by Meera Sanyal
The stories below are an indicative sample of the widespread distress faced by 65 per cent of India’s population, who depend on agriculture for their livelihood.
The price of tomatoes at Girnare mandi near Nashik, Maharashtra dropped to as low as 50 paise per kg, making it impossible for farmers to recover the investments they made while sowing. Faced with the alarming fall in the price of tomatoes, Yashwant and Hirabai Bendkule, a poor adivasi couple, were forced to destroy their crops because keeping them standing would result in a greater loss.15
‘Because farmers living in remote villages face a huge problem of walking long distances to reach a bank to exchange their higher denomination notes, some middlemen take their notes at a value discounted by 20 to 30 per cent,’ says Udit Sahu, in-charge of a Customer Service Point in Dungriput village of Koraput district, Odisha. ‘The situation with farmers who have sold their kharif harvest is all the more dire because they all have invalid `500 and `1,000 notes in cash. They are not able to avail the limited exchange facility because the banks ask the farmers for documents like Aadhar or PAN card, which most of the tribal and backward farmers of Kandhamal district do not have… Local cooperative societies and the district cooperative banks do not accept the old currency notes. And many of the farmers do not have accounts with nationalised banks to deposit the cash available with them. So, farmers having cash with them are in a helpless state.’16
Bandu Ghormade had no choice but to accept the old `500 notes from the procurement agent and a lower price of `200 less for every 40 kg crate of his freshly harvested eggplants. ‘If I didn’t, my produce would have gone to waste,’ said the farmer in his late 40s. He grows carrots, spinach, eggplants, and okra in Chicholi, Betuk district, Madhya Pradesh. ‘Those who grow grains or cotton can hold on to their crop, I can’t.’ Since 8 November, Ghormade has been selling at a loss at the mandi every day, while his son is going to the nearest bank, five kilometres away, to stand in queue and deposit the notes.17
Jitender Chowdhary, a farmer in Sonipat, Haryana, brings around 12 sacks of cauliflower every day to the mandi by paying the transporter `15 per sack. While each sack of cauliflower usually sold for anywhere between `200 to `250, it is now being sold at `80 or less. ‘I can’t do anything. If I don’t sell it for this price, I will only have to feed my produce to the cattle,’ said Chowdhary. In September 2016, he sowed cauliflower after getting a loan from his arhtiya (commission agent). ‘I supported the prime minister’s move initially but I had not imagined its fallout. The cauliflower season lasts only for a month and a half. I don’t know what I will do if I don’t manage to sell it now. I run the risk of doubling my loans,’ said Chowdhary.
The backbone of the fruit and vegetable mandis (wholesale markets) are the arhtiyas, who are the channel between farmers and distributors. Both the farmer and the distributor depend on the arhtiyas for logistical requirements like porters, transporters, credit accounting, etc. A successful arhtiya builds a huge network of farmers across India, and, sometimes lends money to farmers for cropping and other inputs for farming. Since the note ban, the arhtiyas of Azadpur mandi, in Delhi, have been caught between a rock and a hard place.
‘The farmer needs cash for his daily requirements. Therefore, most of our transactions were cash-based. Today, the distributor, already reeling under a demand crunch, does not have enough new notes and the farmer is not ready to accept old notes,’ said Mukesh Tyagi, an arhtiya, who deals with cauliflower farmers and buyers. ‘All our money is legal and all of it is accounted for. We are feeling the pinch only because we work in a cash-intensive market,’ he said.18
Sellers of Eggs, Poultry, Fish and Meat
When cash is short, people cut back on fruits and vegetables and stick to staples like lentils and rice. Being perishables, the prices of fruits and vegetables drop precipitously, as seen above.
The effect is even more pronounced on so-called ‘luxury, non-vegetarian’ foods – eggs, poultry, fish and meat. Since most of these products are sold either live or unprocessed in India, they have a very short shelf life. The market for these products also crashed after the note ban, severely affecting the livelihoods of all those engaged in their supply chains.
‘December to January is peak season for egg sales. We sell over 15,000 eggs each day and prices are high. But, since markets are facing shortage of currency notes post-demonetization, our trade has encountered a rough patch. We could not sell even 8,000 eggs in one day and prices are falling with every passing day,’ said Abdul Aziz, a wholesale egg seller in Aurangabad. ‘Winter is generally a time when sales go up by around 100 per cent owing to the healthy nature of the product. However, this time people are spending less on items like eggs, and hotels have decreased their demand too.’19
‘Chicken is sold at a huge mark-up price by retailers. Before demonetization, the cost of chicken across Maharashtra ranged between `120 and `160 per kg. In the last few days, the prices have plunged to as low as `80–`120 per kg across the state. The demand for chicken generally spikes in winters which leads to an increase in price. However, this time even retailers have been forced to sell at `70–`80 per kg,’ said Nazim Sayyed, a poultry retailer in Mumbai.20
Anju Thengue is a village in Kerala with a population of 16,732, out of which 8,475 are women. Sixty per cent of the women work in the fish trade. ‘One box of fish used to be auctioned for at least for `1,000, but now the box is not being auctioned even for `100,’ says Karmali, the official controller of the fish auctioning. Unsold fish are being dried and sold in packets and fisherwomen are trying to sell them on the Varkala-Kovalam beach road. But selling the packets is also not easy. ‘Instead of paying `100 for a dry fish packet, most of the buyers are giving `2,000 notes and seeking change.’
The Mamballi Nedughadam Fishermen Society, situated at the centre of the village, is the apex agency of 160 women’s self-help groups comprising 3,000 fisherwomen. Most of them don’t have a bank account in any of the commercial banks. The scenes at the society office are turning ugly. One desperate fisherwoman vented her ire against the society authorities. ‘I have deposited my entire savings with the society,’ she said. ‘But I am not permitted to withdraw the amount. Please help me if you can.’ Says an office bearer: ‘According to the new regulations, even a cooperative society cannot withdraw more than `24,000 per week from a bank. We will only have `1 lakh to distribute amongst 3,000 women before Christmas. We are helpless.’21
Dairy and Milk Producers
India is the world’s largest producer and consumer of milk and dairy products. Much of the success of India’s white revolution is attributed to the success of milk co-operatives across the country. Large milk federations like Amul buy milk every day from district-level cooperatives, who buy their milk from block- or taluka-level cooperatives called sanghs, which in turn purchase milk from village mandalis. At the base of the milk supply pyramid is the individual dairy farmer, who has no time for bank visits between grazing his cattle, milking them, and delivering milk twice a day to village dairy mandali.
When the Central Government banned all district cooperative banks from exchanging or receiving deposits of demonetized currency notes, this proved crippling for members of dairy cooperatives.
Nearly 50 days after demonetization was announced, the farmers from the village of Timba were on their third trip to the bank in Gujarat’s Surendranagar district to try to open new accounts. They had travelled the 30 km from Timba to Surendranagar town in a group, so that they could help each other with the seemingly overwhelming process of filling out the bank forms correctly. ‘I haven’t been paid for any of the milk I sold in the past 50 days,’ said Govindbhai Rabari, a 70-year-old dairy farmer who looked utterly lost in the corridors of the bank. ‘Hundreds of us have spent the past seven weeks without any money.’
‘Dairy farmers need cash to buy essentials for their cattle and their homes, and I usually pay them every 10 days for all the milk they have delivered,’ said Tejabhai Tamaliya, the se
cretary of a milk cooperative in Surendranagar’s Diksar village. Tamaliya’s cooperative has 150 members, whom he needs to pay at the current rate of `5.9 per kilo fat of milk (the amount of milk that would yield 1 kilo of fat). Since most of them haven’t been paid in 50 days, Tamaliya now owes his members a total of nearly `15 lakh. ‘I have the money in my account, but a withdrawal limit of just `24,000 a week is too little, and the cooperative bank is not even able to give me that much cash each week,’ said Tamaliya.22
John Kokkat, proprietor of the Popular Dairy Farm in Bhiwandi district, Maharashtra has 156 animals (10 cows and 146 buffaloes), which provide 900 litres of milk per day collectively. He worries they may not survive the demonetization. With no fodder to feed them, they may soon just be dead meat. Kokkat faces a double-edged sword. First, he is worried that he doesn’t have enough legal tender to pay for the special feed for his cattle. ‘I have enough money to pay for the coconut oil-cakes, but it is in the old `500 and `1,000 notes. I also have over `7 lakh stuck in the market. I need to pay my creditors and labourers, but as I could not deposit cash, two of my cheques to the feed supplier have already bounced and I had to plead for a few bags of feed. No supplier can accept these defunct notes,’ he said.
The situation at Padgha weighing bridge was equally grim, laden with overflowing hay from the trucks. Kalpesh Nichite, a trader from Sahapur, said, ‘We collect the hay from farmers at `8 to `15 per bundle and with the help of six daily workers. Now, the weighing bridge has stated they won’t be taking the old currency so the traders and dairy owners are forced to keep bills pending. It is a chain reaction and we all are suffering.’23
Tea Gardens and Workers
There are three main tea producing areas in India. The Terai, Dooars and Darjeeling region (with approximately 363 gardens employing 4.25 lakh people); Assam; and south India (where tea is grown on 1.19 lakh hectares across Tamil Nadu, Kerala and Karnataka).
The management of several gardens suspended operations post-demonetization as they had no cash to pay workers. The stories below are illustrative of the distress faced by tea plantation workers across the country.
Tirrihannah Tea Estate, about 35 km from Siliguri, employs 1,200 permanent and 1,300 casual workers. In December, the management suspended operations because of non-availability of cash to pay wages. ‘Tirrihannah has not made a single payment since the note ban announcement on November 8,’ said Gautam Ghosh, general secretary of the union. ‘There was no agitation and workers did not prevent the dispatch of tea (produced in the gardens). The management has used the cash crisis as an excuse to shut down the garden.’24
After finding himself reeling under mounting debts and no liquidity, Achyut Bhuyan, a worker of Pipratoli Tea Estate at Chabua in Dibrugarh district of eastern Assam, committed suicide last week. He consumed poison because of his mounting debts. The worker was plunged into a debt trap because of irregular payments by his employer on account of the cash crunch precipitated by demonetization.25
According to the Association of Planters in Kerala, the plantation sector in south India has been going through a crisis. ‘The situation became worse owing to the ill effects of demonetization. Most migrant workers left plantations as they did not get wages on time.’26
Tourism and Those Dependent On It
The winter months are peak months for tourism in India. As a result of demonetization, both foreign and local tourists got stranded without cash, resulting in losses across the tourism chain. Small guest houses and hotels, transport operators, tourist guides, right down to sellers of trinkets – everyone lost an entire season.
The stories below were from Rishikesh, but were reflective of the situation at every tourist destination in the country at the time.
A small guest house, where foreign tourists stay for long periods, said that foreign tourists began to leave after the note ban was announced as they found it difficult to cope with the new situation. ‘Overall business has gone down by 70 per cent and we have been idle since demonetization. Everyone from the owner to the waiters has been affected by the note ban,’ the manager said.
Anil, who owns a store that sells gifts, ornamental, and decoration items, said, ‘In winter we have good sales from foreign tourists but their number has been reduced to just 10 per cent of the expected norm. Our overall sales are down to 50 per cent of what one expects in this season. Conditions are still relatively secure for people like us, but it has been worse for poor people, workers and villagers.’27
Small Retailers and Traders
Indian retail trade is estimated to have a turnover of approximately `14,000 crore per day, of which 60 per cent is generated in urban areas and 40 per cent in rural areas.
A report by India Spend28 suggests that there are at least 12 to 14 million kirana (neighbourhood grocery retail) shops in India. In a sample survey of such shops in January 2017, they found that nearly 80 per cent of the shops reported losses over 50 per cent or higher and less than 38 per cent had adopted cashless methods of transactions. Shopkeepers continued extending credit to regular customers but, in the process, were harming themselves financially. They were also forced to buy more goods than they needed because the suppliers couldn’t provide change.
Yogesh Prajapati, a kirana store owner, said, ‘Earlier, I would have one customer every hour at least; now days go by without a sale.’
Ambika Kumbhar’s small kirana store off the Maharashtra state highway 35 has seen a drastic reduction in the number of cars that stop by after the note ban. ‘I earn only `200 to `300 a week, and cannot even afford to pay my electricity bill any more.’
Mangalwara’s Patang Bazaar in Bhopal has been a gloomy place post-demonetization. Nawaab, a kite seller whose family has been in this business for more than 50 years, said, ‘There were three permanent shops in Patang Bazaar in addition to many hawkers who sold kites on the roadside. But November 8 put most hawkers out of business and led to closure of two shops… Earlier, sale of kites would start from November, but this year, we are still waiting for orders and customers for Sankranti. Last year, we sold over 50,000 kites during the festival, but this year we just hope to touch 50 per cent of last year’s sale.’29
Faizal Ahmed, a shopkeeper at the Ashok Nagar market in Delhi running a stall selling women’s garments for the last 25 years, said, ‘We sell cheap products and our customers are mainly from the lower strata of the society. Our customers don’t have credit or debit cards. Many of them don’t have smartphones and, those who have, don’t know how to make digital transactions. Our profit margin is between `50–60. If we start using cards we will have to increase the cost of our products to meet the surcharge rate, which is not feasible. The USP of our business is cheap prices and we cannot increase them beyond a point.’30
The Textile Industry: Cotton Farmers, Weavers, Mills, Looms and Textile Merchants
The textile and apparel sector is the second largest employer after agriculture and contributes two per cent to India’s GDP. Most workers in this industry are migrant workers who are paid in cash and who do not have any bank accounts. The entire supply chain from the cotton farmer, to ginning factories, to weavers and power looms and ultimately wholesale and retail cloth markets was severely impacted by demonetization, with most of the workers being sent back home as farmers and factory owners did not have enough cash to reimburse them.
Some of their stories.
‘About 30 vehicles with cotton come to our mill every day,’ said Mukesh Patel, who runs the ginning facility at Pashupati Mills in Ahmedabad. ‘On January 6, we had only five vehicles coming to sell cotton. The highest number we have seen after demonetization is 15… Farmers accept only cash as they have to pay their farm labour in cash,’ said Patel. ‘Cashless does not work there.’ Patel is worried as his factory, which used to run 24 hours a day for four months, will now work only for 12 hours a day for eight months, since he will now receive cotton from farmers at a slow pace, over a longer period. ‘My labour costs will be double this year
, and my operational overheads will rise,’ said Patel. ‘This year, we don’t have any option, do we?’31
For the struggling saree weavers in Banaras, demonetization has come as a fatal blow. Decline in business coupled with withdrawal limits have led to a cash crunch and they aren’t able to pay labourers or procure raw materials to run their businesses. ‘What will my family eat, if I use up the little cash I have managed to get to purchase raw materials?’ asks weaver Akhlaq Ahmed, 48, who has three daughters. He has stopped his business as he struggles to recover his dues.32
Bhiwandi, Maharashtra, holds more than a sixth of India’s 6.5 million power looms, and is one of India’s largest power loom hubs, providing direct employment to a million people. ‘Only 20 per cent of these (Bhiwandi’s looms) are running today,’ said Mannan Siddiqui, president of Bhiwandi Textile Mills Association. ‘Notebandi ne humko paanch saal peeche fek diya (Demonetization has set us back by five years),’ said Asad Farooqi, 65, a labour contractor who has been running more than 100 power looms for about 30 years.
At Ahmedabad’s New Cloth Market, trade had fallen by 80 per cent, according to Rajesh Agarwal, secretary of the market association. Sixty of his 80 embroidery workers had returned to their villages after notebandi (note ban). When sales dropped, his cash dried up – except exports, the revenues of which he received through a bank account – so he could not pay salaries. ‘Workers, prefer to go temporarily jobless than endure the hassle of opening accounts in already stressed banks,’ said Agarwal.33
‘The worst impact is on the small and micro-exporters as they are mostly dependent on cash payments. They employ a fairly large number of people and serving them is critically important… In Tirupur, there are around 350 ATMs and 7 lakh people, so one can imagine what the situation would be. It will still take a lot of time for things to get settled,’ said Vijayakumar, MD, CBC Fashions Asia P. Ltd., Tirupur.34