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Demonetisation: A rich slap on the poor

This “unprecedented” attack and lack of sensitivity have created unprecedented trouble for two sections of people – the urban poor and the rural poor
Photo: Vijay Pandey

In a withering critique of the latest edition of Prime Minister Narendra Modi’s jumlanomics, the withdrawal of Rs 1000 and Rs 500 notes under the garb of exterminating the black economy, eminent economist Prabhat Patnaik says even the British had more concern for the Indian poor than the government.

“What the Modi government has done is unprecedented in the history of modern India. Even the colonial government had shown greater sensitivity to the convenience of the people than the Modi government has done by demonetising only those notes which were possessed by the super-rich, and not those possessed by the people at large. This emergency measure is in line with the numerous other measures being currently pursued by the Modi government which has embarked on an undeclared “Emergency”: it is as fatuous as it is against the people.”

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This “unprecedented” attack and lack of sensitivity have created unprecedented trouble for two sections of people – the urban poor and the rural poor. The fact that their livelihoods was threatened by rising inflationary pressure has made their situation worse.

Take the case of Delhi’s cycle-rickshaw workers, one of the visible urban poor. Cycle-rickshaw workers in Delhi are largely migrants from rural India who are dispossessed from their traditional agrarian habitat. In spite of their differences on several issues, Narendra Modi and Arvind Kejriwal would agree that cycle-rickshaw workers need to bribe Delhi Police and other authorities regularly. If they don’t pay, they would be booked under fake cases.

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I spoke to a couple of cycle-rickshaw workers yesterday. They told me that they usually exchange small denomination notes with shopkeepers/moneylenders and take higher denominations of currency. A good number of them don’t have bank accounts and they send money to their homes through friends.

“A day without earning can completely destroy us. Most of us store money by converting our small savings into the denominations of 1000s and 500s. But now to give bribe or pay house rent, we cannot use it. Exchanging old notes would end up in losing a work day and wages”, a cycle-rickshaw worker hailing from Bundelkhand region of Uttar Pradesh told me.

Most of the street vendors in Delhi also share a similar situation. When it comes to rural India, the situation is worse. This is primarily because majority of the financial transactions in rural India use hard cash. In rural India, right from agrarian wages to land transactions, one needs cash.

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The poor penetration of banking operations has made rural poor to keep whatever small savings they have with them. Activists and researchers have documented that in crisis-ridden rural belts (all agrarian belts are witnessing massive crisis with variations in intensity and manifestation of crisis) distress sales of agrarian land are happening on a daily basis. The unexpected and sudden move of scrapping currency notes has made their life miserable. No wonder that a woman farmer in Telangana committed suicide on November 10 after learning of the currency decision. Reports point out that she had to sell her land to clear her piling debt as well as to treat her ailing husband. She became extremely depressed when she was told that her currency is illegal.

In Vidarbha, another rural belt severely affected by an agrarian crisis, the currency crisis is said to have created new trouble for the small and marginal farmers. Several farmers have advanced hard cash from moneylenders for the agrarian operations. But fertiliser shops are refusing to accept old notes from farmers. Farmers fear that chances of crop loss are high if fertilisers are not used at the right time.

Similarly, unavailability of cash has negatively affected employment opportunities. This would create hardships for Dalits and Adivasis, who constitute the majority of the landless rural labour.

Lack of circulation of cash in rural areas can intensify the agrarian crisis. This move can lead rural India into a recession. Modi may not be able to withstand the political backlash.

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Photo : Vijay Pandey

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