How Demonetisation Impacted Economic Activities in Tihar Prison

The sudden announcement of demonetisation immediately disrupted the proliferation of illegal trading in currency notes inside the prison, creating chaos, confusion and rampant corruption.

On November 8, 2016, a state of sudden chaos and uncertainty took over the nation when the prime minister announced the demonetisation of certain high currency notes. Aimed at curbing the flow of black money in the economy, the decision announced without any prior intimation had varying impact on the population; from long queues outside the ATMs for some, to loss of life and livelihood for others.

While there is still no government documentation on the socio-economic impact of demonetisation, many personal and media accounts have recorded the human rights violations directly attributable to the lack of structural preparedness for such an overarching decision.

The economic decision of demonetisation had its social consequences in prisons as well. Interviews conducted with inmates serving life sentences in high security jails of Tihar prison complex reveal that the invalidation of high currency notes impacted the dynamics of trading of goods, services, and privileges both among the prisoners, and between the prisoners and the prison staff.

Considerable impact could be seen in not just altering of established economic activities, but also how this change interacted with conceptions such as power dynamics, relationships, trust, and discipline, inside the prison.

What does the study say

The subject of the present article emanates from the thematic analysis of the qualitative data collected for a larger study on inmates serving a life sentence in different jails of Tihar prison complex. The themes discussed in the article appears in the in-depth interviews of ten such prisoners who have served time in Jail No. 3 and Jail No. 1 and are currently placed in Jail No. 14. Three out of these ten inmates have also worked in the administration of their respective jails.

The policy of demonetisation and its impact on the prison economy was mentioned by the prisoners during a discussion on the system of safety and privileges inside the prison. Some prisoners also talked about this issue during the discussion on ‘prison-staff’ relations. These interviews were conducted when prisoners were out on emergency parole as per the decision of the high powered committee to decongest prisons in light of COVID-19 pandemic. For the purpose of this article, the identity indicators of the interviewees have been kept anonymous to ensure their safety.

How cash enters and proliferates inside the prison

As per the current prison manual, inmates are not allowed to carry cash or use it for any purpose inside the jail. Each inmate is provided with some sort of a ‘smart card’ which they can use for availing goods and services. The cash deposited by the inmates and their families is added as value to their respective smart cards. Earlier, paper-based chits in denomination of Rs 10, 20 and 50 were provided to inmates for carrying out economic activities.

Despite the prohibition, currency notes dominate the system of trading inside the jails. Inmates are expected to provide cash, both to the fellow inmates and some jail staff, for availing facilities. While talking about how currency notes make their way inside the jail, an inmate said: “It’s very easy to smuggle cash inside the prison. Some inmates make capsules out of high currency notes, engulf it, and then drink a lot of water to puke it out. It’s quite safe. You can easily smuggle Rs 30,000-50,000 in one go.”

Getting access to currency notes is not just a necessity to avail better goods and services inside the jail, it’s also a privilege. Both the inmates and the jail staff are quite cognizant of the fact that the need to possess cash outweighs the inherent monetary value of the cash possessed. When the legal prohibition on using currency notes inside the jail interacts with a system of demanding cash for availing privileges, the disparities in power get magnified, new hierarchies are forged, and economic activities become highly prone to manipulative practices. The flow of cash itself becomes a trade which incentivises a few, while excessively burdening the others.

“I know some people thrive on this ‘business’, a prisoner said. “You always have to pay more than the actual value of the cash to get the same. The ‘price’ of a Rs 500 note, is Rs 800. You pay Rs 800 through smart card, you get Rs 500 in cash. I know people who make almost Rs 20,000-25,000 a day through this trading”, he continued.

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How demonetisation disrupted the established system

 The announcement of demonetisation instantaneously disrupted this trading in currency notes, subjecting those dependent on it for basic requirements to confusion and exploitation.

“Rates for Rs 500 notes soared overnight. Earlier, you could get one for Rs 800, now they were asking for Rs 1,000. Some inmates had no choice but to unwillingly comply with these exorbitant rates,” one of the inmates said.

The currency notes also have their own language, with a Rs 500 note being referred to as chota Gandhi (mini Gandhi), and Rs 1,000 note, bada Gandhi (major Gandhi). Since the demonetisation, bada Gandhi faded from the prison lexicon and was replaced by Chukunder, for lower denomination notes. Bada Gandhi might have ceased to exist, but its exit process was marred by corruption, deceit, and favourable arrangements with the prison staff.

In terms of the relationships among the inmates, the sudden loss of value of certain currency notes weighed heavily on those who were trapped in the system of debt or protection money. Inmates who found themselves trapped in the lower rungs of power became increasingly vulnerable to those whom they owed cash for the most basic necessities inside the prison. As many inmates had to pay cash to those yielding power for ensuring their security, demonetisation immediately exposed such inmates to both the uncertainty of danger and threats from the extortionists.

Increasing vulnerability to exploitation, extortion and corruption

Inmates believe that certain prison staff excessively benefited from the transition period that immediately followed the announcement of demonetisation. Inmates who were carrying old currency notes had to get them exchanged for the new ones, thus, prison staff became their only source to lawfully participate in this process through banks.

Quite unsurprisingly, prison staff used this opportunity to appropriate these monies for their own purposes by taking recourse to their discretionary powers under the prison rules. In the exchange of cash meant for getting the new currency notes, prison staff offered extra privileges and ‘freedom’ to inmates for a stipulated period of time.

“They would take old currency notes from us and, in exchange, would grant us more liberty. They said we would ‘ignore’ your behaviour, let’s say, for a month or so. They (staff) made a lot of money from this system,” a prisoner informed.

Demonetisation was not the first opportunity for the prison staff to devise a strategy to use grant of privileges as a barter for appropriating money. They have been using the flow of currency notes inside the jail to their benefit for a long time, using their discretionary powers to both allow the cash flow and then exploit inmates who are ‘caught’ with it.

Some prisoners said that the surprise checks were deliberately conducted to make money: “During checks, they will get hold of inmates who have cash, seize the same, and then extort more money from them for not issuing a ticket.”

Also read: NHRC Says Prisoners Were Tortured in MP Jail. So Why Is No Action Being Taken?

Momentary positives of demonetisation and changing contours of currency trading

Despite all its considerable adversities, demonetisation did bring about some promising changes to both the nature of economic activities and the exploitation that directly resulted from them. For instance, prisoners claim that the invalidation of high currency notes increased the use of permitted systems of trade smart cards and prisoner business accounts.

The uncertainty around currency induced by demonetisation made inmates wary of smuggling currency notes inside the jail. Consequently, the flow of cash in the jail reduced which also made inmates less vulnerable to exploitation meted out by the jail staff during ‘cash-raids’.

However, these changes were short-lived. Currency notes have again become a norm inside the jails. In addition to reviving old practices, some new players have emerged who participate in the ongoing corruption to normalise the inflow of cash in the prison economy. The sipahi (guards) is one such group which takes ‘cut-money’ for transferring cash given by families to the respective inmates.

As professor Mahayu Bandopadhaya said, “Social relations inside the prisons often end up replicating the hierarchy that marks such relations outside the prisons. The impact study of demonetisation through prisoners’ interviews revealed that this conception of replication also extends to economic relations. When hierarchies are based upon economic relations, the established power norms interplay with economic capacity, subjecting inmates who are perceived as ‘economically weak’ to different forms of exploitation.”

Additionally, what appears from the interviews that have captured the narratives of the inmates who have been living under this system for more than 14 years now, is the need for structural change. Cash or no cash, the system thrives on corruption which emanates from widespread discretionary powers granted to prison staff coupled with lack of accountability and transparency.

Inmates from Jail No. 14 have complained about the blind trust of the superintendent on whatever that the guards tell him about circumstances and situations. The trust deficit between the higher authorities not only aggravates the pains of imprisonment, but also instils hopelessness in the inmates.

“This way or the other, they find ways to make money. We’ve reached a point where we can’t expect them to do anything for us; and why would they, they don’t even see us as humans,” said one of the prisoners.

Karan Tripathi is a legal journalist and independent researcher in the field of criminal justice.