Demonetization - A Slice of History-R2

In our lifetimes we are witness to several historic events. The physical proximity to the event largely determines its immediacy and relevance to us. Being on a high plateau during a tsunami reduces it to so many video bytes; however, even if one amongst our city dwellers had gone holidaying to Bentota, and had to be evacuated from the first floor suite of their beach resort, then suddenly, we are staring at the giant waves ourselves.

On the evening of 8^th Nov. 2016, the Prime Minister announced to the Nation that the 500 and 1000 rupee notes that were in currency up until that moment, were being withdrawn with effect from the ensuing midnight, and, new 500 & 2000 rupee notes would be introduced. This was being done to curb the financing of cross-border terror and to get a hold on black money, both of which largely used these higher denominations.

Doing so, he earned the sobriquet of being the only chaiwallah who could wake up a billion people without serving any chai. What he served was much more potent and reams would be written in the days to come!

September had just seen the end of an amnesty period for IT dafaulters to declare their unaccounted money and legalise it by paying a flat 30 or 45% tax. Coming on the back of that move, this was hailed as yet another surgical strike. Removed as I am from being adversely impacted by either of these - even though the withdrawal of currency notes does have some effect – I am watching the whole episode with a certain degree of righteous mirth, as, all around me, the environment is suddenly injected with reactions of all types.

WhatsApp, which has been the primary aid for communicating with groups, is rife with all kinds of hilarious takes on the situation and I would like to document as much as I can of all that I have been witness to, without any intention of having a pro-active role in the process of prosecution, for I believe these are only initial steps and the noose will continue to tighten slowly & somewhat imperceptibly over time.

It started with something as innocuous as Mahatma Gandhi being imagined to be saying that he got bored looking to the left all these years so now he would like to look right. You see, his image has been flipped in the new notes, and someone remarked he is now looking in the ‘right’ direction. This, coming in the era of BJP, who rival with the Congress that Gandhi nurtured, is something.

Another thing that made me laugh was the collage of 2 images. First the well-dressed Vidya Balan in front of a mirror representing the bank employee as she is preparing to go to work; the second image of the same employee at the end of the workday represented by a disheveled Nagavalli giving you that slant, menacing stare. Such humor is possible only by the unaffected people I guess.

Elsewhere, things had not been so laugh-worthy for some. Common people who typically have a short term view of everything, and being the highly self-centered lot that we have become, took to the streets with 2 main intentions. Some of them suddenly perceived themselves to be criminals because they owned a banned (and more importantly, worthless) substance which they wished desperately to palm off to some unsuspecting recipient and absolve themselves, so that they can be ‘normal’ law-abiding citizens once again. They targeted the cash deposit facility at ATMs, went to petrol bunks with a 1000-rupee note and asked for fuel worth 50 rupees, and did just about anything ‘legal’, either to become ‘clean’ or ‘cut losses’!

The other set of people realized that they needed lower denomination notes to buy milk and bread the next morning, so they went & drained the ATMs and then headed out to the petrol bunks to ‘break’ some more big notes. Those ATMs wouldn’t work for the following 2 days because the banks had to empty out all the old notes and re-stack the machines with the new ones – hence the urgency.

As more details of the scheme poured in, it was evident that there was nothing to panic about, at least for people with ‘legal’ money. Old notes continued to be accepted at many places, albeit for a limited period: petrol pumps, hospitals, trains, bus stations, fair price shops, literally all the places that could ensure a trouble-free daily life for the common man during this period of transition.

Mind you, money coming in at these points would eventually find their way into Government coffers, so this was another indirect method of helping the ‘change’ process. So people started settling down to the next thing they know quite well: stand in queue at various places and wait for their turn, although not always peacefully.

Daily and weekly limits were set for withdrawing cash from ATMs, as also to surrender old notes for exchange at the banks. People stood in queues at all hours, so much so that one wondered, do all these people really spend the entire daily limit of 2000 rupees every day?! Do they always go about spending with big denomination notes? Why this scramble?

The point was, the announcement came on 8^th evening and banks/ATMs were to remain closed on 9^th & 10^th (although some heroes claimed to have got some money out of the machinery even during these days!), when the salaries of the working class would have been credited into their accounts. Pulling out @2000 per day implied repeated visits. Moreover, in many cases they walked out with just 1 new bill of 2000 rupees, and the new struggle was to find ‘change’ for that!

There was a small section of society who could be considered immune to all this in one respect. A petrol bunk owner for instance, who could request banks for lower denomination notes in bulk, to assist in the collection of old notes while going about daily transactions, did not have to line up before ATMs! They could use some for their personal stuff and even help a few acquaintances by exchanging notes without insisting on purchase of any fuel. Being a regular and knowing people helped.

All kinds of appeals emanated on the social media. Please don’t panic. Please appreciate bank employees as they have been under pressure since Modi came to power. Please write all the details of your transaction and self-attest the photocopy of ID proof that you wish to furnish to the bank. Please make way for senior citizens and women with infants when they visit the banks. Please don’t dump your big notes on small unsuspecting vendors. Please don’t start writing & scribbling on the new notes as well. Please buy daily needs and share it with those who have no spare cash. Please do lend what you can spare.

A friend wrote about how the local store offered an open credit to tide over the situation; another friend wrote about how he could get all his daily needs without ‘spending’ a rupee. Trust was suddenly back in fashion. It was as though a parallel, money-less economy could thrive for a while.

What was overlooked however, was that these smart business people devised a simple solution to continue with their livelihood rather than acting uptight and hurting themselves. That way, they did not accumulate ‘worthless’ money in their hands, and left their customers to fend for themselves with their big notes!

Their stock, which was bought mostly on credit, and paid for with unrecorded income sometimes, would continue to move, sell and morph into legitimate money later. So what if the payment cycle gets stretched a little, everyone else in the system would understand and accommodate. After all, when they do get paid, it’d be in new notes!

Others lined up at the banks when they opened, to exchange old notes with new. A funny list of do’s and don’ts was published to help going through this ritual. Take a chair, some sunscreen, a book to read, a flask full of hot tea and so on. A round of appreciation for the owners of new currency and an analysis of its features ensued. Some took the comic route to explain what the new 2000-rupee note could do, including taking selfies and Gandhiji slapping you if you ever tried to bribe someone with that note!

This was based on the news that had circulated before, that this new note had a nano-something which would help track its location, even 120 meters deep underground! In reality however, nothing of that sort really existed and an onion merchant was even conned with a badly made photocopy!

Meanwhile the old notes became objects of derision. An old beggar woman refused a 500 note on a video clip; some showed how peanuts and other foodstuff could be packaged with old notes; some even depicted uncharitable uses in the wash room, and, righteousness returned only when some others said, ‘have some respect, man’.

Soon, it dawned on people that the old notes in fact could be regarded as legal tender as long as the deadline had not arrived. The tea shop put up a sign to say that the old big notes wouldn’t be accepted, while in private the chettah admitted that if the need was genuine, one’s request would be accommodated. A few regular customers could convince shopkeepers to accept the old notes for now, on the assurance that they would come back & exchange them for valid notes once they laid hands on those. Their money hadn’t become entirely ‘worthless’ after all.

On the sidelines, one wondered what everyone would do in a war-like situation when currency just becomes printed paper and cannot really ‘buy’ anything. Loot perhaps?! In comparison, this was peacetime and the inconvenience was nothing.

After all, like someone remarked, is there anyone who doesn’t have even 10 rupees of unaccounted money? If there are, they may be very few. So if this is a struggle against black money, who did create & nurture it all these days? Just think about all those occasions when you have agreed not to insist on a bill, thereby saving on the tax you had to pay. Or the garbage truck guy who wouldn’t even look at you if the ‘monthly’ amount had not been paid.

While all these went on, there was another section which smelt ‘business’. The milder version was to insist that you go for a ‘tank full’, buy some more medicines, and drain less ‘change’ from the shop. Other options were more severe. The simplest of it all was to short change. Offer 4 hundred rupee notes in exchange for an old 500 bill, take or leave. Offer gold at 5k per gram and USD at 100 apiece. The accumulated old currency could always be exchanged through numerous funnels later on.

As people started speculating about the ‘safe limit’ up to which anyone can ‘exchange’ old notes or deposit them into their bank accounts, some got ready to invest in this opportunity; many set up businesses to make ‘deals’ happen; a lot more brought ‘customers’ to them, for a cut of course. The premium would jump 10% overnight, from say 30% to 40% overall. Anything was okay for someone who risked losing all of it.

Suddenly all the accounts opened for the poor people had a chance of seeing some real balances. Some small-time co-op bank staff explored whether sanctioned loans could be paid for in cash (old notes of course) by their friends, so that the inflow can be explained. Needless to say, in the silent background, Government continued to collect all the information.

Politicians too felt bad, you know. Many Congressmen expressed that the common man would be unnecessarily put to trouble, something that the BJP themselves had said when Congress had proposed a similar withdrawal during its reign in 2014. Some said more time should have been given, whereas the intelligentsia analyzed that the surgical strike could become as effective only due to its suddenness.

There were accusations that friends had been forewarned, while the general public admired the secrecy that surrounded the production of new currency and its launch. Photographs surfaced of political leaders holding an event to distribute bundles of old notes to village folk (read, farmers), suggesting that they treat it as an interest-free loan and deposit the money into their own bank accounts, to be repaid at a convenient time later on. Disclaimers followed that nothing of that sort did actually happen. Irrespective of that, one wondered where these large-hearted people were hiding when farmers committed suicide because they could not repay loans due to crop failure.

Three weeks and a bundh later, there was a fair degree of acceptance. Rumors continued to float around, analyses were aplenty. On one hand, it seemed that this was just the tip of the iceberg and a lot more was to come, by way of ridding the economy of its ills. For instance the next in line could be a crackdown on gold held by individuals, and then it could be realty holdings. These three are the traditional routes taken by people to stash away excess or unaccounted wealth.

While it seemed that the course corrections were well though-out and being implemented on a need-to-act basis, the naysayers liked to believe that a total rollback was around the corner. The common man however seemed to be ‘with’ this process of change, liked to believe it was all for the good and bore the inconveniences with fortitude. One would like to believe that this was same everywhere – in cities as well as in villages – because there is no hard evidence to think or believe otherwise, although it was said that much of the transactions in rural India happens by cash, and people needed money in smaller denominations to grease the wheels of their daily lives.

On the other hand, we read that demonetization is not a phenomenon occurring for the first time, right here in India, and it has not rid the country of the economic challenges, mainly corruption and the love for creating ‘black money’. So it is surmised that people who know how to generate such wealth, also try to stay abreast of developments in the area of conserving it. When too many people are affected, an extreme outcome – like summarily removing the cause of the inconvenience – is also not ruled out… in this case, all the hate focused on one key person. If that is written, so it will be. Life moves on.

Having said all this, if we, for a moment, consider that this is about removing corruption, let us not be naïve enough to believe that it’ll happen. It’ll morph and adopt, never disappear. For, it’s within us. More on that another day as I am writing this with a self-imposed, perhaps irrational, word limit of 2500. There you are.