COP­ING WITH DE­MON­ETI­SA­TION

By and large, the ill ef­fects have ebbed in the vil­lages

Business Today - - CONSUMER -

The de­mon­eti­sa­tion de­ci­sion of Novem­ber 8 last year struck ru­ral In­dia a cruel blow, but it was not a crip­pling one. Harib­hau Gaik­wad, 30, a farmer in Nandgaon vil­lage, 70 km from Nashik, Ma­ha­rash­tra, reaped a good paddy har­vest. But thanks to de­mon­eti­sa­tion, it sold at a much lower price than the pre­vi­ous year, when the crop had been poor. His friend, grape farmer Ban­shi Pageri, in the same vil­lage, had a bumper grape crop, but again it sold for less than half its price the pre­vi­ous year.

How did they cope? Gaek­wad post­poned the buy­ing of farm- lev­el­ling equip­ment he had been plan­ning. In­stead of buy­ing four bags of fer­tiliser for his next crop as he usu­ally did, Pageri made do with only one. But de­spite de­mon­eti­sa­tion, Gaek­wad did buy the LED TV he had been plan­ning ever since his ex­ist­ing 15- year- old TV conked out some time ear­lier.

“Peo­ple con­tin­ued to buy as per their needs, though most of them took credit for ex­tended pe­ri­ods,” says Manohar Gaika, who runs a ki­rana store in the same vil­lage. The same was the ex­pe­ri­ence of Sheikh Mo­ham­mud Mohsin in far­away Kherai vil­lage in South Ben­gal. Many cus­tomers also off­loaded on him heaps of coins they had col­lected over the years while mak­ing pur­chases. “I had coins worth 1 lakh, which the banks re­fused to ac­cept,” he says. He still has 70,000 in coins hav­ing been able to part with the rest as notes be­gan to cir­cu­late again.

“There has been a surge in the open­ing of bank ac­counts,” says Manoj Kulkarni, Branch Man­ager at ICICI Bank’s Ghoti branch in Igat­puri dis­trict, Ma­ha­rash­tra. “The num­ber of ac­count hold­ers us­ing dig­i­tal pay­ment plat­forms such as NEFT and RTGS to trans­fer money has also gone up sig­nif­i­cantly.”

By and large, the ill ef­fects of de­mon­eti­sa­tion have ebbed in the vil­lages and all is nor­mal again. “I could see a re­turn of pos­i­tive sen­ti­ment by De­cem­ber last year as the rabi crop was good,” says Ramesh Iyer, MD, Mahin­dra Fi­nance. “The ef­fects of de­mon­eti­sa­tion are largely behind us.” In Mad­hya Pradesh, how­ever, some of it lingers with man­dis still pay­ing farm­ers by cheque – of­ten post- dated – in­stead of cash as be­fore. Me­herban Singh, res­i­dent of the feeder town of Ghatta Bil­lod, 50 kms from In­dore, says that not only did his crop fetch him 2,200 per quin­tal this year as op­posed to 2,800 last year, but the man­dis also gave him post- dated cheques. Sim­i­larly, Satish Chouhan, a Hero Mo­toCorp dealer, says that while he usu­ally sold 100 bikes a month, he strug­gled to sell barely 50 in the pe­riod be­tween Novem­ber and Jan­uary.

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