Benefits of cash overhaul elusive
Fifty days ago, India yanked most of its currency from circulation without warning, jolting the economy and leaving most citizens scrambling for cash.
As the deadline for exchanging the devalued 500- and 1,000-rupee notes for new ones hit on Friday, many Indians were still stuck waiting in long bank lines.
Empty ATMs and everchanging rules are preventing people from withdrawing money, and many small, cash-reliant businesses from cinemas to neighborhood grocery stores are suffering huge losses or going under.
Despite those problems, Prime Minister Narendra Modi says his Nov 8 demonetization decree has succeeded in uncovering tax evasion and cracking down on graft.
The Indian government is urging patience, insisting it’s playing a long game that will eventually modernize Indian society and benefit the poor.
So far, despite the widespread inconvenience and costs, most of the country’s 1.25 billion citizens appear to be taking Modi’s word for it.
Modi’s announcement that 500 and 1,000 rupee bills making up 86 percent of India’s currency were no longer legal tender has posed an enormous hardship for millions of people who use cash for everything from salaries to cellphone charges.
Almost immediately, huge lines appeared at banks and ATMs as people waited hours to deposit or exchange old currency notes for new bills.
Since authorities only began printing the new bills after the policy was announced, demand vastly exceeds supply and cash machines often run dry.
Daily commerce in essentials including food, medicine and transportation screeched almost to a halt.
Worst affected were the country’s hundreds of millions of farmers, produce vendors, small shop owners and daily-wage laborers who usually are paid in cash at the end of a day’s work. Many lost their jobs as small businesses shut down, compounding their poverty.
Pankaj Aggarwal, owner of a clothing shop in the Old Delhi neighborhood of Chandni Chowk says his sales crashed by 70 percent.
“You can imagine what our business is like now. It will be some time before our sales normalize,” he said.
Modi appears to have succeeded in promoting the cash overhaul as a “pro-poor” policy, tapping into deep anger among the have-nots toward wealthy elites.
“The first two months have been so bad for us, we don’t even have enough money to buy food,” said daily wage laborer Neeraj Mishra, 35.
“Overall, I think Modi has done some good. People with a lot of money are the ones who have been troubled. I don’t have enough cash for it to bother me much.”