Demonetisation is hurting rural India, drying up wages, household supplies and food
Long queues outside banks and ATMs have become a common sight following PM Narendra Modi’s announcement to demonetise Rs 500 and Rs 1,000 notes. (Express Photo: Praveen Khanna)
The overnight withdrawal of most of the country’s currency has beaten down casual workers, street vendors, slum dwellers and homeless people in India’s cities with a brutal hand. But the brunt of this body blow is even more dire on rural landless workers, small farmers and artisans in India’s vast countryside, as I learnt travelling in rural Odisha. For people for whom life, at the best of times, is one of bare, precarious survival, the aftershocks are monumental, an unfolding tragedy whose scale we have barely begun to comprehend.
Ironically, the direct impact of the cash crunch was least visible among the most impoverished tribal communities. “We have rarely ever seen Rs 500 and Rs 1,000 notes,” tribal residents of village Gundrubari in Nayagarh district told me. “We never had much cash to start with.” They all had bank accounts. But when I asked them if they had any money in these accounts, they replied with laughter. No one sells paddy or employs labour. Their weekly grocery purchases are for less than Rs 100. Their small holdings barely sustain them for a couple of months in a good year. They live on wild roots and tubers across seasons.
Only some widows and old people spoke of mounting panic because their sons who had migrated were unable to send home any money. One was a construction worker in Kerala; his company had offered him wages in old notes. He refused. Another, an electrician in Hyderabad, returned home because his employer said he had no cash to pay him.
But the moment we moved to mixed caste villages, the story was different. Padmacharan Parida, a middle farmer with seven acres of farmland in Haripur village in Nayagarh, had employed 34 workers to harvest his paddy; he owed them Rs 12,600 in wages. He took a long bus ride to his bank to withdraw this. He was turned away twice. The third time, the bank gave him Rs 3,000. His workers squatted all day outside his home, demanding payment.
He then went to the grain traders to seek an advance, even though he knew they paid much less than the official minimum support price. But they said they too had no money this year. Finally, in desperation, he borrowed the cash from a local moneylender at even higher interest rates than usual, and thus paid off his workers.
But now, he had no money to thresh his paddy, piled up at his fields. Heavy rains were expected in the next few days. If that happened before threshing, he’d lose his entire crop. For the last three years, the monsoons had failed. He had expected to make up some of his losses this year with its good rainfall. “But Modi devata turned out to be even more cruel than Indra devata (the rain god),” he remarked ruefully.
Another small farmer in village Sankhamuda said he too couldn’t withdraw money from his account to pay workers. He went to the bank four times; he was finally given a Rs 2,000 note. He couldn’t use this to pay his workers — no one had change. Maya, who heads a self-help group of women making incense sticks, spoke of even greater distress. The middleman who buys their incense says he has no money to purchase because the trader to whom he sells is out of cash. Their stocks are piling up, their small machines are now idle.
The women instead spend their day trying in vain to get vegetables and groceries on credit. Even moneyed people refuse them loans. The informal economy of the village, running on small loans given on trust, has suddenly collapsed. There is also no wage work for women, even at distress wages. Employers have no money.
A small grocery store owner in Chakormal village, Sonepur, explained why he could not help the women. “I have no cash to buy my stocks. I went to the bank to draw Rs 20,000. After repeated visits, they gave me Rs 4,000. I don’t know how I will even be able to run my shop.”
We asked people about the government’s goal of a cashless economy. “We are already cashless,” scoffed some. One woman said she’d never put all her money in a bank. “When someone falls sick, will I go stand in line at a bank or go to hospital?” she asked indignantly.
As in times of drought, people are learning to eat less. Most households have stopped buying vegetables. Cow owners said they were unable to sell milk as people had no currency. People in many villages spoke of gravely ill people at home who couldn’t be taken to hospital, lacking money.
Across Sonepur and Bolangir, landless workers and small farmers take an advance from labour contractors of around Rs 15,000 to Rs 20,000 in November each year. In return, they work until June the following year in semi-bondage at brick kilns and construction sites across the country. Life in the kilns and building sites is wretched and gruelling, with 18-hour work days at times. But this was how they’d survived for generations.
However, this year, it is already December and the labour contractors haven’t come to employ them. They have no currency to pay advances. And there is no wage work in the fields either as farmers have no money to pay them.
“How will you survive then?” I asked. “We will just die,” they replied. And then, inexplicably, they laughed.