In Four Areas in Delhi, Average Income Has Declined By 60% After Demonetisation

A survey conducted in Munirka village, Vasant Vihar's Kusumpur Pahadi slum, Trilokpuri and Noor Nagar's Pahadi slum shows that casual labourers and small shop owners have been the hardest hit by demonetisation.

Small shops do not have customers with bank accounts who can make cashless transactions. Credit: Vyom Anil

Small shops do not have customers with bank accounts who can make cashless transactions. Credit: Vyom Anil

With the start of a new calendar year, the window period for exchanging old currency notes came to an end. A saloon owner in Munirka village in Delhi had a Rs 1000 note in his hand, asking all his customers if they knew someone in the bank. Now he has to go to the RBI and provide an explanation as to why the note was not exchanged before the deadline. He was not sure whether he should explain that his wife had stashed it away for hard days and failed to remember it on time. Rs 1000 is the equivalent of a week’s earnings after paying his shop’s rent and other expenses. Yet he was happy, he said, about the ‘sacrifice’ he had made to help catch the black-money hoarders.

Many others, however, resent the sacrifices and are growing hostile to demonetisation. This is one pattern that emerged from a rapid household survey in four neighbourhoods of South Delhi –Munirka village, Kusumpur Pahadi slum in Vasant Vihar, Trilokpuri and Pahadi slum of Noor Nagar. The survey was done during the last week of December 2016 and covered 50 respondents – 20 in Kusumpur Pahadi and 10 each in other areas.

Most of the respondents were small shop owners and casual labourers who earn and survive on a daily basis. Munirka village and Trilokpuri were somewhat better off as many residents there had regular jobs. However, Trilokpuri had a few slum areas, home to Dalits and Muslims. Kusumpur Pahadi is a recognised slum with electricity connections but an acute shortage of sanitation facilities and clean drinking water. The Pahadi slum of Noor Nagar is considered as an illegal settlement on government land, with 70 families of casual labourers and domestic workers. Aside from daily-wage labourers, the respondents included paan sellers, vegetable vendors, grocery shop owners, hawkers, electrical appliance repair shops and domestic workers.

We asked the respondents to estimate the decline in their daily earnings during the month that followed demonetisation. The average decline turns out to be as high as 60%. About 40% of the respondents reported earnings declines of more than 60%. The worst-hit area was the Noor Nagar Pahadi slum where income declined by 70%, followed by Kusumpur Pahadi (62%) and then Munirka and Trilokpuri (55% each).

Among the respondents, the hardest hit were casual labourers and domestic workers, with an average decline of 72% in their daily earnings following notebandi (demonetisation). Cases were reported where daily wages had declined from Rs 350-400 to Rs 150 or even Rs 100 due to lack of work. Earlier, we were told, work was available throughout the month, but employment came down to just five-ten days a month after notebandi. Electric appliance repair shops also faced great difficulties and reported an average decline of 75% in earnings. These shops require assistants who cannot be laid off as they are difficult to replace – and the owners find it hard to pay them because of much lower revenues. Following these were the grocery shops, paan shops, vegetable vendors and other small shop owners who all reported large declines in their daily earnings.

Some workers also reported problems with securing their wages after notebandi. For instance, domestic workers from Pahadi slum said that they were offered old notes as advance salary for the months following notebandi. Due to a lack of documents required to exchange notes at the bank, they had to decline the offer and remain without pay for many days.

The respondents’ stories of waiting in ATM and bank queues were horrifying. One of them, who owned a medicine shop in Kusumpur Pahadi, showed his swollen feet with blisters. He stood for eight hours straight in the bank queue for two consecutive days. Out of the 50 respondents, 21 did not have bank accounts. For those with accounts, average waiting time was five hours in a bank queue and three and a half hours at the ATM.

When asked about cashless payments, one of the respondents from Munirka village said that most of his customers did not have bank accounts, so cashless payments would not suit them. It was also observed that most vendors and almost all casual labourers and domestic workers did not have smart phones. One vegetable seller in Trilokpuri preferred not to have a smartphone as it was a burden to purchase and maintain, and losing it would cost an entire month’s income.

Most of the respondents expressed their anguish over demonetisation. Of the 50 respondents surveyed, 32 felt that demonetisation was a bad move, six said it was good and the rest were not sure about its implications. Those who called it a bad move reasoned that the poor masses were the main victims while the real culprits would find a way out. Many respondents doubted the banks – they accused the banks of not executing demonetisation properly and even colluding with black-money hoarders. Some respondents, however, were ready to bear the short-term pain if it benefited the country and helped to punish the corrupt.

Whatever the intention behind demonetisation, it is definitely affecting those who depend on casual self-employment or wage labour for their subsistence. More than curbing the black economy, it has curbed the daily livelihood of the poor. The idea of cashless payments may appear feasible in malls and supermarkets, but looking at the condition of the residents of these areas it may prove to be a burden more than a relief.

Vyom Anil is a research scholar at Jawaharlal Nehru University.

Join The Discussion