PENNY PINCHING

The life and times of four Indian families in the two weeks since demonetisation

Quartz india
Quartz india

In the two weeks since prime minister Narendra Modi demonetised India’s most commonly-used currency notes, locals have been struggling to adjust. From spending hours in queues to exchange their old notes for the new Rs500 and Rs2,000 bills to cutting back on expenses in the midst of an overwhelming cash crunch, here are the stories of Indians trying to get by, from New Delhi to Tamil Nadu.

Single mother: No medicines in Mumbai

On the night that demonetisation was announced, Shabana Sayyed’s daughter had fallen ill. A single mother with two other children to care for, Sayyed checked her wallet to see if she could afford to buy medicines for her daughter’s headache and fever.

“All I had was Rs300 in usable currency,” said Sayyed, 35, a domestic worker from a dense slum near Mumbai’s Bandra railway station. “The rest was Rs6,000 in Rs500 and Rs1,000 notes, and no one gave me change for it.”

Sayyed puts in a 12-hour day working in six different homes, earning Rs20,000 a month. Her cramped 80 sq ft room in the slum costs Rs5,000 a month in rent and with daily household expenses of Rs400-500 savings are rare.

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Shabana Sayyed’s home. (Scroll/Aerefa Johari)

With demonetisation, Sayyed’s family has been forced to cut costs across the board to make sure their limited cash resources don’t run out too quickly.

“Last week it took me four hours of waiting in line to get my old notes exchanged,” said Sayyed. “And because no one had change for a Rs2,000 note, I had to buy rations on credit for six whole days.”

Sayyed says vegetables and food grains have grown more expensive in the past 10 days because of the impact of demonetisation on wholesalers and retailers.

“It is hard enough to buy bhaji and dal, so we have been forced to give up our regular meat,” she said.

As younger mothers in her slum struggled to buy milk for their children, Sayyed had to walk to work—more than 3km one-way—because she didn’t want to waste precious cash on autorickshaws. “Still, I haven’t been able to get medicines for my daughter.”

How it adds up:

  • Income before demonetisation: Rs20,000.
  • Income now: Her next monthly salary is due in the first week of December.
  • Cash exchanged: Rs6,000 in three trips to the bank.
  • Cash deposited: None. Does not have a bank account.
  • Expenditure before demonetisation: Rs6,000 monthly rent, Rs400-500 daily expenses.
  • Expenditure now: Cutting back on essentials. Made Rs300 last for the first three days.

Hairstylist in Patna: Living precariously

Prime minister Narendra Modi’s decision to do away with Rs500 and Rs1,000 notes has not been good news for Guddu Sharma’s family. Sharma, 24, lives with his wife and two sons near Patna’s Boring Road and runs a men’s salon about 30 minutes away. Since the prime minister’s announcement, he said, earnings have fallen. His salon, which charges Rs40 for a haircut, used to make anywhere between Rs1,000 and Rs1,200 on the weekend. But now, he said, that has fallen to Rs500. Regular customers have stayed away. If they do drop by, they are asking if they can pay later, Sharma said.

Based on where he lives, it seemed the salon generated just enough to support Sharma and his family.

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Guddu Sharma near his home in Patna. (Scroll)

How is Sharma coping with this liquidity crunch? Not by going cashless. That’s in part because he doesn’t have a bank account.

“I tried to open one but they wanted too many proofs of identity,” Sharma said. “I have applied for an Aadhaar card and will try again later.”

Instead, his family is cutting back on expenditure. “We did not buy new stock for the salon. And we did not pay our house rent this month.”

Such deferred expenses, he said, have reduced his monthly expenditure by Rs12,000. But that isn’t all, he’s also had to make other cuts, even on essentials like food.

“We are buying less,” Sharma said. “If we earlier bought vegetables for Rs40, we are now spending only Rs20. We used to buy a bora [sack] of rice at a time. But, right now, we are buying three or four kilograms at a time. That works out more costly as well.”

These are difficult times. Even as incomes fall, food prices are starting to rise. Between Nov. 08, when Modi made his announcement, and now, the price of wheat has climbed from Rs22 to Rs28 a kilogram, according to Aruna Devi, Sharma’s neighbour.

How it adds up:

  • Income before demonetisation: Rs1,200 per weekend.
  • Income now: Rs500 over the last weekend.
  • Cash exchanged: None. Had spent all savings during the festival of Chhath.
  • Cash deposited: None. Does not have a bank account.
  • Expenditure before demonetisation: Rs12,000 on house rent and salon provisions.
  • Expenditure now: Deferred both rent and provisions. Cutting back on essentials.

Farmer in Tamil Nadu: Wilting crops

After 10 days of daily visits to the cooperative bank, R Vedagiri was finally able to get some money in hand last week. But the single Rs2,000 note was not adequate for this farmer from Royalpattu village, 40km from Chennai.

It has been three weeks since Vedagiri’s single acre of land was tilled and paddy seedlings were sown. But he is yet to receive more than Rs15,000 out of the Rs20,000 he is entitled to every 10 months from the cooperative bank. That’s because the new currency notes have been slow to reach most such banks across rural India.

“The cooperative bank cannot lend us money now, so for the whole of last week, our crop has been standing without pesticides,” said Vedagiri, one among many farmers from Royalpattu turned away by the bank several times last week.

While sowing the crop, Vedagiri had employed 20 labourers but he has been unable to pay them.

“I feel so ashamed passing by them each time,” Vedagiri said. “Every time they ask me for their money, I have to give them the same excuse. They too need money to eat.”

Most times, after the crop is harvested, Vedagiri makes a profit of Rs20,000. To make ends meet, he also works on one of his neighbours’ fields once in a while, earning Rs200 a day. But with little money coming from the cooperative bank, Vedagiri does not know how he will get through this cropping season without incurring a loss.

“Neither the cooperative society nor moneylenders are taking our jewellery and giving us loans,” he said. “Also, it has hardly been raining this season. I am worried that our crops will soon start turning yellow.”

With hardly any savings in the bank, and with a weekly expenditure of Rs2,000, Vedagiri is worried.

“My only consolation is that my daughter is studying engineering for free, being the first graduate of our family,” he said.

How it adds up:

  • Income before demonetisation: Rs2,000-3,000 a week, Rs20,000 after harvest.
  • Income now: Rs2,000.
  • Cash exchanged: None. Restrictions on exchange of notes at rural cooperative banks.
  • Cash deposited : None.
  • Expenditure before demonetisation: Rs2,000 a week.
  • Expenditure after demonetisation: Rs1,500.

Shopkeeper in Delhi: Drop in sales

On Sunday afternoon, 75-year-old Lal Chand Jain settled into a chair at his garment shop in Old Delhi’s Chandni Chowk. Heaving a sigh of relief, he said, “Finally, things have settled down.”

The Jains, who hail from Dehradun in Uttarakhand, have been in the garment trade for three generations. The shop is managed by the septuagenarian and his two sons, Manoj and Yogesh.

“We accepted old notes for a good few days even after the announcement but now we have stopped that,” said Jain. But even after that, they had to turn away customers who showed up hoping to pay with them.

“The cash in the drawer soon dropped down to zero,” he said. “In a few days, we landed in a situation in which we also had to refuse customers who came with the new Rs2,000 notes as we had no change. Sales dropped severely,” Jain explained.

But the cash situation has since eased up. Fishing out a healthy bundle of Rs100 notes from the drawer to give change to a customer, Jain said, “For once, we all were scared as the announcement was made days after the winter wear collection had arrived. However, the problem was temporary.”

He added: “It is a very good step that the government has taken. Those who sleep with black money stashed within their mattresses will have a hard time.”

Asked about the family’s expenses, Jain pointed towards his son Manoj who was caught up in an argument with a customer who wanted to buy four sweaters but only in exchange for old notes. Manoj finally gave up.

“For home, we procured everything on credit, from vegetables to milk and grocery,” said Manoj. “It was not a problem for us, or any of the Old Delhi-based business families, I assume, as most of them are known to the traders and vendors. We are settled here for over 70 years now.”

Asked if they had to cut down on anything on their shopping list, Jain said the family leads a simple life and only spends money on essentials. His list of essentials, however, includes fruits and milk, which he considers necessary for a healthy diet.

“I do not remember any instance (of cutting down expense) except for my grandchildren complaining once or twice about having to cut down on fast food,” Jain said.

Jain did not want to give numbers for either his income or expenditure.

Reporting by Aarefa Johari in Mumbai, M Rajshekhar in Patna, Vinita Govindarajan in Royalpattu village in Tamil Nadu, and Abhishek Dey in Delhi.

This piece first appeared on Scroll.in. We welcome your comments at ideas.india@qz.com.

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