[For the sake of secrecy, the government largely avoided printing replacement notes in advance. So there has been an acute and protracted shortage of cash as the government struggles to catch up. That, in turn, has proved economically damaging.]
By
Geeta Anand and Hari Kumar
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Security personnel and
activists clashed during a protest against currency restrictions
last week at the Reserve
Bank of India in Guwahati. The decision to ban India’s
largest currency notes
has led to a cash shortage. Credit Biju Boro/Agence
France-Presse — Getty
Images
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NEW DELHI — First, Yashpal Singh Rathore’s
marriage was delayed by his future in-laws, who, like most Indians, ran short
of cash after Prime Minister Narendra Modi banned the country’s largest
currency notes in November.
Then the 29-year-old lost his job when the
ensuing cash crunch hit demand for motorcycles and scooters sold by the company
where he worked, Hero MotoCorp Ltd. After that, the prospective in-laws refused
to let the wedding go forward until he found another job.
“So I lost my job and I lost my marriage,” he
said in an interview at a protest, where he shouted slogans with more than 100
red-flag-waving workers let go by Hero.
Mr. Rathore is one among a large number of
Indians — the precise number is not known — who have lost their jobs since Nov.
8, when Mr. Modi abruptly banned 86 percent of the country’s currency in a bid
to eliminate “black money,” currency on which taxes had not been paid.
For the sake of secrecy, the government largely
avoided printing replacement notes in advance. So there has been an acute and
protracted shortage of cash as the government struggles to catch up. That, in
turn, has proved economically damaging.
Exactly how harmful remains hard to
determine, but the available data is not reassuring. Demand for vegetables is
declining because people don’t have the money to pay for them, for example, and
some service industries are reporting steep job losses.
The International Monetary Fund this month
cut its projected growth rate for India by one percentage point for the current
fiscal year, to 6.6 percent. While the full impact is still difficult to
discern, there is little doubt who is suffering the most. “This has actually
hurt the poor enormously,” said Nasser Munjee, chairman of DCB Bank and a
company director at HDFC and Tata Motors.
The pain is hidden, for the most part.
Accustomed to hardship, many who lost employment were at first convinced by Mr.
Modi’s speeches that their setbacks were transitory and, in the long run, would
be worth the suffering. But as the crisis drags on, with no end in sight, some
are growing frustrated, as they told us in a series of interviews at protests
and at day labor gathering points.
Many of them, even children, are forced to go
without fruit, vegetables and milk — now unaffordable luxuries. Most had not
paid apartment rents and their children’s school fees in the months since the
cash ban. Many had sent their families back to their villages, and were ready
to give up and follow if things did not turn around soon. Sending cash to the
elderly parents they had long supported is now out of the question.
As is common in India, the workers said that
although they had worked on Hero MotoCorp’s shop floor, wearing company
uniforms, they had been formally employed by other contractors, meaning they
could be let go more easily without benefits.
Sunil Kumar, 28, who had been earning 15,000
rupees a month, about $220, at Hero, said he had been supporting his wife and
two children when he lost his job without notice Nov. 29. They immediately cut
milk, green vegetables and fruit from their diets, including for their
3-month-old and 3-year-old children. Paying rent is out of the question.
“This is like a massacre for us,” he said.
“My livelihood is gone after the cash ban. What do I do now?”
The decline in vegetable demand is so steep
that the prices of eggplants, potatoes, cauliflower and tomatoes dropped
between 42 percent and 78 percent, the NCDEX Institute of Commodity Markets and
Research said.
In the first month alone after the currency
ban, micro and small-scale service industries cut staff by 35 percent, the All
India Manufacturers’ Organization said, based on a survey. It released a study
this month saying that job losses in a variety of industries, including
automobile parts, infrastructure and construction, would swell to as much as 35
percent by March.
The anecdotal evidence is painful. Mr.
Rathore, whose wedding was postponed, is among 582 workers who reported losing
their jobs at Hero MotoCorp in November and December, as the company suffered a
34 percent drop in two-wheeler sales in December from a year earlier. Hero did
not respond to requests for comment.
Most economists believe the economy will
rebound, but nobody knows how long it will take.
In Noida, a satellite city of New Delhi,
hundreds of unshaven men in rumpled clothing stood recently at a three-way
intersection called Khoda Labor Chowk that is a gathering place for people
seeking work.
Before the currency ban, they told us, they
would be hired most days, earning 400 to 600 rupees, about $6 to $9, for a day
of carpentry, floor tiling or masonry. But since the ban, most interviewed
said, they had worked for only a week each month, at best, and even on the few
days when they were hired their wages had fallen by half.
Rafiq Ali, 46, said that having worked only
12 days in the last two months, he had sent his wife and two children back to
his native village about 200 miles away, where it is cheaper to live.
“I am surviving on roti and potato with
salt,” Mr. Ali said, referring to the flat Indian bread that is a staple in the
Indian diet. “I’ve stopped taking milk, even in tea, and eating vegetables.”
But what hurt him most, he said, was a recent
call from his wife, back in the village, who wanted money to take their sick
daughter to a doctor. Mr. Ali said he had nothing to send.
“A sense of desperation and helplessness is
emerging,” he said. “This currency ban is not helpful for poor people.”
Hoti Lal, a 38-year-old father of three, said
he could get work for only six days during the last two months, forcing his
family to survive on money his 18-year-old son made cleaning offices. Mr. Lal
had hoped his son could give up that job to go to college, but that dream is
fading fast.
His son’s salary of 7,000 rupees a month, a
little over $100, is about half of what he used to earn regularly, Mr. Lal
said. So, Mr. Lal said, his family has cut back entirely on green vegetables
and milk.
Almost every man we interviewed said he was a
migrant who had been sending a portion of his salary home to support his
parents in his native village — and had been unable to do so since the currency
ban wiped out work.
Vikas Sahu, 30, who had been working at Hero
for four years, has been unable to send money back to his parents, wife and
children, who live in his village about 100 miles west of New Delhi. His first
grader’s school fees are overdue by months, and his father took out a loan of
70,000 rupees, about $1,000, for agricultural expenses, including paying for
repairs on the family’s tractor.
“How long I can survive like this?” he asked.
With little else to do, Rakesh Yadav, 28,
shows up most days to protest, hoping for some relief from the government or
some upbeat economic news that might induce Hero to begin rehiring. He had
worked there for eight years as a machine operator on the shop floor.
To cut costs, his wife and daughter went home
to his village. He gave up the one room they had shared at a monthly rental of
3,300 rupees, or about $50, and moved in with four other men who share a room.
“I do not know where to go or what to do,” he
said.
Mr. Rathore said he thought about giving up
and returning to his village in Bilaspur district, about 750 miles south of
Delhi, but he just cannot bear to do so, at least not yet.
“What can I do in my village?” he asked.
Follow Geeta Anand on Twitter @goanand and
Hari Kumar @HariNYT
