The din over the banning of high denomination notes should now have subsided but now, over a month later, it is still making waves. Or are waters sought to deliberately be muddied?
In cities, we sympathise with our country cousins, bemoaning the tough situation they are facing. Yes, they do indeed face a tough situation, tougher and more uncertain than our urban lives with (largely) guaranteed salaries. They need something a lot more basic than easy availability of new notes at the ATM or bank.
A fortnight after the PM’s announcement banning Rs. 1,000 and Rs. 5,000 notes, I visited Saswad, a taluka town about 32 kms from here and neighbouring villages, to look at the impact of the note withdrawal. This is the drought prone Purandar taluka where rainfall this year was its usual, ie, less than normal. They are staring at drought-like conditions later in the agricultural year.
The big issue here was not, not even for the big landowner (who owns over 3 acres of land) the withdrawal of the notes. His issue was more basic and his anger was that District Central Cooperative Bank (DCCB) and its affiliated cooperative banks weren’t allowed to accept these high denomination notes. Public sector and the urban cooperative banks had no issues (the queues weren’t that long or bad) accepting the notes but these politically-affiliated banks did. The landowners were threatening violence. With soothing noises being made, let’s hope their threats don’t come true.
But it brings home the crux of the issue regarding withdrawal of legal tender for the Rs. 1,000 and Rs. 500 notes: it is a political issue and the economy is a political economy, every act of the government impacting politics and the economy.
From an urban citizen’s view, the need for infrastructure to support agricultural activities, in the form of cold storages within reach, availability of credit from someone other than the money lender seem issues more critical than the note withdrawal.
The people crying out were the small and marginal farmers. It is their produce which was lying unsold or sold at such low rates that it was better they just throw it. And their vendor, the retailer at the bhaji mandaii who no longer had the money to buy fresh vegetables faced the same problem: no sales. With no cold storage available, these perishables were going waste and the incomes of people as well.
For the landless labour, it was purely academic. They had maybe one Rs. 1,000 or two Rs. 500 notes which they went and promptly exchanged at public sector banks. Yes, they all have accounts, thanks to the gas subsidies they are drawing through the Jan Dhan Yojana accounts.
Curiously enough, it is the poorest who seemed the least affected. The carrot of the gas subsidy which led to the creation of Jan Dhan accounts in public sector banks has ensured they can change their own little stock of high value notes. This also makes them targets for others to launder their unaccounted cash, an area of serious concern and scrutiny.
And politics takes over, the real issues of farmers falling by the wayside.
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