected by this step of government says,
“Demonetisation has affected common workers very badly. They are unable to buy even essential food items for day to day consumption. Their incomes are anyway too low for them to buy monthly or weekly stock for food items. So they have been pushed to starvation.”
In order to capture a corrupt few, the burden of cashlessness has brought despair for the people. Prioritisation and conservative spending has become important for people with low wages, where food is the primary requirement.
Meanwhile there has been a drastic decline in sales through Cash on Delivery which according to a report on Economic Times is 2%-2.5% of the returns, however usage of e-wallets has increased. Ola, itself, saw 15 times recharge on its e-wallet according to a report on Quartz. Joseph Rajamani, a chartered accountant, says, “I took an Ola from airport, they billed me with Rs 250, I gave them 500 but they didn’t accept it, so I had to do a bit of running around.” Zomato has opened only its online payment option, while Flipkart which was initially accepting bills only beyond 1000 for cash on delivery, it is now accepting cards by sending its delivery boys with swipe card machine. Use of coupons like Sudexo which provide food coupons have increased which companies says, Kaveri Martolia, deputy manager at an auditing company, “I literally had Rs 10 in my wallet, initially I used to use my card for grocery shopping once in a while however, frequency has increased a lot. Our company gives Sudexo coupons which are discount coupons; I have started using them now.”
At such a juncture those who have been working relentlessly are the bank staff. Information regarding the change of notes which was kept confidential even from them, lead to clear confusion amongst them. Lack of enough Rs 100 currency has led the exchange currency of 500 as low as Rs 10 and Rs 20. “If they were so keen in invalidating 500 and 1000 notes, they should have increased the currency of Rs 100 notes. For the bank to exchange 500 notes there should have been enough 100 also,” says Bhagwan Rawat, manager at Union Bank of India. He also mentioned the time it takes to calibrate the currency boxes in an ATM machine because of which various ATM machines were opening days after the said date of operation of ATMs.
According to Subhash Bhatnagar, lawyer activist, “Demonetisation is not likely to affect black money. At most it will transfer the ‘cash savings’ of middle class to the banks, which will become available to the rich from these banks for investment. But it is not likely to have any positive impact on the economy.”