How Demonetisation Impacted Construction Workers

An excerpt from 'Demonetisation: From Deprivation to Destitution' focuses on the effects of the policy change on consumption patterns.

Demonetisation was a shock administered to the Indian economy, but it had a tremendous effect on people as well, especially those who relied almost solely on cash transactions. The impact of the overnight banning of old high-value currency notes is still being felt.

Some sectors were hit more than others. One of them was construction – where workers are paid in cash on a daily basis.

A new study, the first of its kind, based on primary data collection and evaluation has recently been published. The study, conducted by economist Ritu Dewan along with researcher Radha Sehgal, set out to document on a quantitative basis the “impact of demonetisation in all its various avatars” – which includes on health, education and food consumption. It was conducted during April and May 2018, said to be the high season for construction work.

The study, supported by ActionAid, Maharashtra, has now been released as a micro-book titled Demonetisation: From Deprivation to Destitution. Below is an excerpt from the book on how demonetisation impacted consumption patterns.


Impact on consumption items

Source of healthcare: A direct consequence of demonetisation has been on the health status of the working class, one which has long-term impacts on not only capacity to work but also the capacity to come out of poverty. Expenditure on health and health quality, as is widely known, is the primary reason for not only living in poverty and not only staying in it, but also slipping into it. Three aspects have been focused on: one, expenditure on medicines; two, impact on hospital admissions and three, change in source of health care.

Ritu Dewan and Radha Sehgal
Demonetisation: From Deprivation to Destitution.
Himalaya Publishing House, 2018

Only 31 workers reported non-use of medicines during the three relevant months. Of the remaining 196, half reported a delay as well as an increase in expenditure on medicines. Delay in treatment obviously impacts recovery levels. Even though chemists were permitted to accept old notes for a number of days, several did not comply. The main reason, however, was that as most construction workers live at the subsistence level, there is little surplus to be saved which can be spent on medicines beyond one single day.

The patriarchal health construct functions tightly, with 55% of those who either had to reduce or delay purchase of medicines being women. The 12 workers who told us that their medical expenditure actually increased during these three months categorically stated that this was directly due to the impact of demonetisation. Several of them claimed that waiting for long hours in long queues in the blazing sun with no possibility of water, food and toilet facilities had adversely impacted their health status.

Ayyappa did manage to raise some amount of new money to purchase medicines for his daughter, but it was not enough to cover the cost of what the doctor had prescribed, and he was therefore compelled to reduce the dosage, thus rendering the treatment ineffective.

Apart from estimation of increase and decrease is the fact that several of the workers went to pharmacies or self-medicated as a substitute for accessing proper medical advice. Several others also said that they could not access medical care because they did not want to miss out on any opportunity of getting employment during that period and neither could they afford to take any day off to visit the hospitals or clinics. 

34.8% of the respondents reported that they or their family members required hospital admission in the three months of November 2016 to January 2017. Of these 79 persons, 26.6% could not get themselves or someone from their family admitted and angrily attributed the cause of this to demonetisation. Women, of course, have been discriminated against more than men, accounting for 57% of those who could not afford admission. 

Ritu Dewan

For many workers, borrowing from equally poor neighbours and informal sources such as contractors became the last resort. Aruna said that she was very embarrassed to ask her neighbour but had no option as her son was ill. In fact, she did not have any money whatsoever even to buy basic fruits which the doctor had prescribed.

Shivdas tried not to borrow from his contractor, stating that borrowings are seen as loans against advance wages and that he had not wanted to reduce his future earnings as often interest was calculated on these advances.

The two major sources of health care among these construction workers are public hospitals (45.9%) and private hospitals and clinics (41.5%), the others being health centres, vaidya and chemists. Several private hospitals refused to accept the banned notes and about 12% shifted to public hospitals during the three months of demonetisation. As expected, more women than men reported this shift, even though the difference is somewhat marginal.

Babban, in Kapurbawdi, Thane, pleaded with the two private clinics where he was compelled to take his relative to accept the banned notes but was rejected at both places.

The saddest instance is probably that of Hiraman. Along with his ill son who required urgent admission in the better equipped public hospital which is located at some distance and with no money to travel, he managed to get a lift. However, he did not have even Rs. 10 to pay for the admission form and had to come away desperate and disheartened.

Educational expenditure: Similar to the shift from private to public health sources, is that of the shift from private to public schools, combined sadly with the withdrawal of several children all together from school during the first three months of demonetisation. Even the children in Anganwadis under the ICDS were affected, both in terms of quality and quantity of food – no eggs were provided, and the rice-lentil mixture was watered down. In fact, for the first few days meals could not be provided at all.

Also read: The Vast Difference Between What Demonetisation Achieved and How it was Perceived

A total of 65 children across 227 households were affected either in the form of withdrawal or shift, 60% of them because of non-payment of fees, 24.6% in order to earn and supplement the desperately low family income, and 15.4% were withdrawn for several other reasons such as migration to the village as a result of unavailability of work, high transport costs, illnesses, marriage, etc. 5 children were moved from privately owned education institutes to government-owned ones.

Radha Sehgal

Reruka told us that in her basti 3 children were forced to shift their schools due to non-payment of fees: one moved from English to vernacular medium which had lower fees, and two were compelled to shift to semi-English from English medium schools.

Interestingly, gendered household differentials are marginal being one percentage point lower for those headed by women. However, this can also reflect, paradoxically, the fact that fewer children of female-headed households attend schools in the first place.

Aakhiya’s daughter, who studies in college, sometimes bunks a day of classes to join catering services at weddings in order to provide income for that day’s meals.

Jaya is extremely upset with what she considers is the duplicity of the policy. “How will we implement ‘Beti Bachao, Beti Padhao’, if our own girls are forced to work instead of studying?”

Excerpted with permission from Demonetisation: From Deprivation to Destitution.

Ritu Dewan was the first ever-woman Director of the Department of Economics at the University of Mumbai. She is currently Vice President of the Indian Society of Labour Economics and was President of the Indian Association of Women’s Studies. Radha Sehgal, after working for three and a half years as a Research Associate at Centre for Development Research and Action, she is now a Programme Officer at ActionAid India – Mumbai Regional Office.