The Costs of Demonetisation: Brushed Off ‘Brush Nagari’; Difficult Times For Kirana Stores

A daily round-up of the human impact of demonetisation.

Lines outside an ATM. Credit: Reuters/Files

Lines outside an ATM. Credit: Reuters/Files

Brushed off ‘Brush Nagari’

Sherkot, in western UP’s Bijnor district still has serpentine ATM queues two months after demonetisation. According to the Indian ExpressSherkot produces about 70% of the painting brushes in India – and hence the colloquial name, ‘Brush Nagari’ – and employs nearly 30,000 people. But post demonetisation, the report says that about 60% of the production units have been shut down because there isn’t enough cash to pay to workers. A local brush trader told the Indian Express that even the bigger units are having difficulty coping. With only four ATMs in the town, only one manages to function intermittently.

The reduction of cashflow in Brush Nagari has brought the brush-making industry to a standstill, taking away several livelihoods. Sentiments have been turning against the BJP in Sherkot for the upcoming elections in Uttar Pradesh, and support for BSP has been rising. The BSP candidate from Bijnor told the Indian Express, “What nasbandi (forced sterilisation) did to the Congress in 1977, notebandi will do to the BJP and parivarbandi (family feud) to the SP this time,”

Difficult times for kirana stores

Ambika Kumbhar’s small kirana store off the Maharashtra state highway 35 hasn’t seen as many customers as it used to. The number of cars that used to stop by prior to notebandi have reduced as a consequence of which the shop earns Rs 200 to Rs 300 a week, IndiaSpend reports. Kumbhar told IndiaSpend that she cannot even afford to pay her electricity bill anymore. The report suggests that there are at least 12 to 14 million kirana shops in India, which makes the population affected by the losses from demonetisation equal to the population of France.

From a sample of 24 such shops visited by IndiaSpend in January, they found that nearly 80% of the shops reported losses over 50% or higher and less than 38% adopted cashless methods of transactions. Nearly 67% of the respondents said that they did not believe that the situation had changed much in two months.

Yogesh Prajapati, another kirana store owner told IndiaSpend, “Earlier, I would have one customer every hour at least; now days go by without a sale.” Shopkeepers, it would appear, are still extending credit to regular customers but in the process, harming themselves financially. They are also forced to buy more goods than will sell because of the suppliers’ inability to provide change.

The report suggests that while urban areas have been recovering slowly, the same can’t be said for the economically paralysed rural areas.

A tomato pickle in Maharashtra

With an alarming fall in the price of tomatoes, Yashwant and Hirabai Bendkule – an Adivasi couple – are being forced to destroy their crops, PARI reported,  because keeping them standing will result in a loss.

The price of tomatoes at Girnare mandi near Nashik has dropped as low as 50 paise, making it almost impossible for farmers to recover the investments they made while sowing. “Rates fell by November 11, and have never recovered,” a farmer in Girnare told PARI.

The report suggests that a number of farmers decided to plant tomatoes because of favourable rates last year. Fairly decent rates had prevailed till just before demonetisation which affected several rural households detrimentally. Bendkule is bent on planting wheat in the next season.

Another farmer, Yogesh Gaikar who had planted tomatoes on his ten-acre farm, told PARI, “I have sold 2,000 crates so far, most of them at a loss. It is due to this note ka lafdaa [mess]. Just when we were about to make some money, Modi has kicked us.”

This is just one of the many incidents that testifies to the centrality of cash for the functioning of the rural economy.

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