Demonetisation: Life in a 'cashless' village

Published: November 25, 2016 - 13:29 Updated: August 8, 2017 - 15:48

Narendra Modi's decision to demonetise higher currency notes has hit people in rural hamlets the hardest due to the poor penetration of the banking system in these areas


On November 8 when Prime Minister Narendra announced his government’s move to demonetise currency notes of the denomination of Rs 500 and Rs 1000, the sleepy hamlet of Ezra, in East Chamaparan district of Bihar, had barely any premonition of the hardship in the days to come.  In sharp contrast to the hysterical scramble that was witnessed in cities across the country, the elders in the village of Ezra slept through the night oblivious, only finding out in the morning. While the youngsters with smart-phones saw flashes on their Whatsapp groups of news regarding demonetisation; the collective inertia of the village towards the news remained.

Though the village, has lurched out of the bucolic road-less state it was in a few decades ago, the penetration of banks remains abysmal. The nearest bank is four and a half kilometres away. For the last fortnight people of the village have been running from pillar to post to get their money exchanged. This has been a burdensome task as their is only a single branch of Bank of India and Gramin Bank of India which caters to them. Rahul Tiwari, a resident of Ezra, rued the lack of banks in the area and pointed out how many people had to stand in line for days at a stretch to get their money exchanged.

The two banks which are located nearby in Sangrampur, have seen visits from close to a 1000 people every day from neighbouring villages eager to deposit their money or get currency notes exchanged. While the queues and lines have not shortened people reach the banks as early as four am in the morning to get money, “There are over 1000 people from all around the panchayat who come and stand in line every morning. The situation has been under control, so far, not because the banks and ATMs are dispensing cash but because the is some respite from the heat  due to the oncoming winters,” said Tiwari.

75 year-old Ravindra Tiwari was due to travel to Delhi for a follow-up with a doctor, with just Rs 500 of valid legal tender in his pocket. Lamenting on his circumstances he said, “The situation has been grave for me as I cannot stand in line for hours, the only option I had was borrowing from either family members or relatives for my journey to Delhi. I would not have been able to travel to Delhi if my tickets had not been booked well in advance.”

While the banks face long queues in Sangrampur, the conditions in Areraj, a small city eight kilometres away from Ezra is no different. Areraj has 6 branches of different banks with 7-8 ATM booths. Most of these ATMs are yet to be calibrated to dispense the new Rs 2000 and 500 notes.

Another problem creating distress for the people of Areraj is the continuous failure of uplink and downlink in banks. Due to poor internet connectivity, these banks are not able to update their financial records in a timely manner. This throws a spanner in the smooth functioning of the bank. Sujit Tiwari said, “the banks have money, but the poor internet connectivity has led to delay in both withdrawal and deposits in these branches, most of the time these banks have no uplink which is delaying everything, giving rise to frustration and anger towards the government’s decision.”

The situation is no different in Motihari district. Motihari town is nearly twenty five kilometres away from Ezra. It is one of the biggest towns in the region with branches of almost every bank that you can think of. Atul Pandey, a resident of Motihari who had recently inaugurated his retail business on Diwali, had hoped for a steady and growing business when he set up shop. The days since demonetisation came into effect have dashed those hopes willy-nilly. With valid cash increasingly scarce and difficult to procure people have been only shopping for essential goods leaving businesses like Atul's out in the cold. Atul has been managing both his business and personal life on the buffer cash that he had reserved for an emergency situation. “The rush at the banks have increased over last few days here in Motihari, as people from neighbouring villages and settlements have started turning to city banks as post offices and local branches have stopped dispensing and exchanging money due to the cash crunch,” he added.  

Businesses are not the only one to be affected due to 500 and 1000 rupee notes being scrapped. Weddings have been thrown into chaos with families plagued with worry about how to pay cash to vendors.

Meanwhile, due to the paucity of information and little awareness about the rules many have crowded the banks with wedding cards in the hopes of getting the stipulated Rs 2.5 lakh for the occasion.

However, the worst hit is the agricultural sector. Ezra, which relies on the income from farming is facing hard times. The sowing season for the rabi crop is about to begin where they grow potatoes, wheat and corn, but with the cash-crunch the Rs 7,000 or 8,000 to procure seeds has become difficult to come by.

The Bihar government had initially expected the crowd to lessen after a week, but with things having escalated legislators are now demanding more time from the people to provide some relief. The villagers of Ezra who were enthusiastic supporters of Narendra Modi ever since he “braved” the bomb blasts in the BJP’s Patna campaign rally back in 2014, now do not support him in his latest endeavour. Many said that while the decision to end the legality of these notes was a big move for a government, it was highly unplanned and the government failed to see the problems that would ensue from such a hastily timed move.

While Modi may have the gumption to make fun of the cash crisis during a private dinner in Japan, it is highly unlikely that the villagers of Ezra and crores of others like them are going to share his sense of humour and levity.