VULNERABLE

Nearly 100 million tribals are at risk of being crushed by Modi’s demonetisation

Quartz india
Quartz india

The last six weeks have been tough for the residents of Pakur, a district in Jharkhand, since prime minister Narendra Modi’s move to demonetise Rs500 and Rs1,000 notes on Nov. 08.

“The first week the policy was announced we all rushed to withdraw other bills or trade in our newly bad notes for good ones,” Hansda Sowvendra Shekhar, a Pakur resident, wrote in the New York Times on Dec. 20. “Again and again, by the time I’d reach a cash machine, often after waiting in line for four or five hours, it would have temporarily run out of cash or the network would be down.”

Since Modi banned the notes, effectively pulling out 86% of India’s currency in circulation, residents of this hamlet in eastern India—which has a sizeable population of Santhals, one of the country’s major tribal groups—has been struggling.

Digital payments, something that Modi has been pushing for since he came to power, are a distant dream in the village. Only Pakur’s best hotel accepts debit and credit cards, or Paytm’s online wallet service, wrote Shekhar, a member of the Santhal tribe.

Pakur is not alone.

India’s rural poor have been subjected to tremendous challenges in the process of demonetisation—and the country’s tribal community may have been hit particularly hard.

At 104 million, tribals comprise (pdf) some 8.6% of India’s population. And a majority (89%) of these tribals live in rural areas, according to data from the 2011 Census. That’s 93 million tribals in rural India—just a little over Vietnam’s population of 91.7 million.

Although prime minister Modi has been pushing his flagship Jan Dhan Yojana (people’s wealth scheme), which entails giving every Indian a bank account, the challenges to operate accounts and ATM or debit cards still persist. People in tribal areas say that although they have opened accounts under this scheme, they weren’t taught how to use ATM and debit cards, according to IndiaSpend, a data journalism publication.

The literacy rate among tribals is significantly below the national average of 74.04%, which can be a major hindrance for using digital payment services and operating bank accounts. Moreover, poverty among this group is rampant in rural and urban areas. This means many may not be able to afford mobile phones and internet connections, which are key for digital payment methods.

And even if these indigenous tribes do get access to cheap mobile phones, internet penetration in rural India is still dismal. For every 100 people in rural India, only 13 are internet subscribers, according to the Telecom Regulatory Authority of India (TRAI) (pdf). In some rural parts of India, many tribals don’t even know what the internet is, so using it for digital payments is out of the question.

Social indicators for India’s tribals
Literacy rate 58.9%
Population below poverty line in rural areas 47.4%
Population below poverty line in urban areas 30.4%

There is, therefore, a legitimate fear that Modi’s drive to crack down on rich tax evaders could soon turn into a nightmare for India’s rural tribal communities. But with large sections of the urban population still reeling after demonetisation, how quickly can the government fix the system in the hinterland?

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