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In rural UP, demonetisation causes ‘temporary pain’ but draws support

Demonetisation has caused huge disruption, yet the support for Modi’s move remains high across kasbas and villages of UP. People are willing to go through tangible suffering for what is, at the moment, intangible good.

black money crackdown Updated: Nov 18, 2016 12:54 IST
Prashant Jha
People take photos with the new Rs 2000 notes after exchanging it at a bank in Noida, Uttar Pradesh.
People take photos with the new Rs 2000 notes after exchanging it at a bank in Noida, Uttar Pradesh.(Burhaan Kinu/HT Photo)

Inconvenienced but all for it -- a small market in Mirzapur perhaps best captures the prevailing mood in eastern Uttar Pradesh following the government’s surprise move to scrap Rs 500 and Rs 1,000 banknotes.

Ram Sudhar runs a small electric goods shop in Mirzapur’s Jamui bazaar. He was watching news on television on November 8 when Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 banknotes had ceased to be legal tenders.

Two days later, he went to a wholesaler in Varanasi to procure wires, cables, light bulbs and other supplies. He offered to pay in banned currency. The wholesaler refused and told him he could take goods worth Rs 50,000 and pay him later.

Over the week, Sudhar has seen his daily sales dip from around Rs 4,000 to Rs 1,000. The local market has only two banks and cash supply is limited, which means customers have little money in hand to buy from him.

Read | We did the math: Replacing all the old currency will likely take several months

He is in a bind -- he owes money to the wholesaler and his earnings have dropped.

What does he think of the note ban? “Bhaiya, it is not a ban. If it was a ban, we would have been destroyed. They have only asked us to deposit the notes and given us time. I think it is a very good move.”

Despite the inconvenience? “If our jawans can protect us 24 hours, we can stand in the bank queue for a few hours in national interest,” Sudhar said, referring to soldiers standing guard at the borders.

In Mirzapur’s Jamui, Shatrughan Bishwakarma (left) and Ram Sudhar (right) have both seen drop in their shop sales. Yet, they support the move. (HT Photo)

And what is this national interest? Sudhar has a quick answer -- money will come into banks, people with black money will be ensnared and the economy will be swachh (cleaned). “In two weeks, it will all be fine.”

Next to Sudhar’s shop is Shatrughan Bishwakarma’s small workshop where he repairs motorbikes. Business has been bad.

“Who will come to repair bikes if they have no money? I used to earn about 500 a day, it is now down to 100,” says Bishwakarma.

And what does he think of the move to withdraw high-value notes? “Money will flow into banks. It will increase government’s resources and will lead to a more equal society. For too long, too much money has been with too few people.”

A little ahead on the same road is Prem Singh’s medical store. He greeted Modi’s announcement with relief – he had deposited a “substantial” sum in his account the same morning.

Sales have dropped but Singh is not worried. His books, he says, are clean.

Read | Why Prime Minister Narendra Modi has already won the demonetisation gambit

“Many people who have hoarded crores in cash will have to bring it in the market. This will help improve the economy.” But reports -- including in HT -- have shown that cash accounts for a small chunk of the black economy. Singh has a ready answer for it as well. “That is why Modiji has said he will go after property next.”

Is he a BJP supporter? Singh, a Kurmi (other backward class or OBC), says “No, I was with the Samajwadi Party. The local MLA is a relative. But this time, I may vote BJP.”

Caste matters a lot in India’s Uttar Pradesh and especially now with the state due for the assembly election early next year.

There are many corrupt people in the BJP’s ranks, he says, but no one dare get involved in corruption. “Modiji is against corruption,” says Singh.

Sudhar, Bishwakarma and Singh, who come from different castes, are not exceptions in small town Uttar Pradesh.

Every conversation -- in HT’s travels across Mirzapur, Varanasi, Azamgarh, Jaunpur -- revolved around how there was a lot of pareshani (inconvenience) -- people don’t have access to their own money and are struggling to meet daily needs.

Yet, most interactions ended with how “Modiji” – the demonetisation move is identified more sharply with the PM than his government -- has done the right thing.

There are murmurs of dissent as well – from those worried about their livelihoods and also those responsible for helming the change.

Tangible suffering, intangible good

Many, it appears, are willing to go through immediate suffering for long-term good. There is a startling paradox at play here, difficult to decipher and unravel through only conventional analytical categories.

The impulses for support are varied. Some have faith in Modi’s commitment and the government’s stated vision of ridding India of black money. Some hope this will pump in money into the economy, eventually leading to welfare measures. Some believe it will eventually lead to a drop in prices and corruption.

Others have a more wishful assessment -- greater equality. Yet others are driven by a deep desire to see the rich punished -- and are willing to absorb relative loss as long as the “amir seth (the rich businessman)” is inflicted greater pain.

Sipping tea at the Bihari Dhaba in neighbouring Chunar’s bus stand, Chhotedhar says he managed to deposit old notes and withdraw some money as well. A marginal farmer and a die-hard Bahujan Samaj Party supporter, Chhotedhar desperately needs cash to buy seeds for upcoming planting season but he supports the move.

Chhotedhar is a BSP supporter and a small farmer. He supports demonetisation, says more money will lead to investment in the poor. (HT Photo)

“There is temporary pain. But in a month or two, notes will start coming in and all will be well. People are saying that the money that will be collected from the rich will then be invested in the poor,” he says.

Will people connect with Modi or get upset with him? Chhotedhar takes his time before he says, “Thirty percent will get irritated and 70% will be with him. I am with BSP but this is good work.”

Up ahead in Mirzapur district is the Rajgadh bazaar. At the Kisan Degree Inter College, students have left and the school hall is doubling up as a wedding venue, a common practice in the area.

Read | Demonetisation: Why India’s poor will no longer believe the news

Amit Patel is sitting outside. His brother-in-law’s daughter is getting married. A small businessman, Patel says the demonetisation announcement left them worried, with the wedding just a week away.

“But we managed. We made TV and fridge, tent and catering payments by cheque. And we had to take furniture on credit. I think this is a good move.”

I ask him why?

“I think this will reduce EMIs. Real estate value will come down. And everyone will be forced to do use cheques,” says Patel. Close by, a college teacher, who doesn’t want to be named, is not convinced. He says the government failed to manage the change.

Amit Patel organised a family wedding in the middle of the cash crunch. He believes that the move will reduce interest rates and real estate prices. (HT Photo)

Similar sentiments play out in other districts.

Standing in a bank queue in Jaunpur for more than four hours, an elderly woman says she is in a great deal of difficulty. “I have no money at home. Modi sarkar has started new money.” So, is the government wrong? She responds immediately, “No, the government did the right thing. If big, big people are troubled, how does it matter if I am troubled?”

Another woman, in the same queue, agrees. The government is on the right, it has forced the rich to declare their money. “They made money by suppressing the poor, so what if we have to face some hardship.”

Notes of dissent

Patience, however, is not infinite.

There is a thin line between being upset and angry. Some have crossed that line, a sign that should worry the government.

Sechu Ram is a Dalit who works as a labourer in Delhi’s Azadpur market. Back home in his village in Azamgarh, Ram is angry with Modi. He had to run around to deposit money and faced trouble in organising his niece’s wedding.

His wife speaks up. “If we exchange money they give us a 2,000-rupee note. What will I do with that big note? The government is wrong.” When asked if this would help remove black money, “How do we in villages know what is black money? What does it mean?”

Sechu Ram (left) is a Dalit labourer who struggled to find money. (HT Photo)

Lalitesh Pati Tripathi is the Congress MLA from Mirzapur’s Marihan -- a rural constituency.

He argues the timing of the move has upset farmers. “This is the cash intensive time of the agricultural calendar. They need money for seeds, fertilisers, and daily labour.”

But, they have no money. Cash hasn’t yet come into many cooperative and rural banks for them to even avail the limits set by government. “The smaller farmers will not be able to take credit too.” Right now, Tripathi and his constituents can share a joke about the liquidity crisis. But, he says, it will not take too long for the jokes to turn into anger.

Read | Farmers fear lost crops and income after Modi govt’s demonetisation move

Those on the front-lines of effecting the money switch are worried too.

The manager of Union Bank of India’s Bajrangnagar branch in Jaunpur, sitting in his dark office, hears out anxious customers as security personnel mind the crowd outside.

There are many waiting to meet him. A former school principal needs Rs 10,000 urgently to pay his wife’s medical bills. He is carrying her medical reports and bills. A brick-kiln owner needs Rs 20,000 to pay his workers. Others have brought wedding cards to make their case. Their demands are within withdrawal limits set by the government but the manager, who doesn’t wish to be identified, still can’t help them.

Congress MLA Lalitesh Pati Tripathi believes that the timing of the move is wrong because it comes during the most cash intensive period of the agricultural season. (HT Photo)

Where is the cash?

He has not received a single new Rs 500 note and has limited quantities of Rs 2,000 notes. The bank is only giving out a maximum of Rs 2,000 per customer. “If I start giving out money according to the limits, I will be able to serve only six to 10 people.” The branch has 40,000 accounts and caters to rural pockets. “People have been patient but it is at a breaking point. We need restoration of cash supply immediately,” he says.

His views are echoed by a senior Uttar Pradesh police official. The officer, who has handled several sensitive situations in his more than 20 years of service, warns, “We are all really worried. If the chaos persists, if people get angry, if we cannot control crowds, if there is even one incident of firing, then the situation can deteriorate into a security nightmare.” Both the banker and the cop offer same solution -- increase cash supply.

Despite the cautionary note and warnings, the overwhelming sentiment in east Uttar Pradesh is that of extraordinary patience, shown by some of India’s poorest citizens, their desire to absorb pain for a larger good, their faith that Modi will deliver and their wish to see the rich punished.

People are willing to be tested for 30 to 50 days. But after that, they will be the one who will test the government and Modi’s ambitious promise of a Swachh Bharat, a clean economy.

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