Devastated by demonetisation: Speak up, India!

The economic anarchy unleashed by demonetisation, shrank consumption, wiped out people’s earnings and created a colossal sense of fear and insecurity, especially in the informal sector

Photo by Vipin
Photo by Vipin

NH Economic Bureau

Whatever positive spin Narendra Modi government provides to its demonetisation policy, it has dealt a severe blow to the India’s economy in the informal sector. It affected the lives and livelihoods of people including small traders, farmers, daily wage earners and others who deal mainly in cash. Many of them National Herald reporters spoke to continue to reel under the blow of demonetisation.

Recovery will take time

Lakhamasi Patel, President, Raipur Timber Merchant Association

The year before demonetisation, net worth of our business was between ₹550 and ₹600 crore. After demonetisation, it dropped to ₹300 crore. As far as recovery is concerned, I believe, it may never happen. The shock was so deep that the whole business had crumbled.

Due to lack of cash, labourers were forced to leave the industry. Scarcity of workforce affected input and processing cost. Sales decelerated. Since we operate in rural areas, and most people still do not have electricity (Internet is a distant dream), how can anyone expect us to do online transactions?

I am surprised to find there are still a few people who hail demonetisation and GST as the biggest economic reforms after liberalisation.

Cottage industry hit hard

Raja Ram, Phool Chand Tusli Ram Copper Brass Artware, Aligarh

Our production has gone down by 50%. We were yet to recover from demonetisation when GST accentuated our problems. There has been an increase in the tax slab from 6 per cent to 18 per cent. This has increased the cost of production and final product prices as well. There are very few buyers for our products now. Despite several written representations to the local MLA, Union Finance Minister and other authorities concerned, our issues remain unresolved.

Earlier, we would provide raw material to artisans too who would work for us from their homes. But the onslaught of GST on handmade goods has made it impossible for us to outsource work to them. Thousands of such craftspersons are jobless now. The story of other traders, manufacturers and artisans associated with the cottage industry is no different.

Coping with coins

Nikhil Gupta, President, Kanpur Confectionery Udyog Vyapar Mandal

We produce confectionary items and baked products including bread. It’s a labour-intensive industry. Hundreds of smaller units in Kanpur district have shut down after demonetisation.

One year after demonetisation, traders are still struggling with severe currency notes crunch. The local economy is flooded with coins but banks are refusing to exchange currency notes for coins. A trader can exchange coins amounting to ₹1000 only per day. Today, we don’t have capital to revive our business. All of our money is lying useless in the form of coins, which have no utility. The businessmen and traders in the district are estimated to have coins amounting to over ₹200 crore.

There are dealers who exchange coins and torn currency notes. But they charge 25% and return only 75% of the money in exchange. If a trader exchanges coins worth ₹4 lakh, he suffers a loss of `1 lakh. Digital transactions are also not free of cost. The entire idea of cashless economy is proving disastrous for Kanpur’s economy.

After the traders protested recently, the police registered an FIR against 22 traders including me. There is fear among traders and no one wants to speak against the wrong policies of the government fearing consequences.

There used to be over 500 hawkers who would travel on bikes and sell goods across the district. But after demonetisation, half of them have left. They are doing menial jobs for a living. Some of them ferry people on cycle rickshaws, while others have become vegetable vendors. If the manufacturers and traders don’t have any business, how can they provide employment to labourers and hawkers?

Marriage plans derailed

Aquil, Meat trader, Lucknow

Aquil (28), was happy with his life. He had an outlet in Indira Nagar, ‘Aquil Meat Shop’, where he sold chicken and was doing well. He had planned to get married by the end of 2017. His life took a turn first when demonetisation was announced and then when the Yogi Adityanath government came to power in March 2017 and ordered closure of illegal slaughter houses. The Nagar Nigam swooped down on meat shops all across the state and closed them. Aquil found himself jobless.

“I have a pucca shop and had a proper licence three years ago. But it was not renewed. I had the documents. I showed it to zonal officer of Nagar Nigam that I had applied for the renewal and the file was with him. But the officer ordered closure,” he said.

Aquil’s shop remained closed for almost a month. As the dust of “close slaughter house” order settled down, he opened the shop after greasing the palms of police and Nagar Nigam officers.

“Majority of us are in favour of closure of illegal meat shops. At every crossing you can see people selling chicken meat. Some even slaughter goat in full public view. This is wrong but Nagar Nigam did not take any action because they were receiving commission from those roadside shops,” Aquil said. “These shops have affected our business. I had a shop in a designated meat market. I had a valid licence, electricity and water connections but still the Nagar Nigam did not renew the licence,” he recalls.

Even in October, 2017 Aquil does not have a licence but is running his business. The roadside meat shops too are back and are giving a tough time to Aquil. In this melee, Aquil’s plans to get married has gone awry. “Marriage can wait, First let me first cope with Yogiji’s naya kanoon (new law),’ he said with a smile.

Agriculture prices crashed

Aakash, Farmer, Hoshangabad

The agriculture sector in India has never been so badly off since Independence. Agriculture has always been a cash-reliant industry. Now, only a few farmers and stock buyers keep cash. The cheque we get after selling our produce are encashed only after 7-10 days.

The mood in the market remains upbeat only if farmers have enough money at their disposal so that they could sow what they want. Nobody has that money since demonetisation was rolled out, so the demoralisation is pervasive; Some farmers don’t have enough money to even buy seeds and fertilisers.

He owns around 25 acres of farmland in the Khapad Kheda village of the district. “We grow wheat and pulses on our land. The output of wheat is 40 quintal per acre, while pulses grow by 15-16 quintals per acre,” he says. Besides, the Minimum Support Price (MSP) for wheat has come down from ₹1715/quintal last year to ₹1625/quintal this year.

In case of pulses, there is no MSP. “Last year, arhar (pigeon peas) was selling at ₹10,000/quintal. But, this year the price came down to ₹3,500 per quintal.

“The state government’s flawed agricultural policy has added to the woes of the farmer, who were already reeling under the impact of note ban.”

Life’s saving lost

Meena Devi, Housewife, Rajouri

I lost my entire savings worth ₹2 lakh following demonetisation. Both my sons were away serving Indian Army. I have never had a bank account. The village I have lived in after my marriage, Draj in Budhal tehsil of Rajouri, is so remote that this was never taken seriously.

My eldest son Sukhdev, whose family lives separately, was posted in Uri sector and the younger son Pritam was posted at Siachen Glacier.

My savings became worthless pieces of papers. I had amassed this money after selling small farm produce. My sons would also give me money whenever they came home. In hilly villages, people usually don’t keep much cash. No one was panicky about getting the currency notes exchanged. I was under the impression that my younger son would get the currency exchanged when he returned home.

But Pritam was due to retire in April and came home in January to collect documents. He was here only for a few days. He did visit the Jammu branch of the RBI but they refused to exchange the currency notes and advised that he should visit the RBI office in Delhi. But he did not have leave to travel to Delhi and hence we gave up the idea.

(As told to Vishwadeepak, Ashutosh Sharma, Biswajeet Banerjee, Dhairya Maheshwari)

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Published: 8 Nov 2017, 8:26 AM