Demonetisation has pushed the bureaucracy – in this case the creaking, ill-equipped banking system – to breaking point
Column in Business Standard, December 3, 2016
It’s now the halfway mark of the 50 days of pain the prime minister begged his countrymen to bear for the notebandi inconvenience to abate. In fact, day by day, the crisis is intensifying, with lengthening queues, struggling banks, drained ATMs and threats of violence. At the government bank I use, it is no longer possible to withdraw the prescribed Rs 24,000 a week; the sum dwindled to Rs 10,000 several days ago and is whittled arbitrarily to lesser sums.
Often there is no money. The police have been called twice to push back the seething throng and quash the scuffles and fights. Chronic cash shortages — to run households, pay salaries and settle accounts — means that most other conversation has ended. The sole dominating discourse among all Indians, cutting across divisions of class and geography of city, small town and village, is how to conduct the painful business of daily life.
It is an increasingly precarious and desperate business. I haven’t sensed such a near-universal feeling of pent-up frustration and anger since the dark days of Sanjay Gandhi’s nefarious nasbandi (mass sterilisation) campaign in 1976.
Like Sanjay’s ill-fated movement for population control, notebandi too is a coercive, mass participatory exercise ordered by dictatorial fiat from on high. Given the miasma of ad hocism, secrecy, fear and loathing that surrounds the curtailing of black money, with rules changed every other day and new punitive measures announced — such as holdings of personal jewellery — it is akin to Sanjay’s authoritarian “Five-point terror” in many ways.
It has pushed the bureaucracy — in this case the creaking, ill-equipped banking system — to breaking point. It has driven Parliament to a halt and endangered the livelihoods and lives of millions. Detailed accounts in Business Standard this week describe the plight of industry affected: Among them two million employed in the diamond-polishing industry in Surat, 500,000 unpaid tea plantation workers in Assam, the distress of cash-starved farmers unable to pay borrowers’ dues or the flight of construction labourers in cities back to their villages.
In an interview to The Caravan magazine this week, Renana Jhabvala, national coordinator of Self-Employed Women’s Association (SEWA), the microfinance trade union with two million members, although a supporter of the PM’s Jan Dhan programme, smashes his Utopian ideal of a “less cash” or cashless economy to smithereens.
Small banking co-ops such as SEWA, she says, are not only starved in banking’s food chain to get the new currency but also that the poorest women are, and remain, the most discriminated in rural banking.
“There are no brick-and-mortar banks in a radius of even 10 km in many rural areas. When you go, sometimes you’re not entertained. The procedures of the bank are often difficult. I’ve seen ATMs where people have been standing in lines like you see now (even before demonetisation) because the electricity is off. Of course, no women can go there because it’s all males (in the lines).” Since demonetisation, she adds, women with average savings of Rs 10,000-20,000 queue for hours to deposit or withdraw money.
The urban middle classes are also reeling from the pain; each has an individual story of some unforetold trauma. A friend who was clearing cupboards and desks this week to mop up any old remaining old notes opened the cupboard of his father, who had died a while ago after a painful illness and found a neatly sealed envelope fall out. It contained a lakh of rupees. On it, written in an old man’s quavering hand, were the words, “For my last rites.” My stupefied friend says that, what at any other time would have seemed a windfall, was now a liability. In Narendra Modi’s daily life-and-death decrees will cremation and burial grounds accept cheques only? Will priests and maulvis henceforth carry PoS terminals?
Black money not being the same as cash money, unfettered access to, and spending of, hard-earned savings is a deeply personal matter for the vast majority. Notebandi, like nasbandi, is not merely disruptive nationally but insidious and intrusive of private lives. It has given birth to a whole industry in rackets and rumour-mongering. Having sharply polarised opinion — for every critic notebandi has its champions — it is worth recalling that many of the Emergency’s draconian measures were praised by luminaries such as Khushwant Singh, M F Husain and Girilal Jain.
Behind its opaque and mendacious disinformation campaign the brutal truth is this: The government has neither enough new notes, nor adequate printing machinery or distribution capacity. It has no time line to replace 86 per cent (Rs 14.2 crore) worth of “worthless paper”. Except for one banal statement, the RBI governor is at sea to update facts or figures.
Success has many fathers but failure is an orphan. As time perilously marches on to his 50-day deadline, Mr Modi will soon be called out to answer.