August 09, 2020
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Cause Over Convenience

How urban India is coping with the sudden cashless break

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Cause Over Convenience
Cashless In Chawri Bazaar
An Old Delhi market on the morning after
Photograph by Jitender Gupta
Cause Over Convenience

In the backseat of a black-and-yellow taxi in New Delhi Railway Station, a driver is lying down with his arms folded behind his head. You can’t see his face in the darkness, but he is a man much in demand today. He has already saved the day for several travellers left stranded without tenderable cash. “I’ll give you Rs 400 for your Rs 500, and Rs 700 for Rs 1,000. At Chandni Chowk, Rs 1,000 is going for Rs 600,” he says. “A lot of passengers have no other option.”

Gauging the reactions to demonetisation in Sadar Bazaar and Ajmeri Gate area, Old Delhi’s hub of small traders, reveals a clear class divide. Despite the gloom due to lack of business, a big section of the shop-­owners and traders—said to be the BJP’s traditional vote-bank and trading in hardware, construction material, house-fittings, wedding stationery and kitchen utensils—seemed to be largely supportive of the government’s move, unlike the rickshaw pullers, daily wage workers, migrants and customers in urgent need of cash.

Many shop-owners said they hadn’t made any sales even by the end of Wed­nesday evening. Taking the long view, Navin Gupta, who runs a shop dealing in pneumatic ­fittings since 1969, says, “Despite the current inconvenience, I believe this will improve the black money situation and, as the prime minister said, help curb terrorism as well.” Indeed, the claim that demonetisation will streng­then the fight against terrorism—and the way PM Narendra Modi called upon the people to join the fight by bearing with a few days of inconvenience—appears to have enthused the people more than the idea of weeding out black money. It made the crisis seem a lot more personal. “We are stakeholders in the country’s security and this is perhaps the first time we have realised it pays to be honest and there is, in fact, is a premium on it.”

The father-son duo of Pradeep and Tarun Jain, sitting with their backs against the wall in a shop packed with brass rods, feel the same way. “I think Pakistan must have been printing more Indian currency than their own,” jokes Tarun. “Dem­onetisation here will put a lot of pri­nting presses out of business there.”

But what does Bhagat Ram care for black money, terrorism and Pakistani printing presses? A Modi supporter in the last election, for the past 25 years he has been making ends meet by manually dragging heavy material from wholesalers’ godowns to shops or to customers. He has Rs 270 left in his wallet from Tuesday and could earn nothing the next day. “Look, we’re just sitting around today. This measure may work for the rich, not for us. Unlike them, we have no options when we get no work.”

Leave no Quarter

In 2011, the UPA government ­announced that coins of 25 paise and less would be withdrawn from circulation from June 30 that year

No one is denying that black money needs to be curbed, but there are many who would agree with Shambu Nath Singh, who works at an Old Delhi store and believe the measure is “disproportionate in terms of how much black money actually exists and the negative impact it will have on people’s lives”. And there are also those, who, on being asked whether the poor are disproportionately affected, would agree with Pradeep, who says, “There is no such thing as poor people in this country. You think the vegetable seller outside my shop is poor? Well, he’s selling green peas at Rs 120 per kg and doesn’t even pay tax. It’s difficult for the labourer, but it’s hard for us too. People don’t pay attention to our problems, bec­ause we wear shirts and have moustaches.” Even as he is saying this, a stranger walks in from the street and takes out from his kurta-pocket a wad of Rs 100 notes, tied with rubber bands and packed in plastic. He offers it to them. They refuse. “We need Rs 100 notes, but why should I take this stranger’s money?” says Pradeep. “We prefer to take money only through NEFT or RTGS payments.”

Singh says, “Black money has many routes, many sources and is stored in diamonds, property and offshore acc­ounts. They aren’t being tackled here. Instead, if I’m a sadhu and you’re a chor, the government is making me suffer.” Chandra Prakash, the store’s proprietor, quips, “No doubt the motive is  good, but it should have been designed to not hit us like this. The government can become hero or zero by this move.”

Meanwhile, on the day the banks opened for the first time to the public for depositing demonetised notes in exchange for new notes, the income tax department carried out raids in Delhi, Mumbai and a few other places, cracking down on people making high-value deposits. The raids were also aimed at those who were reportedly selling the demonetised currency notes at a discount and gold at a premium (reportedly Rs 45,000-50,000 per 10 grams).

Cut to the heart of Bangalore’s business district. On a good day, Shiva can sell Rs 3,000 worth of tender coconuts on the street. But, on Wednesday, when Rs 500 and Rs 1,000 currency notes were rendered worthless, he could barely manage half that. He had to turn away many who came asking if he would change a Rs 500 note (one even offered him Rs 50 for the exchange).

“Whatever profit I earn in a day is soon spent on household and personal exp­enses,” he says. Just the other day, he had spent a small amount on his daughter’s fancy dress event in school. So, even though he has a bank account, not much actually ends up in it as savings. He is hoping his sales will get back on track in a couple of days.

Small businesses or individuals who transact only in cash have perhaps faced the immediate impact of the liquidity crunch following the demonetisation of high-value currency notes, although it’s likely to be a temporary one. But will the cash-only method of transaction that we have been used to actually fade away and usher in the era of digital payments?

“The small trader will adjust to the new way of life,” says Abey Zachariah, CEO of GoodBox, a Bangalore-based startup that hosts an app platform for small businesses to connect and transact with their customers. It currently has 5,200 merchants such as groceries, restaurants, laundries and local cable networks on its platform.

“One reason why small vendors wouldn’t sign up for digital was because everything needs to go to the bank account. We are now assuming a lot of unaccounted cash will vanish. So, we expect that to change totally and there will be more and more digital payments,” says Zachariah, who reckons things could move in that direction in the next one or two years. “It’s a chain reaction. From any angle, it all points towards formal money taking over and informal money coming down significantly.”

Just four per cent of retail payments are being done digitally, and the rest through cash and cheques, according to the Confederation of All India Traders, which launched a nationwide campaign to promote digital payments among traders. A May 2016 study by Google and A.T. Kearney predicted that 55 per cent of online sales volumes will be driven by cashless transactions by 2020 from about 40 per cent today.

However, some say it is unlikely that the cash-on-delivery models would become ext­inct anytime soon, considering there is a huge rural population that still transacts only in cash.“Cash-on-delivery is going to stay,” says Sridhar Gundaiah, founder of StoreKing, a start-up that offers an ass­isted e-commerce platform where customers in rural areas or small towns place orders through its kiosk placed at kirana stores in their vicinity and pick up the goods from the same store. Besides, he points out, a big section of the people preferring cash-on-delivery for e-commerce purchases are in urban India. “People will always carry cash for the convenience, it’s a mindset. There is a big difference between convenience and irregularities,” he says.

By Anoo Bhuyan in Delhi and Ajay Sukumaran in Bangalore

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