Demonetisation and the silent suffering of Bharat

‘Why doesn’t the informal sector, supposedly badly hit by demonetisation, protest or scream in pain?’. Defenders of demonetisation often pose this question. The question assumes that the suffering poor people face because of government policies always finds political expression. If you want an answer to the question, please listen to Sachin Jadhav. His story takes us through the long chain of economic loss and suffering of the rural population.

Jadhav, in his twenties, used to work in a small factory in Yeola, a town in Maharashtra. The factory manufactures plastic sheets used to stop water percolation from farm ponds. The water level in the wells starts declining as the feeder streams begin to dry up after the monsoon. Farmers then pump out the water and store it in the ponds. This water is used for rabi (winter) crops such as onions. Usually, during this period of the year there is a high demand for these plastic sheets. Having sold the kharif crops, farmers have cash in hand and can invest in farm ponds. But this time, due to demonetisation, they got payments in scrapped notes or cheques and could not cash them. They had no option but to postpone farm pond construction to next year. Naturally the demand for plastic sheets dropped by nearly half and Jadhav and three colleagues who earned Rs250 per day were laid off. Jadhav has been jobless for nearly a month now and the future looks bleak as demonetisation has brought most small industries to a grinding halt.

But Jadhav’s suffering is only the tip of the iceberg. The postponed ponds took away the potential employment of hundreds of poor landless labourers and marginal farmers who would have been hired for their construction. But there are indirect consequences too. Farm ponds play a major role in irrigating onions in the rabi season. This is the variety of onion that has a high shelf life and farmers store them in the hope of better prices (provided they are lucky enough not to suffer the export bans the government imposes frequently). Non-availability of the farm ponds would subject this crop to water stress and affect quality and yield, leading to further losses. Naturally, the labourers involved in harvesting and transportation would also suffer income loss.

The cash crunch is also forcing small farmers to postpone the transplantation of onions, as they do not have money to pay labourers. This will have a big impact on the yield as the onions transplanted late are bound to suffer water stress at a later stage.

The urban organized sector (India) fails to notice this ripple effect on the rural informal sector (Bharat). The impact on the organized sector creates a visible effect. The suffering of Bharat is diffused, invisible, but hugely more painful.

Kausarbhai, a small shopkeeper in Yeola, says that his sales are down by at least 60% after demonetisation. He also sells batteries specially made for farmers. These batteries can be clamped around the forehead. Their sales pick up during November, but the demand has now dropped sharply.

Why do farmers need these batteries and why only in this season? Yeola, like most of the rural Maharashtra, receives electricity only during night. So, farmers need to spend the whole night on the field to irrigate the farm. These tiny innovative batteries are a great help in protecting the farmers from snakebites and even for driving away wild boars. Are we going to brush off the effect on farmers as some minor inconvenience of demonetisation?

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For small farmers, goats are a major source of supplementary income. But with demonetisation, Eknath Gaikwad, a marginal farmer in Yeola, had to sell his pair of goats for just Rs600. This is half of what he would have received under normal circumstances and it won’t even recover the money he spent on rearing the goats.

So, if the rural informal sector is not protesting against demonetisation it is because Sachin Jadhav, Eknath Gaikwad and Kausarbhai are too weak and unorganized to do so What would compensate the loss of these poor people? The answer: nothing.

Poverty and political weakness, however, are not the only things that would explain their silent suffering. A large section of the poor feels happy for the supposed punishment demonetisation has caused the corrupt and rich. They are not aware that most of the black money has found its way into bank accounts and that it’s Prime Minister Narendra Modi’s oratorial skills and effective political messaging that still sustain the narrative of ‘demonetisation as a crusade against the corrupt’.

To be sure, if Modi does deposit a few thousand rupees in their accounts just before the next parliamentary election, as speculated by some analysts, they will see in him a Robin Hood transferring money from the corrupt rich to honest poor. He would still bag their votes. Such is the magic of his politics.

Milind Murugkar writes about contemporary economic and political issues.