Jalees ANDRABI, Rina Chandran - Indian farmer Zakir Khan should be sowing his winter crops now. Instead he is stuck at home after the government’s shock move to pull high-value notes out of circulation left him with no money to pay for seeds - or feed his family.

Like millions of rural Indians, Khan lives far from a bank and relies almost entirely on cash to pay for food and the seeds and fertiliser he needs.

Most of his notes are now worthless unless he can switch them for new ones or deposit them with a rural bank - many of which are yet to receive the new cash.

India’s government asked its citizens to put up with what it called the “short-term inconvenience” when it announced the move to withdraw 85 percent of currency in circulation in a bid to tackle widespread tax evasion.

But for Khan, left with just 80 rupees ($1.2) in cash and with no more food in the house, it means a lot more than inconvenience.

“The government has robbed us,” the 42-year-old told AFP in his native village in Bulandshahr district in the impoverished northern state of Uttar Pradesh.

“The government is saying these hardships are temporary, but if we are unable to sow our crops this month, we won’t have anything to eat next year.”

Huge queues have formed outside banks and ATMs in cities across India as people try to swap their old notes for new ones, while many are finding ways to carry out their daily transactions online.

In rural areas though, none of that is possible.

To add to farmers’ woes, the prices of vegetables and other staples have plummeted as a lack of cash in circulation hits demand.

Traders at Delhi’s main produce wholesale market Azadpur Mandi say business is down by as much as 50 percent.

‘People are angry’

To try to ease the problems, the government this week announced it would boost a network of mobile ATMs in vans and public-sector bank representatives known in India as correspondents, who provide rural communities with access to bank services.

They are part of Prime Minister Narendra Modi’s ambitious plan to bring banking to India’s rural masses, where many still have no choice but to rely on private moneylenders who charge usurious interest. But Mohammad Imran, who works as a banking correspondent in a village of 4,000 people, told AFP he had received barely any cash since the November 8 announcement.

“Mostly I take old currency notes from the villagers and deposit them in the bank. There is hardly any cash exchange,” said Imran, who had taken more than 2.5 million rupees in old notes to deposit, but only handed out 50,000 rupees in new currency.

“People are angry and often hurl abuse at me for not giving them cash. But I am as helpless as they are,” he said, adding that he tried to prioritise the sick and needy.

Meanwhile a worker at one government-owned rural bank said it still had no cash, 10 days after the announcement. “This is simply a rash decision,” he told AFP on condition of anonymity.

The government says the move is aimed at bringing billions of unaccounted money into the formal banking system and will ultimately boost the economy.

That message has gone down well in rural areas, where resentment over tax evasion by the wealthy runs high, and many say they are prepared to put up with the resulting hardships.

Only six people earning over 500 million rupees filed tax returns in 2012-2013, the latest figures available, even though an estimated 2,100 Indians have a net worth that exceeds $50 million.

“Corrupt people have amassed huge amounts and the poor are suffering as a result. We have to trust the government to bring about change,” said Mukesh Yadav, a villager in Uttar Pradesh.

‘Disaster’ for rural women

India’s move to withdraw high-value rupee bills from circulation to crack down on corruption and counterfeit currency has hurt rural women particularly hard, as most of them are outside the banking system, activists said.

The shock currency move cancelling 500- and 1,000-rupee ($14.6) notes from circulation overnight, announced by Prime Minister Narendra Modi last week, aims to bring billions of dollars worth of unaccounted wealth, or “black money”, into the mainstream economy and check corruption. But it has also curbed consumption, hurt the agriculture and real estate sectors, and triggered long lines at banks and ATMs as people wait to deposit cash, withdraw money and exchange old notes. At least a dozen people are reported to have died while standing in queues across the country.

The move has had a disproportionate impact on women, more than three-quarters of whom are outside the banking system. Daily labourers and informal workers, who tend to save their money in cash, have also been hurt, activists said.

“The impact on such women is disastrous; they are facing a severe financial crisis,” said Kiran Moghe, national joint secretary of the All India Democratic Women’s Association. “Women in villages and in tribal areas use only cash, and they scrimp and save to put aside money. Now they cannot even buy daily necessities,” she told the Thomson Reuters Foundation. Women often put aside money without the knowledge of their husbands, building a nest egg for themselves and their children, and as a safety net for emergencies, Moghe said.

These women do not have bank accounts as they do not have the minimum amount required, or because their husbands have an account, or because they lack the necessary documentation, according to a World Bank study of rural Jharkhand state.

Demonetisation will hurt India’s informal sector workers, numbering about 482 million, who earn cash incomes, according to consulting firm Deloitte.

In Mumbai’s red-light district of Kamathipura, commercial sex workers who get paid in cash have had to settle for smaller payments and rely on brothel owners to exchange their money, leaving them vulnerable to further exploitation, said Manju Vyas, director at Apne Aap Women’s Collective.


While banks are exchanging old notes for new, making the trip to a bank may involve seeking permission from the husband or employer, the loss of a daily wage and perhaps the loss of the nest egg itself, Moghe said.–AFP/Reuters

“This is not black money - it’s their hard-earned money, put aside with a great deal of sacrifice. Now suddenly, they are left with useless notes,” she said.

In villages, daily-wage workers are out of work or are not being paid on time, said Lalit Babur, who works with an agriculture co-operative in Sangola in Maharashtra state.

“The women are often the last priority for employers, so they are suffering more,” he said by phone. “Yet it is the woman’s responsibility to feed the family. They are doing so by sacrificing their own needs,” he said.

Not everyone is critical of the currency move. Nobel laureate Kailash Satyarthi has welcomed the action, saying it would also help curb human trafficking and child slavery.

But for women in India’s villages and for migrant workers who do not have bank accounts, it may take a while to recover, Moghe said.

“This sort of a blow can have a long-term impact on the women. Nothing has prepared them for something like this,” she said.