Demonetization, a firsthand experience

Demonetization- a term not so-well known till November 8, 2016 to a common citizen of India, is now a household word in India. By definition, it means the notes seize the opportunity to be used as a legal tender. The move is the latest attempt of the Indian prime minister to curb the corruption, which is so deep rooted in every possible aspect of the Indian system.

Modi along with the majority of the mass, who earns their daily bread in an honest way feel that it is indeed a way, as it brings in the accountability for the stashed money since last four decades (the last couple of times demonetization in India happened in 1946 and 1978). This money has been used for destabilizing the prosperity in terms of spreading fake currency, sponsoring terrorism, rising inflation and more importantly promoting corruption.

This was a bold step by any government around the world and it was obviously expected to attract more uneasiness than welcoming note. The momentary quake was not easy to digest and some people even suffered strokes. Some deaths were purposely delayed to call them as a suffering due to inconvenience (caused by demonetization) and political parties tried to draw a mileage in the process! Some irresponsible political figures took the drama to the next level. Even some section of media reported that people were paid to stand in queues and the lines were diminishing instantly after 10 am! Notwithstanding the above facts and non-facts, common people did suffer a lot of inconvenience due to lack of adequate funds to cater to 1.3 billion people. Situations were at times artificial as few corrupt bank staff in some places passed on the cash to wealthy people back door and getting a commission in the process, thus denying people long standing in queue of their necessities. Many private and public sector banks have been reprimanded due to their acts, Axis bank reaching the top of the list! I personally think this could not have been planned in a better way, considering the secrecy maintained by the Government to make the landmark announcement not leaked to section of people. The government and in particular Modi must be commended for its act.

As per RBI estimate, the total amount of currency held by public is 16,000 billlion rupees, out of which 86% is contributed by 500 and 1000 rupee notes, which is less than 14000 billion. World bank estimates the amount of black money to be 23.2% of the GDP. Combining these two parts together, the total amount expected to be injected in the system was 17000 billion rupees. In a weeks’ time after demonetization, the amount of deposited cash by public was 4000 billion rupees, which is a quarter of this estimate and the number increased to a third of total amount by 18 Nov, i.e. ten days. As per the latest report on 28^th December, the amount deposited, touched 14 billion rupees, which also means that people within a fifty days' window, found a means to convert their money from unaccounted to accounted transactions. The intention of the government was however to provide safety to the household incomes at the cost of some taxation that never saw the inclusion into the banking system. Coming back to my share of experience, when all these changes were having a global media coverage, here goes a firsthand experience.

We landed in India exactly after a month, where the shock had been absorbed to a good extent, the ordeals caused to the daily wage workers, common people due to lack of cash in various forms was both gathering media attention and dust at the same time, depending on the sentiments and places of choice. We were aware of such a situation and were bracing ourselves to face what was to come on our way. With 4000 INR in cash (with notes that were to be defunct for everyone except the banks) in our hands and a working ATM card, we landed in Bangalore, the IT capital of India around 0100 AM in the morning. After immigration clearance and collecting the baggage, we were to face the world of demonetization in reality than what media was reporting.

A cab was to be booked to reach our local destination. Though, I was aware of the existence and sprouting cashless entities, which offer monetary services in a digital way such as paytm, freecharge, e-wallet from almost every nationalized banks, many startups to mid-sized companies, mostly used for paying services and utility bills including smooth operation of the taxi services such as ola cabs, uber cabs, airtel recharge etc. However, NRIs and people living outside India are a very small size of customers for such companies, who they are never worried of. Hence, most of the companies expect their customers to have an Indian mobile number for being able to avail their services. Unfortunately, we did not have that choice at the moment, we landed on the Indian soil (this is for the reader being aware of the fact that Jugaad is an essential component of Indian life and one can obtain a Indian mobile sim card without much hassles in a very short span of time- that is not the subject of discussion here :)). So basically we had no money and telephone but still boarded a cab, trying to get integrated into Modi’s digital, demonetized India.

Our friend arranged us a local sim, which enabled us an instant paytm customer. I downloaded Uber, Olacabs and Paytm app in my phone instantly to make myself one of the adopters. The rest was history, I instantly was cashless (not cash starved) as uber was in my doorsteps in 2 mins, every time I wanted to step out even within 2 kms radius without having to head for bargains or even for changes. Paytm worked seamlessly for the recharged amount through netbanking and allowed me to cover all small expenses such as airtel charge, movie tickets and taxi payments such as Uber or Ola. That was bingo, I was enjoying the rides since I used to get out of the car in my destinations and just say thanks to the driver (no cash exchange nor bargains). I mustered myself “say no to autos, and yes to Uber.” Olacabs fared quite poor compared to Uber. Even if I mind the former as an Indian company with inclinations towards it, I felt in this space, make in India was not working, as it failed to embrace the customer delight and even grievances. Nevertheless, Paytm was found to be a useful piece of app, sometimes offering discounts with different vendors since it channelized further transactions for these vendors. I gathered that the company has become enough rich even to sponsor a cash rich BCCI test match that is supposed to be ad revenue sucker (better word). To summarize, the experience was like – digital India was working.

The next step was to see how the world was getting affected by Modi’s changes in first hand. We went to an SBI, where we hold the account to withdraw some cash. Well by 9^th December, there was no option of exchanging the old currency for new one (upto 2000 INR), so the only choice was to withdraw cash from the bank with a maximum of 24000 INR (per week). The que after a month was not so long, could be as big as 10 people in a row. Before my turn arrived, I witnessed some heated exchange of words between the bank staff and the customer about giving small currency instead of 2000, which hits hard for those who need to transact in 100’s not 1000’s. The old rule book also played a role while some bank employees took advantage of the dressing sense of its customers to deal with them.

Upon my turn, the first question I was asked was do I hold the account in that bank? That apparently sets precedence or at least prioritize the customers. I was audacious to ask for 23000 INR so that I could get a change of 1000 rupees in denomination of 100 J. That’s the maximum of change you receive since most of the ATMs were dried up without cash or lack of calibration (for dispensing new notes) or there were long queues like this. I experienced that notes of 2000 were aplenty, whereas 500’s were still scarce. It took us good one week to have a glimpse of our first 500 note, as sort of prized possession. Armed with some cash we started our epic tour of rest of our trip.

Every tiny to big shops had a similar picture as below at cash counters as if people push it on them! There were hesitations to release any 100’s even if we shopped upto 1500 rupees against an exchange of 2000. We received bundles of 10’s and 20’s in some places since 100’s seemed to be a precious possession that the shop owners did not want to part with. 20’s and 50’s were the new kings in the absence of 500’s and 1000’s. Our wallets started swelling, thanks to the additions of 10’s and 20’s and few 2000 notes. This was a funny experience since my wife would always release a few 20’s from a bundle, she was handed over by some shops few times. It even made sense to carry the vanity bag with vanity J

 Coming back to the experience and some tittle-tattles, Rahul Gandhi has been dreaming of a new currency, once he hits the cabinet and reintroducing Rs. 20 denominations like this. Congress just had guts to discard 25 paises and hence Rahul might be interested in reintroducing this.

Some even rumoured this!

I heard some and sometimes a lot of displeasure about the inconvenience created but the honest people and mostly poor voiced the move was welcoming, especially assuming that it is meant to punish the rich and crooked (not the only ones in Trump’s world).

Back in my hometown, I heard that in Odisha the ATM queues were shorter. The chief minister was the first one to support Modi on this and then joined Nitish Kumar. Even a small village in Puri district went completely cashless and made history by introducing e-wallet even in the betel shop. This village called Nuagaon with 300 odd population was the first to introduce digital India campaign in completion in Odisha.

There is a lot of advertisement campaigns both for shop owners as well as customers, suggesting government incentives, being aired both by state and central government. A lot of awareness is being created. Though there has been fringe elements shedding crocodile tears (for the loss of all the unaccounted money) in the veil that it created larger inconvenience to common man. This includes ArvindKejriwal, Rahul Gandhi and Mamta Banerjee. Some people like Mayawati, Samajwadi Party leaders had to drink the poison and accepting the fact that this is an irreversible process. They tried to associate all deaths during this period to ordeals caused by demonetization and made a political furor in this process. Raga even tried mentioning some earthquakes he was to unveil but ended up being trolled yet another time.

Some corrupt officers in UP still managed to convert their black (unaccounted) money to white with help of middlemen. The Government and IT department cannot stop all these. At least it is a welcoming step to curb it in parts, if not fully. At the same time, there were some gentlemen like Naveen Patnaik, Nitish Kumar who showed some commitment by accepting the move made by the central government as a welcoming one.

The steps at least brought in good amount of taxes in government treasury, which was hogging the beds and bathrooms of the rich. The ordeals have not ended and will continue for a while. But, I do believe that it is a step towards a better India. In the process, Government is managing to push for digital India more as a necessity than as a wish list for the commoners. My father is still a cash person and believes that he will survive without having to adopt to the cashless India but I hope that he would embrace the change, when it becomes inevitable. At least things are becoming streamlined, transparent. Sixty years of legacy of corruption would take time to get away but would happen, if those don’t like it have a will to change it. I pretty much liked this picture. I am in for it.