In­dia’s mil­lions pay price of cash ban

Ac­tivists see ‘dis­as­ter’ for ru­ral women from govt de­ci­sion

Kuwait Times - - BUSINESS -

BULANDSHAHR, In­dia: In­dian farmer Zakir Khan should be sow­ing his win­ter crops now. In­stead he is stuck at home af­ter the gov­ern­ment’s shock move to pull high-value notes out of cir­cu­la­tion left him with no money to pay for seeds-or feed his fam­ily.

Like mil­lions of ru­ral In­di­ans, Khan lives far from a bank and re­lies al­most en­tirely on cash to pay for food and the seeds and fer­til­izer he needs. Most of his notes are now worth­less un­less he can switch them for new ones or de­posit them with a ru­ral bank-many of which are yet to re­ceive the new cash. In­dia’s gov­ern­ment asked its cit­i­zens to put up with what it called the “short-term in­con­ve­nience” when it an­nounced the move to with­draw 85 per­cent of cur­rency in cir­cu­la­tion in a bid to tackle wide­spread tax eva­sion. But for Khan, left with just 80 ru­pees ($1.2) in cash and with no more food in the house, it means a lot more than in­con­ve­nience. “The gov­ern­ment has robbed us,” the 42-year-old told AFP in his native vil­lage in Bulandshahr district in the im­pov­er­ished north­ern state of Ut­tar Pradesh.

“The gov­ern­ment is say­ing these hardships are tem­po­rary, but if we are un­able to sow our crops this month, we won’t have any­thing to eat next year.” Huge queues have formed out­side banks and ATMs in cities across In­dia as peo­ple try to swap their old notes for new ones, while many are find­ing ways to carry out their daily trans­ac­tions on­line. In ru­ral ar­eas though, none of that is pos­si­ble. To add to farm­ers’ woes, the prices of veg­eta­bles and other sta­ples have plum­meted as a lack of cash in cir­cu­la­tion hits de­mand. Traders at Delhi’s main pro­duce whole­sale mar­ket Azad­pur Mandi say busi­ness is down by as much as 50 per­cent.

‘Peo­ple are an­gry’

To try to ease the prob­lems, the gov­ern­ment this week an­nounced it would boost a net­work of mo­bile ATMs in vans and pub­lic-sec­tor bank rep­re­sen­ta­tives known in In­dia as cor­re­spon­dents, who pro­vide ru­ral com­mu­ni­ties with ac­cess to bank ser­vices. They are part of Prime Min­is­ter Naren­dra Modi’s am­bi­tious plan to bring bank­ing to In­dia’s ru­ral masses, where many still have no choice but to rely on pri­vate money­len­ders who charge usu­ri­ous in­ter­est. But Mo­ham­mad Im­ran, who works as a bank­ing cor­re­spon­dent in a vil­lage of 4,000 peo­ple, told AFP he had re­ceived barely any cash since the Novem­ber 8 an­nounce­ment.

“Mostly I take old cur­rency notes from the vil­lagers and de­posit them in the bank. There is hardly any cash ex­change,” said Im­ran, who had taken more than 2.5 mil­lion ru­pees in old notes to de­posit, but only handed out 50,000 ru­pees in new cur­rency.

“Peo­ple are an­gry and of­ten hurl abuse at me for not giv­ing them cash. But I am as help- less as they are,” he said, adding that he tried to pri­or­i­tize the sick and needy.

Mean­while a worker at one gov­ern­men­towned ru­ral bank said it still had no cash, 10 days af­ter the an­nounce­ment. “This is sim­ply a rash de­ci­sion,” he told AFP on con­di­tion of anonymity. The gov­ern­ment says the move is aimed at bring­ing bil­lions of un­ac­counted money into the for­mal bank­ing sys­tem and will ul­ti­mately boost the econ­omy. That mes­sage has gone down well in ru­ral ar­eas, where re­sent­ment over tax eva­sion by the wealthy runs high, and many say they are pre­pared to put up with the re­sult­ing hardships.

Only six peo­ple earn­ing over 500 mil­lion ru­pees filed tax re­turns in 2012-2013, the lat­est fig­ures avail­able, even though an es­ti­mated 2,100 In­di­ans have a net worth that ex­ceeds $50 mil­lion. “Cor­rupt peo­ple have amassed huge amounts and the poor are suf­fer­ing as a re­sult. We have to trust the gov­ern­ment to bring about change,” said Mukesh Ya­dav, a vil­lager in Ut­tar Pradesh.

In­dia’s move to with­draw high-value ru­pee bills from cir­cu­la­tion to crack down on cor­rup­tion and coun­ter­feit cur­rency has hurt ru­ral women par­tic­u­larly hard, as most of them are out­side the bank­ing sys­tem, ac­tivists said. But it has also curbed con­sump­tion, hurt the agri­cul­ture and real es­tate sec­tors, and trig­gered long lines at banks and ATMs as peo­ple wait to de­posit cash, with­draw money and ex­change old notes. At least a dozen peo­ple are re­ported to have died while stand­ing in queues across the coun­try. The move has had a dis­pro­por­tion­ate im­pact on women, more than three-quar­ters of whom are out­side the bank­ing sys­tem. Daily labour­ers and in­for­mal work­ers, who tend to save their money in cash, have also been hurt, ac­tivists said.

“The im­pact on such women is dis­as­trous; they are fac­ing a se­vere fi­nan­cial cri­sis,” said Ki­ran Moghe, na­tional joint sec­re­tary of the All In­dia Demo­cratic Women’s As­so­ci­a­tion.

“Women in vil­lages and in tribal ar­eas use only cash, and they scrimp and save to put aside money. Now they can­not even buy daily ne­ces­si­ties,” she told the Thom­son Reuters Foun­da­tion. Women of­ten put aside money with­out the knowl­edge of their hus­bands, build­ing a nest egg for them­selves and their chil­dren, and as a safety net for emer­gen­cies, Moghe said. These women do not have bank ac­counts as they do not have the min­i­mum amount re­quired, or be­cause their hus­bands have an ac­count, or be­cause they lack the nec­es­sary doc­u­men­ta­tion, ac­cord­ing to a World Bank study of ru­ral Jhark­hand state. De­mon­eti­sa­tion will hurt In­dia’s in­for­mal sec­tor work­ers, num­ber­ing about 482 mil­lion, who earn cash in­comes, ac­cord­ing to con­sult­ing firm Deloitte.

AL­LA­HABAD: In­dian vil­lagers queue out­side a bank as they wait to de­posit and ex­change 500 and 1000 ru­pee notes in Hanu­man Ganj vil­lage on the out­skirts of Al­la­habad yes­ter­day.

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