Englishmagazines

VOLUME 33
NUMBER 25
DECEMBER 10-23, 2016
ISSN 0970-1710
WWW.FRONTLINE.IN
C OVE R S T O R Y
C OVE R FE ATUR E
A nation in agony
Farewell to Fidel
Narendra Modis surgical

strike on black money
through
demonetisation
tears asunder the lives of
vast sections of the poor,
promoting a gigantic transfer of income and wealth
from the poor to the rich on
a scale unprecedented since
Independence. 4
Fidel Castro, who defended

the values of the revolution
that he led in his country and
extended his moral and
material support to the forces
of progress wherever they
found themselves up against
dictatorship and imperialism,
walks into history. 116
RELATED STORIES
Political rollercoaster
Legal challenges
Money and social contract
Interview: Utsa Patnaik
12
16
18
20
AGRICULTURE
Brakes on the rural economy

Down and out
Karnataka: Growing worries
Western U.P.: Potato disaster
Punjab: Stench of paddy
Haryana: Wholesale crisis
Odisha: Tribal tears
Assam: Seeds of despair
Maharashtra: Cane hits
cooperatives hurdle
Vidarbhas cotton payment crisis
Tamil Nadu: MGNREGANo work,
no pay
Interview: Hannan Mollah, AIKS
Voices from villages
Shock deaths
Modis model villages
25
28
34
36
37
40
43
44
45
48
50
52
54
57
INFORMAL SECTOR
Livelihoods in peril
Maharashtra: Trucks off the road
59
63
Patients, double victims

Delhi: Big drop in business
Chennai: Small traders plight
Its e-pay in tinsel town
Construction slowdown
Hyderabad: Misery made worse
Mumbai: The busy vendors
Bengaluru: Migrant workers woes
New Delhi: Tourists nightmare
Interview: A.K. Padmanabhan, CITU
Datacard: Informal sector statistics
64
66
68
75
80
70
73
74
77
83
84
INDUSTRY
Where black meets white

In deep trouble
Tamil Nadu: Small units,
huge problems
Maharashtra: Severe slowdown
West Bengal: Beedi industry
going up in smoke
North Bengal: Tea workers' misery
86
89
90
93
96
BANKING
Bankless, cashless in rural India

98
Kerala: Cooperative backbone broken101
Kashmir: Absence of visible impact 105
On the Cover: A daily wage worker loads a 60-kg bag of paddy on his back
at a grains depot near New Delhi.
R E LA TE D S TOR I E S
Soldier of socialism
Defying imperialism from
its backyard
Gabriel Garcia Marquez on Castro
Interview: Sitaram Yechury
Valediction for the Comandante
Revolutionary legacy
A youth icon
116
BOOKS
107
LETTERS
145
125
130
131
135
141
143
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DECEMBER 23, 2016 .
FRONTLINE
C OVE R S TO RY
A NATION
FRONTLINE .
DECEMBER 23, 2016
IN AGONY
Narendra Modis surgical strike
on black money through
demonetisation tears asunder the
lives of vast sections of the poor,
promoting a gigantic transfer of
income and wealth from the
poor to the rich on a scale
unprecedented since
Independence. B Y V . S R I D H A R
PRASHANT NAKWE
FOR MOST OF NOVEMBER, MILLIONS OF

Indians stood in queues outside banks and ATMs across
the country, patiently waiting to collect a fraction of what
was legitimately theirs. December came and nothing
changed. Considering the scale on which an entire
population remained literally on its feet, which also
resulted in nearly 100 deaths as is being reported from
across the country, what was truly remarkable was the
fact that a nation chose to remain sullen instead of
turning angry or violent.
As India lurches into the second month of its tryst
with demonetisation, it has quickly become evident that
this is an unprecedented onslaught on the poor. The
country has never faced an economic crisis of the kind it is
undergoing now and there is no historic precedent to
learn from, from anywhere in the world. Reports from
across the countrycorroborated by an array of reports
from Frontline correspondents, from almost a dozen
Statesshow that the foolhardy and reckless economic
experiment has wrought havoc on lives and livelihoods in
ways that could not have been even imagined.
Prime Minister Narendra Modis clever and cynical
use of the image of a beggar with a swipe machine to
conjure Indias march to a mythical land of a cashless
D AI LY W AG E R S look on as Prime Minister Narendra Modi
arrives at Varanasi in Uttar Pradesh, his constituency, on
November 8 to supervise the Swachh Bharat campaign.
5
FRONTLINE . DECEMBER 23, 2016
AMIT DAVE/REUTERS
A 7 4 - YE A R - O L D MA N receives help after he fainted following a long wait in a queue to exchange or deposit old highdenomination notes outside a bank in Vejalpur village on the outskirts of Ahmedabad on November 15.
FRONTLINE .
DECEMBER 23, 2016
society reects a mindset that has only contempt for the

poor. The simple point is that a man who claimed to have
once been a chaiwala himself at an earlier point in life is
just heaping insults on those whose small-scale
livelihoods revolve around the fulcrum of cash.
But this is not even just about those at the extreme
margins, such as vegetable vendors and people running
tea shops or eateries in Indian villages, towns and cities.
Farmers, for whom cash is critical, especially now in the
sowing season, have been left to the wolves. With the
Reserve Bank of India banning cooperatives from
conducting any operations, in utter violation of their
legal status as banking companies, small and marginal
farmers have either sacriced prots from the last
harvest or have abandoned or neglected their next crop.
There is a good reason why this is the wedding
season in the Indian calendar: this is the time when
harvests bring some incomes to households. But with
cash withdrawals limited to a trickle, reports of
abandoned weddings, or at the very least, of tears in the
time of joy from families across the country, have poured
in. Waves of reports, about small-scale factories in small
towns such as Ghaziabad, not far from the national
capital, Moradabad (brassware), Tirupur (hosiery),
Ludhiana (bicycles, winter wear and sports goods),
Firozabad (glassware) and Mandya in Karnataka
(jaggery), portray a calamity that is still only beginning to
roll. Never before have entire swathes of economic
activity been brought to the brink of extinction as now.
In the immediate aftermath of Modis announcement
of demonetisation, it became clear that a bungling of
monumental proportions, right at the nations helm, was
responsible for the countrys plight. But now, in the light
of the manner in which the government has shifted
goalposts and added new objectives to the agenda, such
as the one of a move towards a cashless society, suggest
that ineptitude may be only a more charitable
explanation for the tribulations heaped on a hapless
people. One must move away from a mindset of pity for
the forsaken to comprehend the scale of wealth transfers
that demonetisation has engendered. This is more about
aggressively promoting inequality on a scale that even the
wealthiest of the land could not have imagined.
simply impossible that the RBI, which lters talent after

a gruelling exam (recruiting less than hundred officers
annually from about three lakh candidates), did not have
within it the elementary skills needed for currency
management.
But rst, the bungling. As was pointed out in the last
issue of Frontline, a colossal failure to print enough of the
currency worth the value of what it was supposed to
replace is directly responsible for the unending queues at
ATMs and banks across the country. This has resulted in
the ultimate insult to the Indian rupee. The acute
shortage of currency and its arbitrary rationing, not only
in geographic termsrural versus urbanbut in terms
of which banks (and within banks, which branches) get
how much, has reduced the rupees status to just being
another commodity. This has been aggravated by the fact
that almost a month after Modis announcement most
people have not yet seen the new 500-rupee note, which
accounted for almost half the value of currency in
circulation and was the fulcrum of the Indian currency
system. The new 2,000-rupee is one that nobody
wantsnot even the driver of the cash van of a bank in
Bangalore who escaped with Rs.1.37 crore but chose to
abandon more than Rs.44 lakh worth of these brand new
crisp notes.
Slowly, because of the utter lack of transparency,
information ltered in of the gross bungling in the
Finance Ministry, which directly controls the
government presses at Nashik (in Maharashtra) and
Dewas (in Madhya Pradesh), which were responsible for
printing the new 500-rupee notes. These presses were
unequal to the task of meeting the huge challenge of
replacing the 17.165 billion 500-rupee notes that were
extinguished on the midnight of November 8. As reports
of glaring errors in the new notes came in, the
government was forced to shift production to the RBIowned presses at Mysuru (Karnataka) and Salboni (West
Bengal). The fact that the government-owned Security
Printing and Minting Corporation of India Ltd.
(SPMCIL), whose printing equipment is of much older
vintage compared with the RBIs units, does not even
have a full-time managing director at this crucial hour
indicates the utter lack of preparedness in the Finance
Ministry and its inability to coordinate currency printing
with the Central bank. This blundering is compounded
by the fact that while printing of the 2,000-rupee note
apparently began soon after Raghuram Rajans exit from
the RBI in early September, printing of the new 500rupee note began much later. The acute shortage of
currency, especially those of lower denominations, is
what is being reected in people queueing up at banks
and ATMs across the country. But the scarcity of money
in its most elementary form is not having the same
impact on everyone. Those with the means, such as
people with multiple ATM cards, for instance, are able to
get much more than those who are lucky enough to access
any cash at all after spending hours in a queue. Those
covered by relationship banking services of private
banks or those categorised as high net worth customers
BLUNDERING TROIKA
The blundering troika of Modi, his Finance Minister

Arun Jaitley and RBI Governor Urjit Patel, must take
ultimate responsibility for the myriad ways in which
havoc has been caused, and is still unfolding. To be fair to
Modi, he has never shied from taking responsibility for
what clearly bears his imprint. Jaitleys role in this arises
from the fact that it is in his name, and under his
command, that demonetisation has been rolled out. As
for Patel, the man responsible for currency management
and much more, his profound silence since November 8
has explained more than he ever could have. After all,
Patel headed the Monetary Policy Department in the
RBI, which deals with currency management, as Deputy
Governor before he assumed his current position. It is
7
SUDHAKARA JAIN
November, while ICICI Bank had been given Rs.4,500

crore, HDFC Bank Rs.900 crore and Axis Bank Rs.700
crore, all other banks put together have been given just
Rs.7,800 crore. This, despite the fact that private banks
account for just over a quarter of all bank branches in
Tamil Nadu.
Dr K.C. Chakrabarty, former Deputy Governor of the
RBI, who veteran journalists recall as being outspoken in
manner, called upon the RBI in a recent interview to
Sucheta Dalal (Moneylife magazine) to declare how
much money, and in what denomination, was being
distributed and on what basis. Chakrabarty urged the
RBI to disclose details of production, transportation,
distribution and last-mile availability. Only then will you
have a snapshot of what is happening at the ground level.
Today, all this information is computerised and
available; why cant it be put in the public domain? Do we
know where the Rs.100 notes are going? Is it to metro
cities or rural areas?
The enormous vacuum caused by the disappearance
of the 500-rupee note and the huge gap between the good
old 100-rupee note and the new pink 2,000-rupee note
have warped the social psychology with respect to
holding cash. This is not merely a problem of logistics for
the Central bank; it has huge implications for unequal
access to cash in a cash-starved society. There is no doubt
that everybody is trying to hoard some cash, especially
100s, simply because the 2,000-rupee notes worth as a
medium of exchange is virtually non-existent. But a
DAIL Y W A G E R S like Gangamma and Rukmini, seen here

in Bengaluru on November 17, have been nding it difficult
to change the invalidated Rs.500 notes.
of these banks are obviously enjoying a privileged status

in these times of scarcity.
A bank manager told Frontline that attention to basic
details, such as designing the new currency notes in
identical dimensions and thickness as the ones they were
replacing, would have prevented the countrys two lakh
plus ATMs from going out of action for almost three
weeks.
But the RBIs culpability in the asco has been vastly
aggravated by the utterly non-transparent and arbitrary
manner in which even the limited currency has been
rationed. There is evidence to show that some banks,
especially public sector banks, have been discriminated
against; moreover, within banks, deployment across
branches has been on a knee-jerk basis. Thomas Franco,
vice president of the All India Bank Officers
Confederation, told Frontline that since November 10
private banks in Tamil Nadu, especially the newgeneration privately owned ones, were given more cash
than the public sector banks even though the latter had a
much wider branch network in the State. Although State
Bank of India has the highest number of currency chests
(137) among banks in the State, RBI instructed it to
source its requirements from ICICI Bank in Madurai and
HDFC Bank in Coimbatore, he alleged. By the end of
FRONTLINE .
DECEMBER 23, 2016
persons ability to hoard in order to simply tide over

short-term liquidity is also conditioned by his/her
income levels. It is obvious that the poor of all kinds are
able to hoard a far smaller proportion of their income
than the rich.
Speaking to Frontline, the besieged manager of a
small branch of a public sector bank in a village near
Mandya said: This form of hoarding is aggravating the
shortage, but I would call this hoarding at the retail level.
The much bigger problem of hoarding arises from the
wholesale scale of hoarding that is exclusively the
preserve of the rich.
Ever since demonetisation began, there have been
reports of a thriving exchange racket from across the
country. According to a business source in Gurgaon, who
has personally encountered the racket, the commission
for exchanging the outlawed currency for legitimate
notes ranges from 20 per cent to 35 per cent, depending
on the place. The rate is most competitive, and in Delhi,
Pune and Ahmedabad the rate seems to be higher, he
told Frontline.
But this market for exchanging notes appears to be
thriving across the country, even in smaller towns and
villages. Enquiring about the possibilities for
exchanging currency just outside the Malavalli cocoon
market near Mandya on November 28, this
correspondent met a youth from a nearby village. He said
several brokers had approached him in the preceding
week, asking him if he had any money to convert.
Whipping out his phone from his pocket, and pretending
to speak on this correspondents behalf, he called a local
tout. The terms were clearly explained by the broker: he
would convert Rs. 1 crore of my currency in old notes and
return, within 30 minutes, Rs. 84 lakh, an effective
commission of 16 per cent on the transaction.
The thriving exchange racket is not merely a
convenience for the rich; it means an additional burden
for the poor in these difficult times. The exchange of
invalid currency is, in effect, sucking out a signicant
portion of the valid currency that is only coming in a
trickle. Just a single case would highlight what this
means for ordinary folk. The Income Tax Departments
recent haul of cash of more than Rs.5.7 crore from the
residences of two government officials indicated that
nearly Rs.5 crore was in the new pink notes. If a person
were to stand in a queue and draw Rs.2,000 each day, it
would require him/her to queue up every day for almost
45 years, if the person had so much money in the rst
place. What this means is that demonetisation is a double
whammy on the poor: their lives are wrecked, apparently
because the government is suddenly determined to go
after the rich, but they have to suffer even more because
these same rich folks have found ways to escape
demonetisation.
Exchanging currency is not the only means
available to the rich. When a currency is suddenly
declared invalid, there would be some who would try and
change them into valid forms. But the spirit of enterprise
does not stop there; many more avenues are available,
limited only by their imagination. Wealth holders,

especially of a black hue, would seek any avenue to retain
their wealth. Cash may be the most liquid of all forms of
wealth, but wealth holders would seek to convert them
into other forms; gold was one avenue, but by no means
the only one available. In fact, any commodity would suit
them just ne, even tender coconuts, as this
correspondent discovered in Maddur, about 80
kilometres from Bengaluru.
The arrival of tender coconuts at the APMC
(Agricultural Produce Market Committee) yard in
Maddur stopped soon after demonetisation. But
surprisingly, they picked up about a week later and even
came back to the pre-November 10 levels briey.
Mallesh, a small trader, explained that the arrivals rose
sharply from November 17 and lasted until November 26.
Mallesh said merchants from Mumbai and Pune bought
heavily in this period, insisting on making payments in
the now-invalid notes, but especially wanted to dispose
off their 1,000-rupee notes. Mallesh said that the
merchants were even willing to pay a small premium for
tender coconuts in order to convert their cash holdings in
invalid notes.
This kind of activity is corroborated from other
sources. A top government official in Bengaluru told
Frontline that several Karnataka politicians, including
State Ministers, have been actively purchasing paddy and
other agricultural products in order to whitewash their
stock of black money.
The conversion of cash to commodity in a situation of
a demand compression that has been provoked by
demonetisation has serious ramications for not just the
livelihoods of the poor but the manner in which it
aggravates social inequality on a scale that would not
have been possible without demonetisation.
Thus, cash hoarding is for ordinary folk seems to be
the taunt of the rich. It stands to reason that they would
have utilised the severe collapse in demand, and hence of
prices, of a range of commodities, to hoard stocks of these
commodities, which can be sold for super prots at a later
stage. Not just that, in the process, they would have
converted a signicant portion of their ill-gotten wealth.
Indeed, the adage in the world of business that a crisis is
also an opportunity never rang as ominously true as it
does now in these times of mass distress.
The amendments to the Income Tax Act, pushed
hurriedly through Parliament recently, amount to a
concession to tax evaders. Coming as it does, within two
The thriving exchange

racket is an additional
burden for the poor in
these difficult times.
9
months of the last amnesty scheme that was touted as a

last chance to black money holders, it is in sharp
contrast to what honest citizens have been put through in
the last month in the name of demonetisation. Delhi
Chief Minister Arvind Kejriwal, a former Indian
Revenue Service officer, has pointed out that the penalty,
which was earlier expected to be 200 per cent on evaded
incomes, has been scaled down to 50 per cent. Kejriwal
said demonetisation was a scheme conceived to enable
unscrupulous people to turn their black money into
white.
SHIFTING THE GOALPOSTS
PTI
It became clear by November-end that demonetisation

would turn out to be all drama and no effect. On
November 29, Minister of State for Finance Arjun Ram
Meghwal told the Rajya Sabha that there were 17.165
billion Rs.500 notes and 6.858 billion Rs.1,000 notes in
circulation on November 8. The total value of these
denominations on that day was Rs.15.44 lakh
croreRs.8.58 lakh crore in 500-rupee notes and
Rs.6.86 lakh crore in 1,000-rupee notes.
A day prior to this, the RBI said that Rs.8.45 lakh
crore in these denominations had been deposited with
banks during November 10-27. Moreover, on November
8, banks maintained Rs.4.06 lakh crore with the RBI in
order to comply with statutory cash-reserve ratio norms;
banking industry sources said most of this would have
been in high-denomination notes. In addition, banks
cash holdings on November 8, meant to meet day-to-day
requirements from customers, would have amounted to
at least 0.50 lakh crore. Thus, the total amount that has
been sucked out within the rst three weeks of
demonetisation would have been at least Rs.13.01 lakh
crore. With 84.26 per cent of the targeted denominations
already back, well before the half-way mark of 25 days,
the question is: was it for this that millions of people have
had to suffer?
From the start, demonetisation was all about shifting
goalposts. First it was about black money and its links
with counterfeiting and terror nancing. Later it shifted
to a war on black money, with Modi making the rather
brave assertion that the rich and the famous were in
queues, just like their poorer brethren. Now it has shifted
to moving towards a cashless society in which cash
would be replaced by card-swiping and app-wielding
citizens using mobile phones. Among the goalposts that
were shifted was the one by Arun Jaitley on December 2,
when he asserted, of course without any details, that a
FI N A N C E M I N I S TE R Arun Jaitley (right) with RBI

Governor Urjit Patel during a conference in Mumbai.
signicant portion of the old currency would soon be

replaced by fresh notes. But in the same breath, he stated,
again without any substantiation, that the total value of
the fresh 500- and 2,000-rupee notes need not be
equivalent to the total value of the old 500- and 1,000rupee notes pulled back from circulation. The implicit
suggestion is that an equivalent replacement of the
currency is not required because India is now on the
revolutionary road that liberates it from the shackles of
cash, which is preposterous for at least two reasons.
First, Jaitleys conjuring of monetary policy on the y
is not how it happens in the real and modern world. As
any undergraduate student of economics would tell him,
if he cares to pay attention, the quantum of money
needed in a dynamic economy that is growing is a
function of many variablesnot just of the level of
national income and its sectoral composition or the levels
of consumption and investment, but even social attitudes
to holding wealth in currency form. Jaitleys cavalier
treatment of these weighty issues suggests that he is
simply saying this to evade responsibility for the
wholesale bungling for which he is directly responsible.
The second aspect of the new magic panacea that is
being spewed from all wings of the government in the last
few days, from the Niti Aayog, the institution that is a
pathetic caricature of the Planning Commission which it
replaced, to Ministers scurrying in damage-limitation
mode, is that cash will be replaced by other forms of
payments. This is not only blatantly irresponsible, it is
positively insecure for the poor. Officials of the Niti
Aayog, in the manner of corporate trainers, have been
busy conducting workshops in the last few days,
educating government officials on how to adopt
cashless payment systems.
A recent analysis of cashless payment systems,
Modi, Jaitley and Urjit Patel

must take responsibility for
the myriad ways in which
havoc has been caused.
FRONTLINE .
DECEMBER 23, 2016
10
RAMESH SHARMA
study by Ernst and Young, which

particularly of e-wallet services and
shows that the POS penetration in
of mobile banking services, by
India is only 693 machines per
Medianama, a portal on digital and
million persons, compared to about
telecom businesses in India, warned
4,000 per million in China and
that a measured and gradual
Brazil. Neither the fans of Modis
approach would be more prudent.
cashless agenda nor the Niti Aayog
For instance, most of the e-wallet
officials who have rushed where
services read the users phone
angels fear to tread have cared to
status and identity and track their
point out that even the beggar that
location. Medianama pointed out
Modi cited in his address at
that most people are not aware of
Moradabad would have to pay a
the implications of permissions
transaction charge on the POS
being taken by wallet apps, and have
terminal, apart from the rental
no control over the data that are
(about Rs.400-600 a month,
being collected. It pointed out that
according to one source).
wallet applications can collect a
Pahwa makes a point tellingly,
signicant amount of behavioural
thus: The difference between cash
information on users, which can be
and digital is that cash limits the
used to create granular proles of
damage to the loss of a note or of a
users, and market services to them.
number of notes. In digital, the risks
The fact that India has no privacy
K . C . C H A K RA BA R TY, former
are
higher. He points out that
laws means that users have no
Deputy Governor of RBI.
digital payments do have a role to
control over how their data are used
by these companies. But this is not merely a problem of play, just as cash does, but warns that a headlong rush
privacy as understood in a vague and abstract sense. The into digital systems increases security risks for all
sheer scale on which data are being tapped and stored by citizens. Almost a century ago, in 1919, John Maynard
wallet companies, without any regulation, is also a Keynes wrote in The Economic Consequences of the Peace:
Lenin was certainly right. There is no subtler, no surer
signicant security hazard.
means of overturning the existing basis of society than to
THE CASHLESS MIRAGE
debauch the currency. The process engages all the hidden
Mobile banking apps, which are another approach to a forces of economic law on the side of destruction, and it
cashless world, also suffer from similar problems that not does it in a manner which not one man in a million is able
only compromise the users privacy but also pose a to diagnose. Although more recent research (Journal of
security hazard. Arun Jaitley recently regretted that only Economic Perspectives, 2009) indicates Keynes
45 crore of the 80 crore debit cards issued by banks are in attribution of Lenin may have been misplaced, his
use. If he had tried asking a small trader or a person in a observation appears laser-like in its accuracy in depicting
village, he would have understood why. All payment the Indian plight today. The massive transfer of wealth
systems come with a transaction cost. Medianama from the poor to the rich is not conned to just
founder Nikhil Pahwa has this to say in a recent article on agriculture. Huge swathes of industrial activity that are
his website: There is no parity between cash and digital concentrated in the small-scale sector could lose their
money: a rupee paid by cash is far more convenient for a business, perhaps permanently, to larger entities whose
user, and affords less costs, as compared to a cashless dependence on cash is much less then theirs. In short,
system.
demonetisation paves the way for a further concentration
First off, the uneven distribution of mobile phones in of not only wealth in a manner that would not have been
the country implies unequal access to transaction possible by other means. That is why those who favour
platforms. Moreover, as Pahwa points out, of the 343 further concentration have welcomed it as a
million Internet connections (even discounting for masterstroke.
multiple connections in the same household), 192
Sitting outside a crowded bank branch in a village
million are narrowband connections, indicating that near Mandya, Siddegowda, a sericulture farmer, said he
only a small fraction is ready for the cashless highway. was planning to abandon two cycles of his cocoon harvest
Pahwa also notes that debit card usage is currently about (a cycle lasts about a month) because he fears prices
18 transactions for every 100 debit cards that have been would collapse even further. Despite his angst, however,
issued; the average number for credit cards is even lower, he welcomes Modis assault on black money, but. His
at 3.18.
voice trailing off, he does not complete what he set out to
While these data pertain to the customer-end of the say. Perhaps, as the prominent TV anchor Ravish Kumar
transaction, the data at the seller-end are pretty said recently, mediapersons ought to watch out for the
disappointing too. There were 1.46 million point-of-sale many buts that people want to, but are unwilling, to
(POS) machines deployed across the country, which are voice. That may explain why people are sullen, rather
most likely concentrated in the metros. Pahwa quotes a than angry, now.
11
C OVER STO R Y
POLITICAL
ROLLERCOASTER
The seemingly never-ending glitches in the demonetisation drive and the
pressure of expectations from the ground seem to be pushing the
government into an unprecedented governance rollercoaster fraught with
dangerous political ramications. BY VENKITESH RAMAKRISHNAN
FROM THE MOMENT IT WAS DRAMATICALLY
unravelled on the night of November 8, political games
and intrigue have remained an unambiguously key component of Prime Minister Narendra Modis demonetisation drive. Just like the self-professedly path-breaking
but otherwise operationally muddled nancial sector en-
FRONTLINE .
DECEMBER 23, 2016
terprise, the political games associated with the demonetisation drive are charting a dicey, bumpy and shifty
path. The demonetisation drive has progressed with
many twists and turns and is leading to huge contests
with a more or less united opposition comprising parties
with a national presence such as the Congress and a
12
ment and the Prime Ministers close circles.

Still, the dominant internal assessment within the
higher echelons of the BJP and the Sangh Parivar count
two unmistakable short- or medium-term gains from the
move. First, that the demonetisation drive and the propaganda blitz that has accompanied it has successfully
diverted the attention of vast sections of people from the
bribery charges that had come up against Modi in various
constitutional bodies, including the Supreme Court. The
bribery allegations were on the basis of documents that
had come up during the raids of investigating agencies on
the premises of the Sahara and Aditya Birla groups which
suggested that Modi had been given Rs.65.7 crore
(Rs.40.7 crore by Sahara and Rs.25 crore by the Aditya
Birla group) when he was the Chief Minister of Gujarat.
That the allegations brought up before the Supreme
Court did not lead to a probe is also perceived as a factor
that contributed to this diversion of popular attention.
Rejecting the appeal for a probe into the documents
containing pointers to illegal gratication by a number of
politicians, including Modi, the Supreme Court bench of
Justices J.S. Khehar and Arun Mishra stated that the
entries did not arouse its conscience enough to order a
probe.
The second short-term gain listed by Sangh Parivar
insiders relates to the manner in which demonetisation
and the political thrusts connected to it have upset the
preparations of the BJPs opponents, the Bahujan Samaj
Party (BSP) and the Samajwadi Party (S.P.), for the
forthcoming elections in Uttar Pradesh. As was deduced
by these Sangh Parivar constituents in the days immediately following the demonetisation announcement, it is
the BSP that was more disconcerted than the S.P.
clutch of powerful regional forces as well as the communist parties. These contests have manifested themselves
in different forums, including Parliament and non-institutional public spaces, with no clear indication as to
which way the balance is tilting.
For the record, the Bharatiya Janata Party (BJP) has
sought to cite the results of a couple of State Assembly
byelections and civic body elections in Maharashtra and
Gujarat as affirmation of the growing popular support for
the demonetisation drive. Sections of the BJP, comprising the most ardent supporters of Modi, have gone into
overdrive with a campaign on this. However, from a
closer analysis of these results, the conclusion, even from
within the Rashtriya Swayamsewak Sangh (RSS)-led
Sangh Parivar, is that they cannot be viewed as substantive indicators of popular approbation. On the other
hand, powerful sections of the RSS and other Sangh
Parivar organisations, especially in the north Indian
States of Uttar Pradesh and Bihar, are of the view that
Modi and his close associates have scored what would, in
the long run, be a self goal. In this context, the overall
mood within the BJP and the Sangh Parivar is that no
one is able to predict with conviction the net impact that
the demonetisation drive will have on the prospects of the
ruling dispensation. The blatantly undemocratic manner
in which a Bill proposing a new tax regime was pushed
through in the Lok Sabha as well as certain executive
steps relating to controlling gold trade have all exposed
the high anxiety quotient in the top rungs of the govern-
PERIPHERAL GAINS
According to a senior RSS activist based in Lucknow,

these are merely peripheral gains that would not alter the
situation on the ground substantively. At best these
would form additions to a larger political climate. The
fundamental question is how far the larger political climate is turning in favour of the BJP on account of the
demonetisation drive. At the moment, there are two
palpable aspects that one can see on the ground. On the
one side are the colossal inconveniences suffered by the
people on account of the banking restrictions and the
liquidity crunch. On the other side you have the high
expectations that the very same people, particularly poor
people, have about getting material gains once the drive
comes to a conclusion. The real test will be in the governments ability to full these expectations. If this is not
done and not done in good time, the consequences will be
disastrous, he said.
He added that there were hundreds of Sangh Parivar
cadres across the country, including in the BJP, who held
similar opinions. He also said that the triumphant campaign linking the results of the recent byelections and the
PTI
P R I M E M I N I S TE R Narendra Modi addressing the BJPs

Parivartan Rally in Moradabad on December 3.
13
civic polls in Maharashtra and Gujarat was also discussed

among a section of Sangh Parivar activists in this perspective. They were apparently of the view that the hype
created on the Maharashtra victory was completely misplaced and that such campaigns have often led to unfounded condence, leading to organisational and
political reverses.
POINTERS FROM MAHARASHTRA
Civic body elections were held in 19 districts of Maharashtra. Following these, the State and central leaders of
the party claimed major gains and ascribed them to the
overwhelming response of the people in favour of the
demonetisation drive. However, this claim was shown as
hollow from the details of the results that came out.
Although the overall tally of the BJP was higher than of
other parties, it did not signify overall political dominance in the State. In fact, close to half of the BJP seats
came from one region, Vidarbha. Out of the total 3,727
winning candidates, 893 are from the BJP, 727 from the
Congress, 615 from the Nationalist Congress Party (NCP)
and 529 from the Shiv Sena. Maharashtras BJP Chief
Minister Devendra Fadnavis called this a tsunami of
noble thoughts. But the fact is that the BJP won 448
seats from Vidarbha alone and just 445 from the other
four regions combined, namely Konkan, Marathwada,
western Maharashtra and northern Maharashtra. It was
the NCP that had more seats than other parties in these
four regions; the number two in this geographical sector
was the Congress.
Similarly, the BJP retained the Shahdol Lok Sabha
seat in Madhya Pradesh with a vastly reduced majority.
Sangh Parivar activists, however, rated the comeback in
Gujarat after some reverses in the last year as signicant.
But here too, they pointed out, linking this with the
demonetisation drive could turn out be counterproductive in the medium and long term. Evidently, their iteration was about ensuring that some benets accrue to the
poor and the marginalised after the completion of the
demonetisation drive.
On its part, the government, especially Finance Min-
ister Arun Jaitley, has been asserting that the slowing

down of business would only be a matter of a few days and
that demonetisation would ultimately increase investments in rural India. Cash worth crores has come into
the banking system, which will increase the banks capacity to approve loans. It is a huge decision and the government had to be strong to make difficult choices has been
Jaitleys refrain at several interactions.
Another argument repeatedly advanced by the government was as to how demonetisation had struck heavy
blows on terrorist activities from Islamist jehadism in
Jammu and Kashmir to left-wing extremism in central
India. These claims were questioned by political and
security observers following the attacks on the Nagrota
camp of the security forces and the jailbreak at Nabha in
Punjab.
THREE PLANS, GROUND-LEVEL CAMPAIGNS
VIJAY BATE
Travelling across several districts of Uttar Pradesh, what

Frontline gathered was that the peoples expectations
cited by the senior RSS activist were being bolstered
through sustained campaigns of the cadre of the BJP and
other Sangh Parivar activists. This was being done by
etching out three proposals that could acquire concrete
dimensions in early 2017. The rst of these possibilities
was about a direct transfer of money from the Central
government to people living below the poverty line who
have zero-balance Jan Dhan accounts. The refrain on this
was that Modi was moving with a clear plan and that was
why he had rst got the Jan Dhan accounts opened in
large numbers and later sought to ush out black money
so that it could be transferred to the needy. The amount
A P R O T E S T against demonetisation in the Jan Akrosh
Morcha in Mumbai on November 28.

FRONTLINE .
DECEMBER 23, 2016
14
PTI
OP P O S I T I O N L E A D E RS protesting against demonetisation at Parliament House in New Delhi on November 28.
special schemes and rules, is seen as a manifestation of

this desperation. The new stipulation on gold holdings
also seemed to have a similar political trigger. All this
have added to the repeated ip-ops by the government
in the rst week of the demonetisation drive. Evidently,
there is a scramble to raise some money so that it can be
transferred to the people to seek votes. But that is not
working according to plan, a Finance Ministry official
told Frontline.
At the level of political administration and governance, all these decisions have reportedly emanated from
the Prime Minister himself or his close associates in the
Prime Ministers Office (PMO), underscoring the kind of
individual stakes involved in the whole frantic operation.
The level of the frenetic activity has also led to loose talk
about unseen pressures working on the Prime Minister.
Is this loose talk true? If so what could it lead to next?
These questions too are doing the rounds in Delhis
political circles even as one of the things that go in favour
of Modi in the form of a lack of cohesion in the opposition
is highlighted. Indeed, although the opposition has
closed ranks in a manner unprecedented in the last two
years against the pitfalls in the demonetisation drive, it
has fallen short of a cohesive and effective unity. While
that blessing does remain with Modi, the seemingly never-ending glitches in the demonetisation drive and the
pressure of expectations from the ground seem to be
pushing the government as a whole into an unprecedented governance rollercoaster fraught with dangerous political ramications.
of money mentioned in this campaign is in the range of

Rs.50,000 to Rs.4 lakh. The second proposal widely
circulated involved the enhancement of the credit facility
of the Kisan Credit Card, which was originally brought in
by the United Progressive Alliance government. The
amount mentioned in this context is Rs.25,000 to
Rs.50,000. The third proposal was about speeding up the
Housing for All by 2022 Mission announced by Modi in
June 2015. As part of this announcement, the Central
government had visualised building low-cost houses for
over 10 crore people below the poverty line. The campaign was that the initial work would start on about 20
lakh houses in 2017 with the black money that was being
ushed out through the demonetisation drive.
SENSE OF DESPERATION
Indeed, all these ground-level campaigns were built on

the premise of accruing at least Rs.3 lakh crore of black
money to the governments coffers. However, as it existed
in the early part of the rst week of December, the picture
was not that promising. Finance Ministry officials admitted that their expectations might not be met on this
count as a large quantum of cash originally perceived to
be black money was getting into the system and being
legalised. By all indications, there was a sort of desperation building up within the Central government and the
BJPs central leadership about this.
The virtual bulldozing of the Taxation Laws (Second
Amendment) Bill, 2016, aimed at taxing the money deposited in bank accounts post-demonetisation through
15
C OVER STO R Y
Legal challenges
When the government declared high-denomination currency notes
as not being legal tender in 1978, it did so through an Ordinance.
In contrast, the November 8 and subsequent notications came without
any legislative support. B Y V. VENKATESAN
SHIRISH SHETE/PTI
IT IS NOT WITHOUT SIGNIFICANCE THAT NONE

of the Central governments notications since November 8 relating to the old currency notes of Rs.500 and
Rs.1,000 ceasing to be legal tender has used the word
demonetisation to describe it. The reason perhaps is
that calling it so would make it imperative for the government to explain why it did not follow the legal obligations
associated with it.
In 1978, when the government declared high-denomination currency notes as not being legal tender, it did so
through an Ordinance. The Ordinance, and the Act that
replaced it (the High Denomination Bank Notes (Demonetisation) Act, 1978), described it as demonetisation. In contrast, the November 8 and subsequent
notications were devoid of legislative support. The absence of legislative backing meant that the government
could not declare illegal the transfer and receipt of these
high-value currency notes to all entities or persons other
than banks as had been prohibited by the 1978 Act.
Legally, such a prohibition would require legislative
backing in the form of Ordinances or Acts passed by
Parliament.
No doubt, the many exceptions the government provided were aimed at easing the inconvenience caused to
the public. But the exceptions, according to many reports, also helped legitimise the unaccounted-for money.
The 1978 Act had penal provisions, with prison terms
extending up to three years or a ne or both, to punish
those depositing unaccounted-for currencies by making
false declarations. As imposition of prison terms would
again require legislative backing, the recent notications
merely impose penalties. The non-recourse to the legislative route to demonetise, therefore, raises disturbing
questions about the governments intentions.
E CON OM I C A FFAI R S S E C R E TAR Y Shaktikanta Das
addressing the media on the demonetisation issue in

New Delhi on November 22.
insofar as they infringe ones right to practise any profession involving cash transactions, are violative of this
fundamental right. It is not that this fundamental right
cannot be restricted. But such restrictions must pass the
test of reasonableness and be in the interest of the general
public as laid down in Article 19(6). The November 8
FUNDAMENTAL RIGHT
Article 19(1)(g) of the Constitution guarantees one the

fundamental right to practise any profession or to carry
on any occupation, trade or business. The restrictions on
cash withdrawals of ones own savings from the banks,
FRONTLINE .
DECEMBER 23, 2016
16
RBI is under its management and control. This is contrary to the general understanding that the RBI enjoys
functional autonomy from the government.
notication justies the declaration of high-value currency notes ceasing to be legal tender on specied
grounds.
First, it says it has been found that fake currency
notes of the specied banknotes have been largely in
circulation, and it has been found to be difficult to easily
identify genuine banknotes from the fake ones, and that
the use of fake currency notes is causing adverse effects to
the economy of the country. Secondly, it claims that
high-denomination banknotes are used for storage of
unaccounted-for wealth as has been evident from the
large cash recoveries law enforcement agencies have
made. Thirdly, it claims that fake currency is being used
to nance subversive activities such as drug trafficking
and terrorism, which cause damage to the economy and
threaten the security of the country.
No doubt, these may sound like reasonable grounds
of restrictions on the exercise of the fundamental right to
practise any profession or carry on any occupation. However, unless the government can demonstrate that the
notication has a reasonable nexus with the objects
sought to be achieved, its claims will be suspect. Ironically, it announced the issue of Rs.2,000 currency notes
through another notication on November 8, which
seems to defeat the very objects sought to be achieved by
declaring that high-value currency notes are no longer
legal tender. Among other grounds of challenge, the
Supreme Court will examine the allegation that the Reserve Bank of India, as required by the RBI Act, 1934, did
not give a valid recommendation independently after
detailed consideration of all the issues. This allegation
has been made in a writ petition led in the Supreme
Court by Adil Alvi through the advocate V.K. Biju. Although the November 8 notication claims that the RBI
did recommend the steps the government announced,
the question whether the RBI could make such a recommendation unilaterally without consulting the public at
large has to be gone into, the petition has submitted.
Besides, the petition asks the court to examine whether
the RBI considered all the relevant material and the
likely consequences independently without being inuenced by the government before it submitted its recommendation, as required by the RBI Act. The Central
government, however, has claimed in its affidavit that the
RIGHT TO PROPERTY
Article 300A guarantees the right to property. It reads:

No person shall be deprived of his property save by
authority of law. Although it is not a fundamental right
(the 44th Amendment of the Constitution deleted the
fundamental right to property in 1978), it cannot be
restricted without invoking a legal provision. Access to
ones savings in bank accounts through cash withdrawals
forms part of the right to access ones property.
The November 8 notication cites Section 26(2) of
the RBI Act. This provision states: On recommendation
of the Central Board, the Central government may, by
notication in the Gazette of India, declare that, with
effect from such date as may be specied in the notication, any series of banknotes of any denomination
shall cease to be legal tender (save at such office or agency
of the Bank and to such extent as may be specied in the
notication). It is silent on whether any restrictions can
be imposed on a customers right to withdraw cash from
his or her bank account. The government has not considered the infringement of the right to property of those
without bank accounts who have discarded currency
notes that they legally acquired but that they could not
exchange within the stipulated deadlines. Those who are
heavily dependent on cash for their livelihood but are not
part of the formal banking system, therefore, are likely to
suffer the most from the restrictions on the exchange of
discarded currencies. If the return to normalcy takes
longer than what was initially foreseen, these restrictions
will be seen as unreasonable.
The Supreme Court has held that the word law
mentioned in Article 300A refers to an explicit law,
whereas the November 8 notication appears to claim
implicit powers to restrict access to bank accounts. On
the face of it, it appears to be an open-and-shut case that
the government is likely to lose in the Supreme Court.
The legal commentator Usha Ramanathan has
voiced another concern over the demonetisation move.
According to her, the move, insofar as it encourages a
cashless and paperless economy, will, in time, make
banks redundant. Her concern is that this would make
monetising and compromising the citizens personal data
on a mass scale easier.
As the Supreme Court begins hearing the challenges
to the constitutionality of demonetisation from December 5, its irreversibility may appear to be a serious hurdle
in striking it down, even if the court nds the arguments
against demonetisation valid. According to one petitioner before the court, the effort, therefore, would be to seek
the courts directions to the government to take specic
steps to signicantly alleviate the suffering of the people
as a result of restrictions on cash withdrawal from their
bank accounts and the unreasonable deadlines imposed
on those without bank accounts to exchange their discarded currency notes with valid ones.
The Supreme Court will

examine the charge that the
RBI did not give a valid
recommendation independently after detailed consideration of all the issues.
17
C OVER STO R Y
Money and
social contract
We are now in relatively uncharted economic territory in India.
But this also means that we may be entering an entirely
new phase of our social contract as well. B Y JAYATI GHOSH
THE SOCIAL CONTRACT BETWEEN A STATE
and its citizens is a complex thing. Philosophers of the
European Enlightenment saw it as the basis on which
society is organised so as to ensure the mutual protection
and welfare of its members. It is therefore the implicit
social arrangement whereby citizens give up some of
their rights and freedoms to the state or a similar authority, in return for some degree of order and stability that
would effectively ensure the protection of their remaining rights and freedoms. In very unequal societies, the
voluntary nature of such a social contract is not particularly evident. Indeed, many would be hard put to nd
much evidence of its existence in the rst place, even in
ostensibly democratic political contexts where periodic
elections provide at least the veneer of accountability.
But however strong or weak the social contract may
be, the system of moneythe currency of a country,
especially in the form of its bank notesis one of the most
direct and obvious ways in which most people experience
it.
Money has always been inherently of and between
human minds. The commodity base of money, in the
form of precious metals like gold and silver, allowed some
mediation of this, but even that was typically extended by
other forms of liquidity like merchants promissory notes
and bankers bills. But ever since the disappearance of
gold-backed money, worldwide at money is entirely
built on trust. And that trust is ultimately trust in the
issuing authority that it will maintain and continue to
recognise the value of what is described as legal tender.
The imsy pieces of paper that constitute money are
inherently of little or no value in themselves other than
the promise made on them, typically by the representative of the central bank, which, in turn, is explicitly or
implicitly backed by the authority of the state. Of course,
that promise itself is rather circular: what does it mean,
after all, to say on a hundred rupee note I promise to pay
the bearer the sum of one hundred rupees? Yet that
FRONTLINE .
DECEMBER 23, 2016
somewhat bizarre promise actually works in terms of

making that note an effective medium of exchange simply because everyone believes in it and is willing to exchange it for goods and services of equivalent value.
So the currency in circulation is not just the most
obvious material form but in some ways the purest expression of the social contract that binds a society together and keeps it functioning. It is obvious therefore that
messing around with it can cause problems not only in
material and economic management but also in the social fabric. Periods of history in different societies when
trust in the currency has collapsed (say in hyper-inationary situations) tend to be social and politically
volatile as well, generating all sorts of different and warring tendencies.
That is among the reasons why the Indian governments demonetisation move is so startling and even
incredible. It is without doubt the most extreme experiment of its kind ever. Such a large-scale demonetisation
of major currency notes (around 86 per cent of the value
of the currency in circulation) has occurred in the past
only in extreme hyper-inationary situations (as in several countries in Latin America in the lost decade of the
1980s) or in periods of war and civil conict in which the
currency was already debased (as in China just after the
Revolution). For it to occur in peacetime, in a period of
moderate to low ination and generally rapid growth of
economic activity is both unprecedented and remarkable.
There have been many adverse consequences of this
decision, widely seen even if not as widely reported by the
increasingly subservient mainstream media. But a deeper and more long-term concern has been less talked
about: the breakdown of trust in money, especially in the
form of currency, which could affect transactions in the
economy in the foreseeable future.
On November 8, the Government of India effectively
de-recognised its own legal tender in the form of the
18
THE G OVE R N M E N TS promise on currency

notes works in terms of making the note an
effective medium of exchange. The hundred
rupee note, for instance, says: I promise to pay
the bearer the sum of one hundred rupees.
who operate on the basis of its own legal currency. All

others, no matter how poor or disadvantaged, are guilty
unless proven otherwise and must pay the price by losing
their monetary wealth.
How long, then, before the reverse part of the social
contract also breaks down? Before people start doubting
the validity of the currency issued by the central bank and
backed by the Indian state? Already, the embarrassing
aws in the new currency notes (including irregular sizes,
copy-editing errors and now even printing mistakes that
make them look different) are rendering them less usable
and ironically easier to counterfeit. But these may be even
less damaging than the inevitable rumours about these
notes also being withdrawn suddenly and without notice
at some later date.
Some analysts living in their own digital dreamland
might actually welcome such a move, thinking that this
would hasten the move to a cashless society, and that
cashlessness is akin to godliness. This is obviously foolish,
given the state of development of both physical and
digital infrastructure in India and the extent of education
of the people in general. It also completely ignores the
possibilities of fraud, identity theft and massive loot
possible in online transactions through cyber-crime,
something that the most advanced countries in the world
are still struggling to contain.
Loss of faith in a currency through history has generally involved a shift into other assets, which increasingly
become stores of valueand these could be anything
from gold (always the favoured choice of the country that
Keynes once described as the sink of precious metals) to
dollars to bitcoin. Debasement and creating aversion to
its own currency is therefore something rarely done by
any state out of choice, rather than in response to the
most extreme of exigencies.
We are now in relatively uncharted economic territory in India. But this also means that we may be entering
an entirely new phase of our social contract as well.
existing notes of Rs.500 and Rs. 1000 value. That would

have been one thing if other notes were immediately
available to be exchanged for these. But that was not the
casenor, it turns out, was it even intended to be the
case. Instead, notes could be placed into bank accounts.
Withdrawals from these accounts have been massively
constrained by the absence of new notes. But that was
hardly the only problem, as the move completely disregarded the problems faced by more than one-third of
the population without bank accounts. The small
amount of notes that could be exchanged directly was
progressively reduced from Rs.4,500 to Rs.2,000 and
then nothing at all.
The subsequent series of more than 170 different
(and changing) notications that have determined and
affected implementation of this demonetisation have
further deprived those without access to formal banking
of the right to hold their wealth in this form, and indeed
have effectively expropriated them. The presumption is
that all those with such notes who are unwilling or unable
to put them into bank accounts with PAN cards or other
documents proving identity are criminals, holding black
money.
The possibility of relatively poor people painstakingly
saving up their own cash hoards over years is simply not
considered. Indeed, so strong is the opposite perception
that the government has assumed that any large deposits
into Jan Dhan Yojana no-frills bank accounts are necessarily benami inows from rich people seeking to hide
their own wealth. So deposits into Jan Dhan accounts
above Rs.50,000 are no longer possible without linked
PAN cardsa tall order for vast numbers of poor people
who have had no encouragement or assistance to get into
this system.
In effect, one part of the social contract had already
broken down: the state no longer trusts its own citizens.
Or rather, it trusts only those who make cheque payments or can engage in online transactions, not those
19
C OVER STO R Y
GOVERNMENT HAS CON

SECTIONS WAGES AND
Interview with Utsa Patnaik, professor emerita of economics, Jawaharlal
Nehru University. B Y T.K. RAJALAKSHMI
and rm action, not by treating the entire population as
potential criminals. As regards black money, exact numbers are problematic, but the government itself admits
that of the estimated income which is not declared for tax
purposes, hardly one-twentieth is held in the form of cash
holdings in excess of normal requirements. Certainly,
there is income generated in illegal activities, or in largerscale legal activities by the well-to-do which may not be
fully declared in order to evade tax, but it is a continuous
ow of income mixed up with the declared income from
legitimate activities and the income of the majority of the
population, which is in any case too poor to pay direct tax.
Most of accumulated past undeclared income with the
rich is invested in land, gold and jewellery or held in
accounts abroad.
The measure of declaring as worthless over 86 per
cent of money in circulation without making any preparations at all to quickly replace the notes is an extremely
foolish move without parallel in any country in the world.
There is no point in saying fatuously, as many do, that it is
a bold and dramatic move. If you push almost your
entire population over a precipice, that is a bold and
dramatic move but it is also a criminal move. The small
elite which has ample money in bank accounts and uses
credit cards in large-scale retail outlets is relatively unaffected. The adverse impact has been felt essentially on
THE FALLOUT OF THE DECISION OF THE

National Democratic Alliance government to demonetise currency of higher denominations has been felt
across all sections of people. There are concerns that it
will lead to an overall economic slowdown given the acute
shortage of currency for industrial and agricultural operations. The impact on agriculture and those dependent
on agriculture has been gradually unfolding. Utsa Patnaik, professor emerita of economics, Jawaharlal Nehru
University, spoke to Frontline on the devastating impact
the decision has had and is likely to have, both in the
short and the long run, on people and the economy as a
whole. Chances of an economic recovery, she felt, were
bleak. Excerpts from the interview.
K. BHAGYA PRAKASH
It has been nearly three weeks since the government

announced its decision to demonetise 500 and 1,000
rupee notes. The impact has been felt differentially
across society. Could you comment on the move and its
likely impact?
Lets rst talk about the rationale. The stated purpose
is unearthing black money and punishing those who are
guilty of generating and keeping black money, and it is
supposed to hit terror funding as well as counterfeit
notes. Terror funding and counterfeit notes have to be
tackled directly through patient intelligence gathering
FRONTLINE .
It is very clear that the government... is not

only clueless itself on macroeconomics but
has hastened to get rid of professionally
qualied people who have the independence of
mind to give it good advice.
DECEMBER 23, 2016
20
FISCATED THE POOREST

WORKING CAPITAL
T.K. RAJALAKSHMI
the entire unorganised sectoragriculture, small and

medium industry and on traders and retailers. The very
meaning of a country being poor is that the major part of
the workforce and population is not in the organised
economy.
Because of a quarter century of neoliberal economic
reforms, the segment of the workforce which is in the
organised economy has itself come downof close to 450
million persons in the total workforce, 93 per cent are in
the unorganised sector. Everyone knows that this sector
operates on the basis of cash dealings, and this makes
sense because the transaction costs are lowan employer pays workers directly in cash on a weekly, or even daily,
basis where casual labour is involved, and the workers
immediately spend to meet daily subsistence needs.
What is the point of intervening with a compulsory bank
account where rst the money has to be deposited and
after that the worker has to spend time to withdraw it? It
increases the transaction costs for both the employer and
the employee. Agriculture, small- and medium-scale enterprises and almost the entire chain of supply and distribution of goods fall in the unorganised sector for which
cash is the lifeblood. If working people in this sector have
some little savings they wish to hold in an interestbearing account, it is their choice; they cannot be forced
into it.
The maximum employment outside agriculture in
our country is provided by labour-intensive small manufacturing, especially textiles, which has a large export
contribution as well. Consider the effects of the foolish
move of extreme demonetisation on the small- and medium-scale enterprises ranging from the textile units of
Tirupur to the tile manufacturers in Gujarat, to exportoriented garment manufacturers in Gurgaon and to hosiery units in Punjab; there are lakhs of such small- and
medium-scale units that necessarily hold anywhere from
Rs.20 lakh to 80 lakh per week as working capital. It is
absolutely bona de for an enterprise to keep several
lakhs in cash as working capital because it has to purchase raw materials and pay out wages to labour to keep
its output owing.
By demonetising to an extreme extent, the government has at one stroke deprived these units of working
capital. After their existing raw materials and wage fund
is used up, they have been forced to lay off their workers,
21
K. BHAGYA PRAKASH
who are returning to their villages. There is nothing for

them there, but they can share hardship and help each
other survive.
As an economic policy measure, how sound do you think
this move has been?
There are issues of legal and constitutional basis for
such an extreme measure. Demonetisation is one thingone can demonetise 10 or 15 per cent of the currency.
But declaring over 86 per cent of the currency to be
worthless is qualitatively different and has no precedent
outside war conditions. Notes are just bits of paper without intrinsic value. It is their acceptance by society that
makes them function as money. Every note barring the
one rupee noteand including the 500 and 1,000 rupee
notes which have suddenly been declared to be worthlesscarries the guarantee and signature of the Governor of the RBI [Reserve Bank of India]: I promise to pay
the bearer such and such amount. Now what does this
mean? Of course, notes are not convertible today into
metallic pieces with intrinsic value for exchanging
against goods. This guarantee from the RBI, the highest
monetary authority, basically says that the note gives
purchasing power over commodities and services. The
note is a liability for the RBI and it has violated the
guarantee on its own notes. It has conscated the purchasing power which has been earned by the people
themselves and has not substituted it with new notes
replacing purchasing power, except to the extent of less
than one-eighth of the value rendered worthlessa trivial fraction after three weeks of struggle by people to take
out their own money. The Governor of the RBI, on the
arbitrary directive of the government, is reneging on the
promise made to every Indian citizen.
Yesterday I went to the bank to withdraw money.
Although Rs.24,000 is the amount allowed, in the ab-
sence of enough new notes, my local SBI branch has itself

introduced rationing and for a week now has been giving
only Rs.12,000 per week per account. Some of the very
soiled Rs.100 notes I was given have transparent tape
holding together the torn parts! This sum will not pay
even half the amount I owe my domestic service providers, and it leaves nothing for ones own daily small expenses. The announcement by the Governor of the RBI
that people can now take out more than Rs.24,000 is
nothing but a cruel joke. The supply of money is not
restored, yet empty announcements are made.
The principle that I can freely access my own money
is being violated by the banking system owing to the
arbitrary measure imposed by the government, and this
is a very serious matter, for the trust of the public in the
countrys monetary and banking system has taken a severe blow. It is another matter that a large part of our
public has been kept uneducated by cutting down on
expenditures on literacy and education, and this part of
the public is not aware of its own constitutional rights.
When a political leader with oratorical skills tells them
that all this is for their own good, they tend to believe it
until their own experience tells them otherwise. In reality, the damage actually inicted on the Indian people
and the economy by this single ill-conceived measure is
beyond the wildest dreams of the most rabidly antiIndian of organisations we can think of.
CONTEMPT FOR KNOWLEDGE
There is a move to downplay the impact on the economy.

What would be your assessment?
The damage to the economy is obvious to qualied
economists. It is an articially induced, completely
avoidable economic recession. On the one hand, it is
reducing output by conscating the working capital of
producers and traders, and on the other it has sharply
reduced mass purchasing power, which is being restored
far too slowly because not a single problem was anticipated or planned for. It is very clear that the government
has a complete contempt for knowledge and scholarship;
it is not only clueless itself on macroeconomics, but it has
hastened to get rid of professionally qualied people who
have the independence of mind to give it good advice.
Incidentally, even the colonial government had insisted
on sending its highest-ranking civil servants for training
in economics in England before they started administering a vast and complex country like India.
One of the arguments given by the government is that
the move will help raise taxes that will ultimately be
spent on people in the form of expenditure on public
utilities such as health and education.
This argument reects monetary illiteracy. The power to spend their own earnings has been arbitrarily withdrawn from the people, and the government itself is
saying it will take a considerable length of time to put it
back. Further, production is being reduced both owing to
loss of working capital as well as forced reduction in
demand. Indirect taxes are bound to go down.
The provision that only Rs.2.5 lakh of old notes can be
The power to
spend their own
earnings has
been arbitrarily
withdrawn from
the people, and the
government itself is saying
it will take a considerable
length of time to put it
back.
FRONTLINE .
DECEMBER 23, 2016
22
MALLIKARJUN DANNANVAR
It is impossible for anyone to

have the data to say at this point
of time that the rabi... acreage is
higher than last year.
deposited without raising questions makes no economic

sense as the legitimate weekly working capital of even the
smallest labour-intensive enterprise such as in textiles, or
a traders working capital, will easily be a multiple of this
amount. By threatening the public that any deposit in
excess of Rs.2.5 lakh will come under income tax scrutiny, [the government] in effect is treating every honest
citizen, producer and trader with contempt as a potential
criminal. There is no logical or economic basis for saying
that deposits in excess of Rs.2.5 lakh represent black
money: all such a claim represents is the governments
own illiteracy. If it does use brute force to tax these
amounts deposited, this will amount to arbitrary conscation of citizens income, whatever the legal garb
under which it may be concealed.
and kharif. I saw some reports which say that the rabi
crop is being marketed! It is impossible for anyone to
have the data to say at this point of time that the rabi crop
acreage is higher than last year.
There have been reports of a dip in the prices of
vegetables and other agricultural produce. There are
reports of distress selling.
For those who have their vegetables ready and who
are taking them to the market, there has been a large drop
in prices. The wholesaler who purchases from the farmer
has effectively lost his working capital and has no or not
enough new money to pay the truckers for transport or
for paying the farmer. Naturally, the produce lies rotting
in the elds. As far as the consumer is concerned, with the
immediate sharp drop in purchasing power, as total
demand and consumption has also fallen, there is no rise
in prices. If purchasing power is not restored quickly,
retail prices may fall; while if purchasing power gets
restored faster as compared to the working capital of the
traders, prices may go up. The government has so far
restored only one-eighth of lost purchasing power. Deposits of old money are not what should be looked at, but
how much new money has been issued, and this is minuscule compared with the values rendered worthless by
at. The scenario is very grim from a monetary and
economic point of view.
The idea is that this is short-term pain for a good, longterm objective. How sound is this idea itself?
Even if we give the government the benet of the
doubt, this measure is going to be totally ineffective.
Every schoolchild knows by now that black money is not
stacks of money kept in gunny bags but is in ow and
generated by illegal and legal activities of which the
illegal activities are a tiny proportion. As a former Deputy
Governor of the RBI has pointed out, all notes are white;
it is specic activities generating large-scale undeclared
incomes which are black. Yet, the middle classes as well
as those who engage in legitimate activities are being
threatened and treated as criminals by [the government]
saying that if one deposits more than Rs.2.5 lakh, one will
come under the IT scanner. If there is a legitimate businessman who needs Rs.40 lakh weekly to pay his employees and obtain raw material, why should that come under
the IT scanner? Further, who will scrutinise the Income
Tax scrutinisers? The threat of scrutiny appears to be
tailor-made for future witch-hunts in which the governments political opponents can be selectively picked out
ECONOMIC ILLITERACY
The government has been at pains to point out that any

deceleration in growth rate will be in this quarter and that
there will be a surge in subsequent quarters.
This is economic illiteracy. People who are saying this
are irresponsible and do not seem to know any economics. On the other hand, the professionals whose business
it is to make a realistic assessment of the situation are
saying that the impact on the economy is going to be
serious, a one- to two-year dead loss to the economy apart
from the phenomenal burden of underconsumption that
has been put on an already very poor population. Those
who have made the calculations on various optimistic
scenarios estimate that there may be a drop in the gross
domestic product [GDP] of between 2 to 2.5 per cent.
That absolute drop may not show, however, in the governments statistics. The professionals who advise people
abroad on how to invest their money in the countryand
they have no stake in making tall claims as they do not
contest electionsare saying that there will be an absolute drop in the GDP.
There are those who say that the rural economy,
agricultural output, etc., will not be affected and that the
acreage of the rabi sowing has not shown any drastic
decline because of unavailability of currency to
purchase seeds and fertilizer.
I am amazed that within two weeks of demonetisation they miraculously know exactly how much acreage
has been sown. The rabi season sowing is still in progress
and is in its early to middle stages. The economists who
say this do not seem to know the difference between rabi
23
K. GOPINATHAN
The threat of [income tax] scrutiny

appears to be tailor-made for future
witch-hunts in which the
governments political opponents
can be selectively picked out and
victimised, much as happened
during the McCarthy era in the U.S.
exodus of urban workers is taking place to villages.
It is not so easy to get the economy back on track once
it is derailed. The labour-intensive small and medium
enterprises, which are the [countrys] biggest employer
and foreign exchange earner, are already being forced to
close down. They do not know how long it will take for
cash to be reinfused into the economy. When enterprises
are shutting down, output is going down, how can anyone
say that manufacturing will not be hit? Similarly, those
who are saying the rabi crop will not be affected do not
even know what a rabi crop is as opposed to a kharif crop.
Rural cooperative banks were not permitted to exchange
old notes and are still not doing so, so the situation of
farmers remains dire. The government agencies by now
supply a very small proportion of seeds and fertilizers,
and the private suppliers will not take old notes in any
case, so the farmers sowing plans are getting delayed.
What is your opinion on the role of the RBI in this
matter?
Unfortunately, the RBI has almost always functioned
as an instrument of the government, including of oppressive government policy. I have recently researched a
paper on the Bengal famine of 1943-44. The British
wanted to raise money to nance war expenditure in Asia
and put the entire cost on the Indian revenues. The total
budget spending in India rose sevenfold between 1941
and 1944, and three-quarters of increased spending was
met by the RBI printing notes against a mere promise of
sterling payment later. Prices rose from three to ve
times in 18 months. The expenditure to feed the people
employed in war industries and Allied troops was effectively met by brutally reducing through deliberate ination the purchasing power and consumption of the
poorest of the rural poor. As a result, three million people
died in Bengal. The RBI functioning as an instrument of
British imperialism did what it should not have done as a
responsible monetary authoritythat is the blot on the
history of the RBI under colonialism. In order to pursue
the present move dictated by the government, the RBI
has once more abdicated its role as a responsible monetary authority.
and victimised, much as happened during the McCarthy

era in the U.S.
The government says that the taxes collected will be
spent on public utilities, the ostensible larger good.
It raises enough taxes already to spend on education
and health, but it has been cutting back on rural development and the social sector. Even if it raises more taxes,
there is no guarantee that the people can believe in, that
there will be more spent on the social sectors, when the
government has already violated the basic guarantees
that underpin the smooth working of the economy and
has plunged it into chaos.
There is an ongoing agricultural crisis in the country,
and there have been estimates about the impact on
rural incomes.
I would call it an ongoing depression in Indian agriculture, rather than crisis, a term I reserve for the situation in the export crop sector. The government has for
a long time, since 1991 onwards, brought down rural
development expenditures; it made credit more difficult
for people to access. From the late 1990s, it exposed
farmers to global price volatility by removing protection.
Fluctuations of global prices, particularly for cotton, tea,
coffee and so on, have been a major factor behind farmer
suicides. That general depression and specic crisis in
export-oriented crops continue.
On top of that, the government has now in effect
conscated the wages of the poorest segment of the
population; it has stolen much of the income of the
farmer and imposed a phenomenal burden of loss of
purchasing power. The daily wage worker, the wholesaler
and retailer of goods, the farmer, the service providers
sector, the government has taken away their income and
conscated their working capital, to date to the total net
extent of over Rs.12 lakh crore.
It is a completely mindless measure carried out without preparation to mitigate the consequences. It is not
just imposing temporary painit is actually forcing
people to part with their assets. The unemployment rate
is shooting up. Rural labourers or small farmers will
have to mortgage their tiny assets to survive. Already an
FRONTLINE .
DECEMBER 23, 2016
24
C OVER STO R Y
Brakes on the
rural economy
Demonetisation is likely to adversely affect agricultural growth and shrink
rural incomes and consumer demand. It has already created a serious
credibility crisis for rural cooperatives. B Y R. RAMAKUMAR
First, dates of sowing are dependent on soil moisture
conditions, and a date-to-date comparison has less
meaning than an estimate for the whole rabi season. In
2015-16, a drought year, the rabi area sown with wheat
was less than normal. If about 305 lakh hectares of wheat
was sown in the rabi season of 2014-15, only about 293
lakh hectares of wheat was sown in the rabi season of
2015-16 (as on January 28, 2015). The Ministrys year-toyear benchmark, then, might be convenient, but poor.
Only nal estimates would tell if wheat was sown in at
least 300 lakh hectares in 2016-17.
Secondly, even if sowing is on track, it is at a cost to
the peasantry. The cash crunch has limited the ability of
farmers to purchase seeds and other inputs on time and
at reasonable prices. Farmers purchase seeds and fertilizers largely from private traders and cooperatives and not
government outlets. To sow wheat in one acre, a farmer
would require about Rs.2,500 to buy seeds, about Rs.700
to buy fertilizers and about Rs.1,000 to meet labour
costs: a total of about Rs.4,200 per acre. Thus, a ve-acre
wheat farmer would require at least Rs.20,000 to complete sowing, which is extremely difficult to mobilise
given the limits on cash withdrawal. Reports suggest that
traditional village networks between farmers and traders
are being revived to meet the emergency and most transactions are running on credit. Farmers have also borrowed from moneylenders at high interest rates to pay for
inputs. Hence, surely, costs of sowing have risen.
Thirdly, in many regions where wheat sowing has
taken place, farmers have used a part of the previous
years harvest as seeds. Farm-saved seeds yield, on an
average, 20 per cent less than purchased certied seeds.
In other words, the quality of sowing in the rabi season is
likely to have been poorer than in earlier years.
Indias agriculture has hardly grown after 2011. If we
consider the gross value added in agriculture, annual
growth rates over the previous year were 1.5 per cent in
GEORGE ORWELL ONCE WROTE THAT IN

our times, political speech and writing are largely the
defence of the indefensible that takes the form of arguments which are too brutal for most people to face.
Public statements of the Minister for Agriculture, Radhamohan Singh, reminds one of Orwells words; he said:
Seventy-ve per cent [of rural] people have not been
affected by [demonetisation]. In a village economy, 80
per cent of the people take Rs.50 and Rs.100 notes to
local mandis and do trading, with hardly two to three
people using the bigger currency notes of Rs.500 or
Rs.1,000.
Radhamohan Singh appears to be totally out of tune
with the realities in rural India, which has been thrown
into a deep crisis because of the ill-conceived and poorly
implemented demonetisation scheme. It should have
been a no-brainer that in an economy in which about 85
per cent of all transactions happen in cash, a net withdrawal of about Rs.6.5 lakh crore worth currencyworth
about 46 per cent of all currency circulation, as on November 27would have a crippling contractionary impact on everyday economic transactions. In rural India,
where dependence on cash is higher than in urban areas,
the impact is likely to be most acute. All available information suggests that the impact would be on multiple
spheres: agricultural production, rural incomes, rural
demand and rural credit.
AGRICULTURAL PRODUCTION
An important impact of demonetisation is likely to be on

crop production in the rabi season of 2016-17. The Ministry of Agriculture has claimed that sowing in the rabi
season is unaffected. The Ministry has stated that 127.2
lakh hectares of rabi wheat was sown until November 25,
2016, which was higher than the 117.3 lakh hectares sown
until November 25, 2015. However, these gures give no
room for satisfaction.
25
SUSHANTA TALUKDAR
elds and yards. In other regions, farmers are forced to

sell at a lower-than-market price to traders or sell in
exchange of the demonetised currency of Rs.500 and
Rs.1,000. Those producing perishable commodities and
who do not have access to storage facilities are among the
worst affected.
A striking indicator of supply-chain disruption is the
sharp decline of arrivals in agricultural markets. Nidhi
Aggrawal and Sudha Narayanan of the Indira Gandhi
Institute of Development Research, Mumbai, have
shown that in the rst week after demonetisation, market
arrivals in select major States fell by 87 per cent for
soybean, 55 per cent for paddy, 61 per cent for guar, 51 per
cent for maize, 38 per cent for tur dal and 23 per cent for
cotton. If we take the second week after demonetisation,
the fall in arrivals over the week preceding demonetisation was to the extent of 61 per cent for paddy, 77 per cent
for soybean and 29 per cent for maize.
Farm incomes have slumped just when farmers were
expecting better returns after two consecutive years of
poor returns. According to a pre-demonetisation analysis
by CRISIL, Indian agriculture was projected to grow at 4
per cent in 2016-17 over 2015-16; it also expected the
favourable monsoon to revive rural incomes. After demonetisation, however, a 4 per cent growth rate in agriculture appears unduly optimistic and a revival of rural
incomes appears doubtful. If we assume that incomes of
agricultural households decline by about 10 per cent, and
use income data of 2012-13 as an illustration, it would
imply that even at the average, the monthly income of an
agricultural household would fall short of its monthly
consumption expenditure.
L OAD I N G H A R V E S T near Dhamdhama in Nalbari

district, Assam. In the rst week after demonetisation,
market arrivals in select major States fell by 87 per cent
for soybean, 55 per cent for paddy, 61 per cent for guar,
51 per cent for maize, and 23 per cent for cotton.
2012-13, 4.2 per cent in 2013-14, -0.2 per cent in 2014-15

and 1.2 per cent in 2015-16. That is, except over 2013-14,
gross value added in agriculture did not grow at more
than 1.5 per cent a year. But 2016-17 was to be different.
In 2016, the rainfall received was higher than in previous
years. If 46 to 49 per cent of the 629 districts in India
received less than normal rainfall in 2014 and 2015, the
corresponding share in 2016 had declined to 33 per cent.
Consequently, there was much hope placed on agricultural growth rates in 2016-17. These hopes have been
dashed by demonetisation.
RURAL INCOMES
Average incomes of Indian agricultural households are

extremely low. According to a survey of the National
Sample Survey Office (NSSO) in 2012-13, the average
monthly income of an agricultural household was
Rs.6,426. The average monthly consumption expenditure per agricultural household was Rs.6,223. Averages
hide internal variations. Aparajita Bakshi of the Tata
Institute of Social Sciences, Mumbai, has estimated that,
in 2012-13, about 50 to 70 per cent of the agricultural
households survived on incomes that were inadequate to
meet their requirements of consumption expenditures.
Demonetisation has disrupted agricultural supply
chains and hit even the meagre incomes agricultural
households earn. November is the month when kharif
harvests arrive in mandis. But the cash crunch has prevented the smooth sale of harvest by farmers. In some
regions, traders have not picked up farmers harvest from
FRONTLINE .
DECEMBER 23, 2016
RURAL DEMAND
As growth rates in capital investment are slowing down,

Indias gross domestic product (GDP) growth in 2016-17
26
cooperative banks have historically emerged as part of a

struggle against usury capital; they play a central role in
nancing agricultural and non-agricultural activities in
rural areas, as well as in lending to the landless poor.
Yet, after November 8, primary cooperative societies
were not allowed to either exchange old notes for new
notes or provide fresh crop loans with new notes or even
accept repayments of outstanding debt in old notes. The
primary societies were also not allowed to exchange their
existing stock of old Rs.500 and Rs.1,000 notes with
either the Reserve Bank of India (RBI) or banks. Reports
suggest that primary societies in Maharashtra are sitting
on Rs.40,000 crore worth of old notes, which the RBI has
not yet accepted for exchange. In the absence of cooperative credit, moneylenders are emerging as new sources
of nance for many rural households.
In sum, the government has created a major credibility crisis for the century-old cooperative banking network. There are reports that customers are eager to
withdraw deposits from cooperative banks. Any prolonged crisis might even lead to a run on these banks.
Collapse of cooperative banks would immediately open
up Indias rural credit market to usurious moneylenders
and traders.
On its part, the government claims that the recent
expansion of the rural bank branch network has ameliorated the adverse impacts of cash crunch in rural areas.
Nothing could be farther from truth.
The number of brick-and-mortar rural bank branches in India did increase between 2011 and 2016. Still,
crores of households continue to remain without access
to bank branches. As on December 31, 2015, there were
about 5.55 lakh unbanked centresdened as centres
without a brick-and-mortar branchin India. Of these,
about 5.54 lakh unbanked centres were in rural areas.
The population that resided in the unbanked centres in
rural areas amounted to 62.9 crore. In other words, about
81 per cent of the rural population did not have access to a
bank branch within their centres.
The RBI might respond by noting that most unbanked centres have a banking correspondent (BC) to
undertake banking activities. However, the BC model
has been totally incapable of dealing with the huge pressure of cash demand in the villages. On November 14, the
government raised the cash holding limit of BCs to
Rs.50,000 a day. However, as adequate number of new
notes was not printed, most BCs never obtained the
higher cash holdings. Even if they did, assuming a withdrawal limit of Rs.2,000 per person, one BC would serve
only about 25 persons a day. In other words, the BC
model has been a poor substitute for bank branches.
To conclude, demonetisation is likely to affect agricultural growth adversely and shrink rural incomes and
consumer demand. It has already created a serious credibility crisis for rural cooperatives. Radhamohan Singh
may do well to consult a few sensible advisers, who would
tell him how wrong and callous his remarks were.
R. Ramakumar is Professor, School of Development

Studies, Tata Institute of Social Sciences, Mumbai.
and 2017-18 is crucially dependent on growth in consumer demand (and government spending). Quick estimates
show that about 68 per cent of Indias population lives in
rural areas; 54 per cent of the total consumption expenditure comes from rural households; about 35-40 per cent
of the GDP comes from rural areas; and about a third of
the total savings comes from rural areas. Though agriculture contributes only about 15 per cent to Indias GDP,
there continues to be a fairly high correlation between
gross value added in agriculture and total value added in
the economy.
As higher rural incomes would lead to higher consumer spending, the CRISIL report of October 2016 was
optimistic. It projected that the upturn in rural incomes
should push private consumption [growth rate] above 8
per cent in scal 2017, compared with 7.4 per cent in
scal 2016. Higher rural income growth was expected to
lead to higher rural sales of television sets, electric fans,
motorcycles, tractors and multipurpose vans. For most of
these goods, there was de-growth in 2014-15 and 201516 because of poor agricultural growth. However, for
2016-17, the report pointed to green shoots, and projected that the recovery [of rural demand] is likely to
gain strength in the coming months.
Demonetisation, however, has poured cold water on
such optimistic assessments. Preliminary estimates suggest that sales of fast-moving consumer goods fell by 30
per cent in November 2016 compared with November
2015. Over the same period, car sales declined by 15-40
per cent. In small towns, sale of mobile phones declined
by 70 per cent. The consumer goods giant Hindustan
Unilever has reportedly stated that trade is down due to
the liquidity squeeze (Hindustan Times, December 2,
2016).
Government spokespersons agree. Finance Minister
Arun Jaitley has stated that people may suffer hardships
for one or two quarters. According to Arvind Panagariya,
Vice Chairman of NITI Aayog, there may be an adverse
impact on GDP growth in the third and fourth quarters of
2016-17. Arvind Subramanian, Chief Economic Adviser
to the government, has stated that he expected uncertainty in the third quarter of 2016-17. The worst
assessment was from Ambit Capital, which has projected
the possibility of negative GDP growth in the third quarter of 2016-17 and an overall agricultural growth rate in
2016-17 of just 0.8 per cent. Reality may vary from these
estimates, but the tension is palpable.
ACCESS TO RURAL CREDIT
Cash crunch in rural areas turned more acute owing to

the near-shutting out of the cooperative bank network
from the purview of cash exchange. In rural India, cooperatives accounted for about 15 per cent of the total debt
outstanding of agricultural households in 2012-13. In
States like Kerala and Maharashtra, cooperatives accounted for more than 40 per cent of the total debt
outstanding of agricultural households. These gures
reveal the strong dependence on cooperatives for cash in
rural production and exchange. In States like Kerala,
27
C OVER STO R Y
DOWN AND OUT

The demonetisation decision has seriously hurt agriculture and
allied activities and the rural economy will take a long time
to recover from the shock.
Growing worries
was a major headache for us, he said. After much pleading with some nationalised banks, he managed to deposit
some money in the cooperatives accounts, but by the end
of November he was still saddled with Rs.28 crore in
banned currency. The banks, he said, simply did not have
the space to keep such large volumes of cash and so asked
him to wait until the situation assumed a degree of
normalcy.
Ramakrishnegowda said the cash withdrawal limit of
Rs.24,000 a week (which applies even to the accounts of
primary milk producing cooperatives) is ridiculously
low. The cooperatives have to pay their members
amounts running into a few lakhs on a fortnightly basis
depending on the volume of milk procured. Farmers
supplying milk have not been paid for almost a month in
view of the cash withdrawal limit. Credit for agricultural
operations was at a standstill, and this will have a severe
impact on farmers ability to purchase inputs or pay
wages for farm labour, he observed.
Cocoon market: Sericulture, which has for long
been an avenue of diversication, is also proving disastrous for farmers. Farmers expect a spike in cocoon
prices in the winter, the season when the demand for silk
peaks, but clearly these are not normal times. Cocoon
prices are stagnant in the face of a collapse in the offtake
by silk reelers. Reelers complain that merchants of raw
KAR NAT AKA

BY V. SRIDHAR in Mandya
RISHIKESH BAHADUR DESAI in Bidar
G.T. SATISH in Hassan
VIKHAR AHMED SAYEED in Bengaluru
FRONTLINE .
DECEMBER 23, 2016
BY SPECIAL ARRANGEMENT
THE farm economy in Karnataka is facing a severe

crisis. Agriculture in Mandya district is dominated by
small farmers who grow a wide range of crops. They are
bearing the brunt of the cash crisis.
The district recorded the most number of farmer
suicides in the State last year. For paddy growers, who
were already reeling under the impact of a severe
drought, and sugarcane growers, wilting under the pressure of delayed payments by sugar mills, this is a crisis
they could never have been prepared for.
The outlook for the next sowing season appears grim
as cooperatives, the primary source of credit for small and
marginal farmers, are in limbo. The cooperative milk
procurement and supply system in the State has also
been hit hard. Farmers supplying milk to the Mandya
District Cooperative Milk Union, affiliated to the Karnataka Milk Federation, the State apex cooperative, have
been unable to access their money because the cooperatives operations have been frozen since demonetisation.
P. Ramakrishnegowda, Chief Executive Officer of the
Mandya District Cooperative Central Bank (DCCB), said
that between November 9 and 14, the bank collected
deposits totalling Rs.95 crore from the public and they
were in compliance with RBI regulations. Suddenly, at
about 3 p.m., we got a message from the RBI that we
should not collect cash in the banned denominations.
According to banking regulations, the savings of depositors ought to be kept in accounts with nationalised
banks. Ramakrishnegowda faced a serious problem because the banks were unwilling to accept cash in Rs.500
and Rs.1,000 denominations. Sitting on this pile of cash
CR OW D S G A THE R in front of the State Bank of
Hyderabad branch in Humnabad, Bidar, which serves

11 villages in the vicinity.
28
T. GOPICHAND
cocoon sellers. Reelers are paying us in the old currency

and are adopting a take-it-or-leave-it attitude. A superviser at the Malavalli market said trading had collapsed. Only 900 kg of cocoons were auctioned
yesterday, whereas, at this time of the year normally
about 2,000 kg would be sold, he said.
Jaggery production: Mandya is a major centre for
jaggery production. T. Yashvantha, an activist of the
Karnataka Prantha Rytha Sangha, told Frontline that
only about 300 of the 450 jaggery units in the district
were operating. He pointed out that these small-scale
units, which were dependent on migrant labour from
Uttar Pradesh and Rajasthan, employed at least 10 workers each. The shutdown is reected in the collapse in
jaggery prices, from about Rs.3,600 a quintal before
demonetisation to about Rs.2,950 a quintal nowa drop
of 20 per cent. The high price for sugarcane offered by
jaggery units appeared to be a boon for the long-suffering
sugarcane growers here, but demonetisation has
snatched away that hope, Yashvantha said.
Jaggery production in the district has come to a
grinding halt because the units are unable to either pay
wages to workers or cash to farmers. The lone trader at
the sprawling jaggery market at Mandya said: What is
the point in running a jaggery unit when nobody has the
money, at least in valid notes, to buy in these uncertain
times?
The market for tender coconuts, a speciality of Mandya, has also been hit hard. Traders have an interesting
tale to tell. The arrival of tender coconuts at the Agricul-
FAR M E R S W H O B R I N G GRA I N and fruits to the

wholesale market in Bidar are forced to sell them on
credit to commission agents.
silk are staying away from the main cocoon markets.

Siddaraju (28), a silkworm farmer in B.G. Pura village in Mandya district, is distraught. He has brought 35
kilograms of cocoons to the cocoon market at Malavalli,
but does not expect any takers unless he is willing to sell
them at a discount. The price ranged between Rs.300
and Rs.370 a kg yesterday but today I expect nothing
more than Rs.350 a kg, he said.
Mukhtar Pasha, a silk reeler who sells raw silk to
merchants in Andhra Pradesh, said: The market has
suffered a seizure because the merchants are unable to
pay in cash, especially of the legal kind. A day earlier, he
managed to buy cocoons worth Rs.10,000 from farmers
making half of the payment in Rs.100 notes and the
remaining in Rs.500 notes. But his option of dealing in
the now-banned notes is fast disappearing. I have not
even seen the new 500 rupee note, let alone use it in a
transaction, he said. He said the merchants were willing
to pay only in the demonetised notes and that he was
unwilling to be stuck with tender whose validity had
ceased. Pasha said he had ve bags (20 kg each) of raw
silk valued at Rs.3 lakh for which he was unable to nd
takers. If the situation continues, cocoon prices will
crash, he said.
Channaraj, a sericulture farmer, said reelers were
transferring the pressure of exchanging old currency to
29
tural Produce Market Committee (APMC) yard in Maddur near Mandya collapsed from about 3.65 lakh nuts on
November 5 to about 1.16 lakh nuts on November 10,
after demonetisation. But interestingly, arrivals picked
up again, reaching 2.91 lakh nuts on November 19. Why
did this happen? Mallesh, a trader at the yard, has the
answer. Traders from outside the State, especially from
Mumbai and Pune, were willing to pay a premium for the
coconut because they found a way to get rid of the demonetised notes, especially the Rs.1,000 notes. That is when
prices reached Rs.22 a nut, but by the end of November
the price fell to Rs.12 a nut. Mallesh said while some
farmers were staying away, waiting for prices to recover,
small farmers were ready to sell on deferred payment
basis because they had no other option.
VILLAGES WITHOUT BANKS
Moti Ram Damla has returned to his home in Lal Singh

Tanda from the nearby Aurad town in Bidar district after
selling two quintals of red gram. Although the market
price of 100 kg of soya is Rs.3,000, Damla was forced to
sell at Rs.2,200 a quintal as the trader told him to either
take the old currency or come back after two months if he
wished to sell at Rs.3,000 a quintal.
Narsingh Rao Hatkari, a small farmer in Jamalpur
village on the Karnataka-Maharashtra border, is trying
to resist the temptation of selling his produce. He lives
with his wife, son and daughter in his 100-square foot
home. He has grown 12 quintals of soya in his 1.2 hectares
of land. In his modest home, the women sleep in the
space available between the 24 bags of soya arranged
along the wall, while the men sleep outside. Hatkari also
rears eight sheep. I will lose Rs.10,000 if I sell now. I will
rather wait, he said. His land is not irrigated and he is
not planning to raise a rabi crop. We may have to work in
someone elses elds in the next six months, he said.
Ramrao Gyanoba, a farmer and petty businessman in
the village, said he had been hit both ways. I have not
been able to sell my soya and red gram as I did not agree
to sell at a lower price. The number of customers to my
shop has reduced greatly. I have no cash on hand now. I
am waiting to sell whatever is left in my shop and then
worry about selling the grain, he said.
The district has around 11 lakh ha of agricultural
land, of which around seven lakh ha is cultivated in two
seasons. Bidar, along with Kalaburgi, produced around
40 per cent of the pulses in the State, M. Ziaullah, Joint
Director of Agriculture, said.
This kharif season, Bidar had the largest extent of
land under soya in Karnataka, nearly 1.45 lakh ha. Jowar,
or sorghum, is the staple food here and is cultivated in
around 70,000 ha. Red gram is grown on 50,000 ha, and
green gram and black gram on around 30,000 ha each.
Sugarcane, the lone cash crop of the region, is cultivated
in around 25,000 ha. The fields are either full of readyfor-harvest soya or red gram. Farmers are putting off soya
harvesting as they have no money to pay labourers. They
will resort to barter by giving the labourers 2.5 quintals
for every 10 quintals of grain plucked and stocked.
FRONTLINE .
DECEMBER 23, 2016
THE TE N D E R COC ON UT
market yard in Maddur in

Mandya district. Arrivals
collapsed after the
demonetisation but picked
up on buying by traders
from other States eager
to get rid of the banned
notes.
Medium and large farmers seem to have harvested

the grain by paying farm hands either in cash or in kind.
Some rich farmers, who employ regular labour, have paid
them annual wages of around Rs.80,000. Selling the
produce at the mandi is not easy. The commission agent
is willing to buy the grain only on credit or pay less. Early
kharif crops such as green gram and black gram were
harvested and sold to the commission agent in October
itself. They are yet to reach the retail market. Vendors say
there is a chance of their prices going up.
Bidar also has a large grain market. On an average,
around 100 trucks carrying at least 10,000 quintals of
grain, oilseeds and pulses leave the market every day. But
now, only 4,000-5,000 quintals of goods are sold. That
is because there are no buyers and the prices have fallen,
albeit slightly. If the money crunch continues for a few
more weeks, prices will increase. Apart from affecting
trading volumes, it could affect food security, too, Basavaraj Dhannur, a miller and member of the grain traders
association, said.
Rajendra Pawar, a farm labourer from a tanda near
Ekamba, said he brought home soya and black gram as
30
THE HINDU ARCHIVES
its an incentive of Rs.4 a litre in the bank accounts of the

dairy farmers every quarter.
M. Nabi Qureshi, president of the Jamat ulQuresh,
or district butchers association, said there was a marked
decrease in the demand for goat or chicken meat. All our
transactions are in cash. Now we have no money. It seems
like someone has cut our lifeline, he said.
Penetration of banks is poor in this backward district.
Of the 600 villages and 300 wadi-tandas (Scheduled
Caste and Scheduled Tribe settlements) in the district,
bank branches are located only in 213 settlements. The
wadi-tandas are mostly not covered by banks. Satish
Kumar Maruti Rao, a lorry driver of Umapur in Basava
Kalyan, skipped his work for ve days to travel to the
nearest bank located 12 kilometres away to exchange the
old currency notes and get money to meet his petty
expenses. Everyone from my village left their work to
wait at the bank, for they need money to start preparations for the rabi cultivation, he said.
The RBI has set a mandate to cover all habitations
with a population of 5,000 with at least one bank branch
by April 2017. This means that there will be banks only in
six villages and not more, said B.G Shetkar, Bidar chamber of commerce and industries president.
The district is dependent on cooperative institutions.
Over 75 per cent of farm loans are issued by the DCCB.
Bidar is also recognised as a self-help groups (SHGs)
district, with over 22,000 SHGs active in the villages.
Women from these groups deposit their savings and take
loans from the primary credit societies in 171 villages. The
70 milk societies and the ve sugar factories in the district operate through these societies and the DCCB. With
the RBI disallowing cooperative institutions from handling the banned currency notes, activities in these institutions have come to a standstill.
PLANTATION BLUES
wages. We use black gram in our cooking, but not soya. I

have to sell it to get some money for daily expenses. But
no one is buying soya in the mandi, he said. Traders are
not giving cash, but asking us to wait for one or two
months. We cannot afford to do that, he said.
Vithal Shilke is among hundreds of donkey-rearers in
the district whose beasts carry the grain on their backs.
The owner is paid about 1.5 kg of soya or red gram for
every 40 kg of grain carried by an animal. Shilke makes
around Rs.3,000 for every donkey load. But now farmers have no money, so they are giving us more grain, he
said.
Kalavva Jhareppa, a widow living near Hanumanthwadi, a Dalit hamlet, has only a buffalo to depend on. She
earns between Rs.50 and Rs.100 a day, depending on the
season and the milk yield. The milk society in Ekamba
village, which collects the milk, has not paid her since
October 30. Our payments are usually delayed by weeks.
But this time, due to the note ban, farmers have not been
paid, she said. While the secretary of the milk society
visits the houses of cattle owners to hand over Rs.24 for
every litre of milk supplied, the State government depos-
Gowribai (60), an illiterate Dalit woman working in a

poultry farm at Shantigrama near Hassan, about 180 km
from Bengaluru, did not hear about demonetisation until
she approached a shopkeeper to purchase a pack of biscuits for her grandchildren. She was waiting for a bus to
reach her daughters place when the shopkeeper told her
that the Rs.500-note she was carrying was not acceptable
as legal tender any more. She was shocked and went to all
shops seeking change as she was about to board a bus. As
nobody was willing to give change for the higher denomination note, she went to her employer, who had paid her
wages the previous day. She had not opened a bank
account as she never felt the need for one.
Like her, several elderly men and women of Angadihalli, a village consisting of the nomadic Hakki-Pikki and
Shillekyata tribes, have never felt the need to open a bank
account. I had Rs.6,000 in old currency notes. As I dont
have a bank account, I gave it to a relative who has an
account so that he can deposit it and give me the money
later, said Bandhu (75).
Hakki-Pikkis sell traditional medicines (plant extracts) and offer therapeutic massages. Demonetisation
31
BY SPECIAL ARRANGEMENT
FA R M E R S S E L L I N G milk at a cooperative collection centre in Mandya district.
tials in the local weekly market and the due as salary at

the end of the month. With restrictions on bank withdrawals, estate owners had no cash to make advance
payments. They began transferring the advance amount
(normally Rs.1,200 a week) to those who had opened Jan
Dhan bank accounts.
Anand, who works at Uttolalu Estate, said: My employer credited Rs.1,200 to my account and my manager
informed me about it. I went to the bank at Arehalli in
Belur taluk to withdraw cash as I required it for purchases in the weekly market. The bank officials refused to
honour my withdrawal form saying that they cannot give
me Rs.1,200 as they would have to hand over 12 Rs.100
notes. They asked me to withdraw only when the balance
in the account was Rs.2,000.
If this is the plight of plantation workers, their employers fare no better either. Planters with 10 ha estates
require Rs.30,000 to Rs.50,000 each a week to pay the
workers. Moreover, during the harvest season they have
to spend more as they hire more workers. Many people
from Assam, Odisha and other districts of north Karnataka are working in our plantations. The majority of them
do not have bank accounts. We have to pay them in cash,
which is impossible given the withdrawal limits. Even if I
get cash, it is only in Rs.2,000 notes. The workers have
got currency but they cannot use it, said B.S. Jairam,
president of the Karnataka Growers Federation.
Planters, who are already expecting poorer than normal crop this year due to a decrease in rainfall, are
worried over the quality of coffee beans. If the harvest is
delayed we will not get the desired quality beans. This
has hit their daily earnings. People buy medicines worth

Rs.150 and offer Rs.500, said Rahul (36). He earns well,
but does not have a bank account. With no earnings, most
of the men have returned to the village. Some of us have
deposited whatever cash we had in our bank accounts.
We are worried that the deposits may result in our below
poverty line cards being conscated, said Hooraja, a
gram panchayat member.
Dalits and Other Backward Class members form the
majority of the farm and plantation labour. The plantation workers are paid Rs.250 and Rs.350 a day, while
others earn about Rs.200. With no cash on hand, farmers
either delayed the kharif harvest or delayed the rabi
cultivation, forcing workers to lose their source of income. Hundreds of farmers have left their maize crop on
the eld as there are no buyers.
Earlier this month, a merchant offered Rs.1,450 for a
quintal of maize and also paid a small amount as advance. So far he has not turned up to purchase the
produce, said Sanne Gowda, a farmer at Attihalli in
Hassan taluk. He has left the crop standing. Unless the
harvest is marketed he cannot go in for rabi cultivation.
Desperate farmers are willing to sell off their produce
even for a lower price. I am ready to sell maize even for
Rs.1,250 a quintal, but I hardly come across merchants
ready to offer even that much, he added. In the case of
ginger, the price has come down to Rs.950 a bag (62 kg),
which had gone up to Rs.1,300 a few days ago.
Plantation workers have not got the payment for a
few weeks as estate owners have not been able to withdraw cash. They get a weekly advance to purchase essenFRONTLINE .
DECEMBER 23, 2016
32
will affect planters and workers in coffee estates, said

Jairam. A few planters are managing this situation by
withdrawing cash from more than one account in the
family. A planter said he withdrew money from accounts
of all his family members to pay the workers. I have to
pay an advance to the middleman [agent] who brings
workers from north Karnataka to work in the estate
during the picking season, he said.
The banks are making use of this opportunity to
recover loans. Kantaraj, a resident of Shettihalli near
Hassan, had borrowed Rs.40,000 to set up a chicken stall
in the village. The monthly instalment was Rs.2,000. He
could not pay the instalment in October as he had to

spend all his earnings for the treatment of a family member. He had banned currency notes worth Rs.8,000. He
deposited them in his account with Canara Bank in
Shettihalli branch. The official deducted Rs.4,000 [including the current months instalment] for his loan and
credited the rest to his account.
THE ONION MARKET
SUDHAKARA JAIN
Of the various yards at the APMC mandi in Yeshwantpur

in north-west Bengaluru, the onion market, which constitutes a separate yard, is the largest. During the peak
ONION A UC T I O N on at the APMC yard in Yeshwanthapura, Bengaluru, on November 29.

33
FRONTLINE .
DECEMBER 23, 2016
VENKITESH RAMAKRISHNAN
season, between October and December, one-third of

Indias onion trade takes place in this market. Onions
from here are sold in places all over India and even
exported.
On November 28, only 565 trucks carrying 1.13 lakh
sacks of onions arrived at the mandi, down from 1.37
lakh sacks a couple of days earlier (a sack of onion weighs
between 50 and 70 kg). The quantities are falling every
day. During this time of the year, we usually have a
turnover of more than 210,000 sacks on a daily basis,
said Ravishankar Balakrishna, president of the Potato
and Onion Merchants Association, at the yard.
So far, we have just about managed with cheques,
online payments and current account and personal account withdrawals and are selling mainly on credit. We
are also forced to trade in old currency and 25 per cent of
our transactions are happening in old Rs.500 and
Rs.1,000 notes. With supply getting affected on a daily
basis, we may have to down our shutters, he said.
The onion trade, like business in other commodities
at the APMC yard, is mainly done in cash and payment to
farmers is made instantly. With a severe shortage of valid
currency notes, business has shrunk. The number of
vendors and buyers who use cheques and other non-cash
banking avenues is estimated to be only about 20 per
cent.
This year, the best quality onions are sold at Rs.15,
compared with Rs.60 last year, during the peak season.
While one of the reasons for this was a shortage of onions
last year, demonetisation has also resulted in a fall in
demand this year leading to a fall in prices. Even the State
Agriculture Department has offered a minimum support
price of only Rs.6.24 a kg of onions. According to traders,
farmers are disposing of their low-quality onions at this
price, which are subsequently sold by government agencies for Re.1 or Rs.2 a kg at the APMC market.
Farmers are suffering as the sale price has fallen
much below the support price offered by the government.
We take a loan at the start of each cropping season and
with the drought this year and now demonetisation, we
can expect another spate of suicides in Karnataka, said
Lakshmana C., an onion farmer from Chitradurga who
had come to the mandi with 25 sacks of onions.
Abbas, a daily-wage worker who hauls sacks of onions, was standing near an opening in the wall, to buy a
plate of rice and dal for Rs.20. Eating his meal, he said he
was paid Rs.5 for each sack of onion he hauled. During
the season, which lasts three to four months, there is a lot
of work and some of us even make Rs.800 a day, but this
time our workload has been coming down every day.
Yesterday, I made only Rs.200. Many of the traders insist
on paying in old currency and I dont know what to do as I
dont have a bank account, he said.
Large retailers purchase onions from the mandi,
which has around 500 wholesale traders. They purchase
on behalf of hotels or resell the onions to small vendors.
D. Babu, a large retailer from Russell Market in
Shivajinagar, who usually buys 300 sacks of onions every
day to resell to petty vendors, said his stock, which used to
M AHE S H C HA N D , a vegetable retailer in western

Uttar Pradesh, has seen his sales halved because
people do not have cash to spend.
last a day, lasted three days now. We are forced to use old
currency, otherwise our business will stop completely.
Take, for instance, a pushcart vendor who makes a few
hundred rupees a day and who has very little savings.
Demonetisation has destroyed his life.
Potato disaster
WE STE RN UTTAR PRAD E SH
IN early November, the medium farmer Fateh Singh

Bhattis days were divided more or less equally between
stocking up potatoes that were being harvested from his
farms in and around Harnauti village of western Uttar
Pradesh and making preparations for his daughters
wedding scheduled for the rst week of December. The
harvest, Bhatti told Frontline, was coming up nicely, as
were the preparations for the wedding. My best-quality
potatoes were being picked up by the wholesale market at
Rs. 2-13 a kilogram and I was looking forward to making
34
had with the rented cold storage was that they would
accept and keep my produce until November 30. There is
time, I thought, as did many other farmers. So, we held on
until November 12 without reducing the price. It also
meant that, practically, we were not selling anything. The
following week the harsh reality dawned on usthat this
was going to be a long-drawn and tortuous affair. The
mess in the banks and on the roads brought home that
reality to us. We started bargaining frantically and reducing the price day by day. The deadline with the cold
storage, which had seemed comfortable just three days
ago, started acquiring ominous proportions with each
passing hour. There was no hiding our desperation. Day
by painful day we brought the price down, to Rs.10, then
to Rs.8, Rs.6, Rs.5, Rs.4 and then Rs.3. Each reduction
told us that we are doomed for this season. Even then,
there is no chance of selling all my produce. The cold
storage will throw out our stuff once the contract period
is over. Large quantities of potatoes will rot and perish
even though potatoes have a longer shelf life than other
vegetables like tomatoes.
Bhattis family raises multiple crops on 100 acres (40
hectares) of land every year. He, therefore, hopes to
recoup some lost ground. But there are several farmers
across Uttar Pradesh who put all their energy into cultivating one good crop a year. They are doomed this year.
These three weeks in the harvesting and sowing season
have literally dealt them a crushing blow, he said. Bhatti
is going ahead with his daughters wedding with help
from friends and family but with a reduced scale of
celebrations.
Travelling across four districts of western Uttar Pradesh, Frontline met scores of vegetable and fruit farmers,
farmhands, and small-time retailers in villages and small
towns. These people grow and sell potatoes, tomatoes,
cauliowers, cabbages, leafy vegetables and sugarcane.
In village after village and district after district, farmers
complained that the prices of their produce had slumped
to roughly one third of what they were before November
8 and that sales had dropped to half of earlier volumes, or
even lower.
Rajkumar Kashyap, working in a jaggery kohl (a
small village set up for converting sugar cane into jaggery) at Shamli, told Frontline that the kohls normally
help sustain the liquidity of the farmer. Unlike the sugar
mills that operate on credit and long-term payments, the
kohls have a kind of ready cash system. That, too, has
collapsed after demonetisation. The collapse in liquidity
has upset every aspect of day-to-day life in these villages
and towns.
Mahesh Chand, a small-time vegetable retailer at
Sikandrabad, said his earnings had been halved, although the slump in retail prices had been proportionate
to the prices offered to farmers by wholesalers. Chand
knows Bhatti and is aware of what the farmer is going
through. My sale price is still at least double of what
Bhatti is getting from the wholesaler. But then people do
not have money to buy. My sales have come down from
around Rs.600 a day to about Rs.300. We are putting up
FATE H S I N G H B H A T T I , a potato grower in western

Uttar Pradesh, has seen his thriving potato crop turn into
a disaster as prices slumped.
a considerable prot by the time the current lot of potatoes moved from my storage to the market. The slump in
the production of potatoes in south India, particularly in
Karnataka, had raised the demand for north Indian potatoes. Then came the demonetisation announcement, and
everything collapsed.
Frontline met Bhatti on November 27, about three
weeks after the announcement. In these three weeks, the
price of potatoes fell to Rs.3 to Rs.4 a kilogram. My crop
has become an unmitigated disaster. I will not be able
even to recoup my sowing and production expenses, let
alone make a prot. Just to break even, I should have got
Rs.8 a kg.
Bhatti gave a day-by-day account of the disaster. The
effect of demonetisation struck on November 9 when
market agents and middlemen refused to pick up our
load and the truckers refused to accept old notes for
transporting charges. My fellow farmers in Harnauti and
nearby regions of Sikandrabad and I had thought that
this was a temporary affair that would be set right by the
government in three to four days. Indeed, that was promised in the television pronouncements. The deal that I
35
been of much help. Amrit Pal Singh, resident of Chahal

village in Patiala district, who was visiting the grain
market to sell his Basmati paddy, complained that the
arhatiya had not paid him his due and it had added to the
problem of overseeing a healthy rabi crop, which was
sown with great difficulty by taking loans or buying
manure, seeds and other materials on credit or good
faith. Often we cant pay by cheque because the sellers
worry that we may be indebted and the cheques may not
be encashed, so they demand assurances from arhatiyas
that we will pay back, Amrit Pal said.
Experts in the States agriculture sector said farmers
were the worst affected by demonetisation, not private
traders or State agencies who buy the produce or arhatiyas. For, farmers are dependent on liquid money in view
of the inadequate penetration of cashless economy infrastructure in rural areas.
S. Ravinder Singh Cheema, vice-chairman of the
Punjab State Agricultural Marketing Board, explained:
Only farmers are suffering. Barely 10 per cent of the total
value of kharif cropsincluding paddy worth Rs.25,000
crore, cotton worth Rs.1,000 crore, and other crops,
including maize, worth Rs.500 croreis available in the
market in cash. Rural banks dealing with the agricultural
market are not getting sufficient cash. There are almost
2,500 such banks in Punjab. Once this volume of cash
rotates in the market after farmers get it from the bank,
things may improve relatively. The rabi crop market, not
the crops themselves, will still be affected though.
In the fruits and vegetables market, the situation
appears to be worse. Business has reduced by almost
50-60 per cent. But even this much is going on because
we are accepting the old Rs.500 and Rs.1,000 notes to
prevent the trade from being further hit. But we have
asked our members not to accept the notes after December 20. I feel we will know the real impact on our trade by
January 10 when the old notes will no longer be valid,
said Amarvir Singh, general secretary of the Ludhianabased Wholesale Fruit and Vegetable Sellers Association. He feels the grape and pomegranate fruit seasons
which begin in early Januarywill most certainly be
hit by the drastic reduction in demand. Early indications
of this are coming from the demand for the kinoo fruit,
the season for which begins in mid November.
Just yesterday I was told that if there was order
earlier for, say, 10 trucks from Hyderabad for kinoo from
Hoshiarpur, Fazilka and a few other districts, it has
reduced to two trucks, he told Frontline. In the vegetable
market, prices of coriander, carrot and capsicum have
with all this in the hope that poor retailers like me and
agricultural labourers who belong to the same category
will be prioritised when Modiji decides to give a bonanza
to the poor after rounding up all the black money from
the rich, he said. Asked how much he is expecting,
Chand said that some supporters of the Prime Minister
had told him that there would be cash transfers between
Rs.3 lakh and Rs.4 lakh but that he would be happy with
even Rs.1 lakh or Rs.50,000.
Stench of paddy
L U DHIANA
BY AKSHAY DESHMANE
FOR someone burdened by a severe cash crunch and

indebtedness, Gursev Singh from Malakpur village
speaks with an unusual equanimity. The money given by
the arhatiya [commission agents who act as money lenders as well as intermediaries between farmers and
buyers] has been paid back by me in instalments, on
time. Banks are giving Rs.6,000 a day. I cant use that
money to make payments to the cooperatives and shopkeepers or buy anything in the market because I have a
huge loan to repay. Moreover, cash is not received in large
sums, so I am sad, he told Frontline matter-of-factly,
having just returned from yet another meeting with his
arhatiya inside what is considered to be the Asias biggest food grain market, Khanna Mandi, in Punjabs Ludhiana district.
Not far from where we speak on a chilly late November afternoon, the seasons last batches of paddy are
being unloaded from trucks, cleaned and auctioned.
There is the stench of paddy husk in the air as farmers,
traders, sweepers and drivers are engaged in their respective jobs. Gursev was expecting to receive some money
owed to him by the arhatiya but has been told that the
government agency which bought his paddy worth Rs.9
lakh has not paid the full sum yet. In addition, there is the
uncertainty about receiving cash. I have to endure the
inconvenience of standing every day in a queue outside
the local bank. Often the bank runs out of cash when my
turn comes, he said.
Gursev shares this predicament with a large number
of farmers in the State, which is known as Indias grain
bowl and one which, as the Punjab Economic Survey for
2015-16 put it, is ranked rst among States in contribution of wheat and rice to the central pool for the year
2014-15.
The invalidation of 86 per cent of the currency in
circulation posed an added problem for the farmers who
were already saddled with indebtedness and delay in
payments by government agencies in a season of record
paddy production. The severity of the indebtedness problem can be gauged from the fact that it forced the incumbent governmentwhich is preparing for a tough
Assembly electionto pass a Bill in late April to tackle
the problem of farmer indebtedness. However, it has not
FRONTLINE .
DECEMBER 23, 2016
Some coriander farmers

have not even picked the
crop as transportation and
other costs are too steep.
36
collapsed. Some coriander farmers have not even picked

the crop as transportation and other costs are too steep,
Amarvir Singh said.
This being Punjab, there is at least official acknowledgment about the plight of farmers. There is so such
empathy in the case of migrant agricultural workers.
Taravati, who gathers raw paddy spilled on the market
oor and gets her daily wages in paddy, said: Often we
are given old notes when we exchange paddy in the
mandi. What do we do with them?
forced to do precisely thatdelay sowing of the rabi crop

and also put on hold expectations of money for their
kharif harvest.
They have neither been able to get money from the
sale of their harvested kharif crops nor been able to
purchase the requisite inputs like seeds, pesticides and
fertilizers owing to the paucity of legal tender.
The cash crunch has hit the agrarian community
hardagriculturists, tenant farmers, small landholders,
agricultural labour, all of whom have borne the brunt
with an uneasy stoicism. The distress is there for all to
see. If the serpentine queues in front of ATMs in the cities
and downed shutters of bank branches in Haryana are
any indication, the crisis in the countryside can only be
imagined.
In Rohtak district, farmers told Frontline that they
expected at least a 20-25 per cent reduction in the output
of the rabi crop owing to the delay in sowing. They
explained that timely sowing was of great importance,
especially in canal-irrigated areas where the availability
of water is periodical. The land is cleared and prepared
after the kharif crop has been harvested. In some places,
it is still being cleared. Then it is levelled and moistened
with water, after which the sowing has to start immediately, otherwise the land will harden and become unt for
Wholesale crisis
ROH T AK, HARY A N A
BY T.K. RAJALAKSHMI
T.K. RAJALAKSHMI
THERE is a saying in the northern parts of agrarian

India, including Haryana: Kheti aur bimari intezaar
nahin karti. Shaadi karne wala phir bhi intezaar kar
lega, which literally means that while a marriage can be
delayed, agriculture and sickness cannot be put on hold.
But in the wake of the Central governments decision to
demonetise high-value currency, farmers have been
MIG R A N T W O R K E R S from Bihar at the wholesale grain market in Rohtak have had to subsist on credit for their daily
necessities because of the currency crunch.

37
sowing. The delay matters a lot. We have been unable to

purchase seeds and urea from the government cooperative seed societies as they have no written order to sell us
the seeds against old notes. The Rs.2,000 note is useless
as we cannot make purchases in smaller amounts and no
one has the smaller denomination notes to return us the
change, they said. Farmers were forced to buy seeds at
huge rates of interest from private outlets, at rates as high
as 25 per cent.
If you want to have an idea of the agricultural crisis
post-demonetisation, go and visit a commissioning agent
at the wholesale market, a farmer told Frontline. The
wholesale vegetable and grain market in Rohtak district,
one of the largest in the State, receives produce from
almost 80 villages but is now desolate. Agricultural and
horticultural produce from nearby districts like Jhajjar
also reach this wholesale market. With harvesting of the
kharif crop almost in the last stages and the sowing
season of the rabi crop (wheat, mustard and gram) imminent, farmers do not have the luxury of waiting in serpentine queues to deposit old currency or withdraw cash in
small instalments. The commission agents were the ones
who ensured that the farmer got the price for his produce.
Government or private procurement was done through
these agents, who purchased the grain from the farmers
and sold it at the retail level. The currency crunch postdemonetisation has hit all sections hard. Shamsher
Singh, a fodder agent, told Frontline that the government
had little clue about the situation in the countryside.
Everything is dealt in cash here. There are no payments
even by cheque. Sales of fodder from my outlet have gone
down owing to lack of liquidity. Eighty per cent of the
farmers here have taken land on lease. They dont have
bank accounts. They do not accumulate enough cash to
have bank accounts, he said.
But there was no respite for anyone, including pensioners, from long queues. Jagjit Singh, a tenant farmer,
took his father, a retired army man, to the bank to
withdraw the monthly pension. We could not withdraw
it either, he said, adding that he would rather spend the
day working on his patch of land rather than stand in line.
I sold paddy worth Rs.60,000 to the commission agent.
He wanted to pay me in old notes. I didnt take it. He said
he would give me the money later. I am managing somehow on debt, but dont know for how long, he said. Preet
Singh, a local All India Kisan Sabha (AIKS) leader, said
that given the degree of informality in social ties among
rural folk, farmers and others were able to make purchases of food and other essentials on a deferred payment
understanding. The problem is with those who do not
know anybody well enough. They are in bad shape, and
the poorest are the worst sufferers, he said.
But what has been most shocking is the complete
apathy of the government in not allowing farmers to buy
the required inputs from government-authorised seed
and fertilizer outlets using old currency notes. A sales
assistant at the Indian Farmers Fertiliser Cooperative
Limited (IFFCO)-run Kisan Sewa Kendra said that he
did not have written orders to sell the inputs against old
FRONTLINE .
DECEMBER 23, 2016
THE W HOLE S ALE A N D R E TAI L
T.K. RAJALAKSHMI
market for grain, fruits and

vegetables in Rohtak, Haryana,
wearing a desolate look.
currency. His sales had seen a drastic fall after demonetisation. Every day this centre used to sell fertilizer and
seeds worth Rs.4-5 lakh; it has come down to Rs.10,000
now, he said. The sales assistant also complained that he
was short-staffed. I have to stand in queues too, to
deposit the earnings every day. Earlier, it used to happen
in minutes. But now I have to wait for hours. I dont know
what to do. I either queue up or sell fertilizer. I cant do
both, he said. There are 37 such certied IFFCO-run
centres all over the State and none of them was accepting
old currency notes from farmers.
Deepak, a young farmer who came to purchase seeds
and fertilizer from the IFFCO centre, rst enquired
whether the old notes would be of any use. He said: I
really dont know what to do; whether to pay the workers
or buy fertilizer. The sowing period for wheat had roughly coincided with the demonetisation of high-value currency. Owing to the staggered nature of rabi sowing,
wheat in some parts of the State could be sown until
December 15 and in other parts up to November 30. This
was the peak rabi season and farmers have been running
around for seed purchases.
A eld officer associated with one of the IFFCO centres said that an output reduction of 5-10 per cent per
acre (0.4 hectare) could be expected, although individual
farmers pegged it higher. The period was also the loan
recovery season. Farmers who receive money from the
sale of the kharif crop usually use it to pay off their loans
but now they are not able to. Acreage is not the issue. The
point is the kind of hardship that every segment of the
38
rural population has been put through owing to this

drastic measure, said Inderjit Singh, vice president of
the State unit of the AIKS.
With the season of rabi sowing at its peak, farmers are
at a loss whether to stand in the queues to deposit their
old currency or withdraw money and suffer the loss of a
days work or more. But every section has been affected by
the demonetisation. Contrary to what some economists
have suggested about farmers not dealing with highdenomination notes, the reality is vastly different.
Ram Dulari, a Dalit with six children, was the only

woman among the workers. My husband is a paralytic. I
have no money to buy provisions. It is easy for the rich to
manage. What do we do? The provision store owner tells
me to buy rations worth Rs.500. If I spend all the money
on rations, what will I do if I have to go to the doctor? she
said.
Devendra Kataria, a commission agent, said that he
had been able to sell some grain to the retail market but
was not able to pay the farmers. They are not prepared to
accept cheques. By the time the cheque gets encashed,
the period for sowing will be over. The farmer needs cash
immediately. If I want to have a cup of tea, will I pay the
tea vendor by Paytm? This is ridiculous. I am not a small
farmer, I have 40 acres of land, but even I am unable to
buy material for necessities. Plastic money will not work
in the wholesale market, he said. They want to make an
America out of India; they are making it into a presentday Baghdad, he added.
Fruits were being undersold at the wholesale-cumretail market. There was one government-managed cold
storage facility for the entire market but it closed down
recently. It was useful as it was located right within the
market. That option is not there anymore. Some of us are
using the private cold storage facility, which is at a distance, said Joginder Lal, a fruit commissioning agent. I
am not placing any fresh orders with the producer. I will
try to dispose off whatever I have now. Sales have gone
down considerably, he added.
The effects of demonetisation are palpable in the
FARM AND MIGRANT WORKERS HIT HARD
Farmers are not the only ones suffering. Agricultural

workers and migrant labourers Frontline spoke to in the
wholesale market were worse off. Jitendra, a labour contractor from Bihar, said that he was unable to pay the
workers as the grain commission agents were giving old
notes which the workers were reluctant to take. There
was also another problem: most of the migrant workers
did not have bank accounts. We are here one day and at
some other place the next. We dont make enough in
order to save and put in banks. We dont even have these
smartphones. We have a lot of trouble meeting daily
requirements for food and basic necessities, one of them
said. A few among them had bank accounts but complained bitterly that the banks refused to take their deposits and transfer them to their accounts in Bihar. How
are we expected to feed our families in the village? These
old notes are useless and the banks wont accept them,
one of them said.
39
countryside but grossly under-reported. In Rohtak city

itself, long queues were visible outside ATM kiosks as
well as bank branches. Raghubir Singh, a farmer in his
80s, said that this was the rst time in his life he was
witness to a situation where there was a cap on withdrawing ones own money. This is white dacoity in a
sense, he said. The articially imposed embargo on the
purchasing power of the rural consumer is already beginning to have an effect on the overall economy.
A clothes shop owner told Frontline that his sales
depended much on the migrant worker, who would purchase items from money earned by working in the harvest
season. They have all gone back home now, emptyhanded. At least they wouldnt starve in the village. Here
who will take their old currency? said Gajendra Jain, a
cloth merchant. He said it was unrealistic to think of a
cashless economy in a country like India.
For an agrarian community already grappling with
low minimum support prices and crop losses due to
natural causes like hailstorms and whitey (a pest) invasions, the demonetisation and the push to a world of
cashless transactions could not have come at a worse
time.
BISWARANJAN ROUT
Tribal tears
KAN DHAM AL, OD I S HA
BY PRAFULLA DAS
FRONTLINE .
DECEMBER 23, 2016
BISWARANJAN ROUT
WHILE the demonetisation move did not affect

some poor families in the backward Kandhamal district
in Odisha as they seldom handle cash, especially highdenomination notes, it crippled the economic activities
of millions of tribal, Dalit and Other Backward Class
people in the States tribal areas. The impact of demonetisation was clearly evident in small townships and
weekly markets in the form of low level of business
activity and slow pace of work at numerous construction
sites.
The weekly market at Tumudibandha gram panchayat in the district witnessed little business even after
three weeks of the announcement of demonetisation on
November 8. There were no queues outside the banks
and most of the ATMs had their shutters down as they
had no cash to dispense. The rush to banks ended within
three days of the announcement.
Meet Bandali Dolemajhi, a tribal woman whose life
has turned topsy-turvy in the past three weeks. Her
husband earns Rs.200 and she gets Rs.150 as daily wages
when they work at construction sites. From where will
poor people like us get Rs.500 and Rs.1,000 notes? We
are suffering because of the withdrawal of these currency
notes as we are not getting any work, and the contractor
who engages us says he will pay our wages at a later date,
said Bandali.
The introduction of the new Rs.2,000 notes was of
little use in this region. Kalindri Koslia, a woman who
40
A TR A D E R W A I TI N G for customers at the
Tumudibandha weekly market in Kandhamal district.

sells used clothes to Bandali, condemned the demonetisation and its faulty implementation. The release of
new Rs.2,000 notes and the non-availability of new
Rs.500 notes have affected small traders like me. Of what
use is the Rs.2,000 note when our transactions are limited to a few hundred rupees a day? she said.
Ramamani Nayak, a widow who sells utensils in a
permanent shop as well as at the outlet she opens in the
weekly haat at Tumudibandha, said with tear-lled eyes:
I am unable to pay back the wholesaler from whom I
procure utensils. She had in her possession Rs.7,000 in
Rs.500 denominations when the note ban was announced. She deposited Rs.3,000 in the bank and exchanged Rs.4,000 (eight Rs.500 notes) to keep her
business running. The government should have gone
after those who have made money through illegal means
instead of harassing the public at large. said Ramamani.
The government should tackle poverty but not cause
inconvenience to poor people like us. We are not getting
work or wages since the note ban came into force, said
TR I BA L W OM E N buying used clothes from a trader
at the weekly market.

41
FRONTLINE .
DECEMBER 23, 2016
SUSHANTA TALUKDAR
Rabi Nayak, a resident of the locality. He was of the view

that the demonetisation carried little meaning for poor
people like him as he had not handled those high-denomination notes in a long time. Nayak, whose last bank
transaction took place on June 24, 2015, has a deposit of
Rs.289 in his account in the local State Bank of India
branch. He opened the account when he was allotted a
house under the Indira Awas Yojana in 2009.
While a debate over black money is raging in big
cities, the tribal people are concerned more about arranging two square meals a day than about demonetisation.
The government should tackle the rampant corruption in the administration instead of harassing the public, said Ramesh Chandra Nayak. I have not been able to
get an Indira Awas Yojana house because I cannot pay
Rs.10,000 as bribe. If I had that much money, I would
have constructed a house on my own instead of paying a
bribe to avail myself of nancial assistance from the
government to construct a house under the Indira Awas
Yojana, he said.
Nayak, who was working as a volunteer with a nongovernmental organisation lost his job a few years ago
after foreign aid stopped owing in and the voluntary
organisation started partnering with different government departments, said: Eighty per cent of the poor
people are suffering because of the 20 per cent of the rich
people who hoarded money. The government cannot
ght corruption by demonetising notes until our elections cease to be a game of money and voters are not
bribed.
When I came to know of demonetisation initially I
was happy that black money holders will land in trouble,
but the move ended up affecting the masses, said Jaleswar Digal, an elderly person of Sindhirigaon village.
In fact, the vast majority of people in interior Odisha
have not seen much cash for decades. Many of them do
not have bank accounts. Mobile phones are still a distant
dream for them. They mostly deal with lower denomination currency notes of Rs.100 or less. Demonetisation
has compounded their woes because the smaller denominations they are used to have also disappeared.
Prime Minister Narendra Modis campaign for cashless (read digital) transactions cannot work in these remote tribal habitats.
Take for instance the case of Dukhe Mahar, a herder
from Ganjupadi village located a few kilometres from the
subdivisional town of Baliguda. Dukhe handled the
Rs.100 note only once since Rs.500 and Rs.1,000 ceased
to be legal tender. He was paid Rs.100 at the Baliguda
market when he sold tomatoes that he grows on government land on the outskirts of his hamlet. Dukhe used the
amount promptly to repay a loan he had taken from a
fellow villager. Dukhe manages to feed his family of seven
with the rice he gets for raising and herding cattle belonging to 10 families in the hamlet. Each family gives him
two kilograms of rice a week and he buys oil, salt and
other small items with the money he gets from selling
vegetables. The family is so poor that it is not in the habit
of even having tea. Dukhe and his wife Radhika complain
M AN I K D A S , a marginal farmer in his mustard eld in
SUSHANTA TALUKDAR
Nij Botahgila village in Assams Nalbari district, about 85

km off Guwahati on November 26.
HA ZAR A T ALI ( R I G HT) , a marginal farmer, with rice

trader Rubul Ahmed at Dhamdhama in Nalbari district
on November 26.
that the numerous welfare schemes have not helped

improve their economic conditions: they are leading a
cashless life and have no ownership rights for the land on
which their house is built.
A bank official at Baliguda said many tribal people
came to the bank to exchange old high-denomination
notes on behalf of traders, contractors and other people
42
change for Rs.2,000 and I managed to buy only 10 kg of

potato seeds. I will be able to cultivate only one-fth of
my plot this rabi season, Ali told Frontline.
Manik Das, 50, of Nij Botahgila village under No. 5
Nij Botahgila panchayat in the district, bought 10 tins of
pumpkin and other seeds for Rs.5,000. He paid Rs.1,000
in cash and payment of Rs.4,000 is due. He owns one
bigha and has taken 13 bigha on lease. The contract
requires him to pay Rs.1,000 a bigha to the landowners a
year irrespective of whether he has cultivated it or not. He
has harvested about 80 maund of paddy from eight bigha
and has grown mustard in six bigha. He plans to sell some
paddy and mustard for his cash requirement.
PADDY PROCUREMENT REDUCED
Decline in paddy procurement by local rice traders this

season indicated the impact of demonetisation on cashdependent marginal farmers of the district. Last year we
procured 250 to 300 packets [one packet of 45 kg] of
paddy on an average daily from the farmers in this area.
This time, it has almost halved. We have been able to
procure only about 120 to 150 packets a day. Owing to
cash shortage, we are unable to procure paddy from all of
them. They do not want to accept old currency notes or
the new Rs.2,000 note as it becomes difficult for them to
use these notes, said Rubul Ahmed, taking a break from
inspection of loading of the paddy procured during the
day.
Joydev Baishya of Balitara village, who runs a retail
outlet of seeds, fertilizers, cattle feed and yarn, said the
demand for seeds had substantially declined even though
he had sold seeds and fertilizers worth Rs.2.5 lakh on
credit to farmers. He had borrowed money from his
father, who retired from service recently, to procure supplies.
The sudden demonetisation has also left Akbar Ali
and Aklima Bibi of Sataibari village worrying about the
Rs.1.5 lakh taken in loan for the marriage of their daughter Asma Begum on November 20. There has been cash
shortage everywhere and my daily sale has declined from
Rs.2,000 a day to just Rs.150, said Ali, a garment trader.
The story is common in every household here. The
net return is always negative if we take into account the
production cost. We never try to calculate as it is very
depressing and we just try to make ends meet by selling
some quantity of paddy or other crop for buying seeds
and household goods. Some people came to the market
with Rs.500 notes to buy vegetables for just Rs.20 or
Rs.30, but we did not have enough cash in hand to return
the change, said Kiran Deka, 54, who was returning with
her husband, Uttam Deka, 60, from the familys one
bigha of land at Nij Botahgila village. Dekas extended
family of nine members harvested 18 maund (7.2 quintals) this season.
Although the minimum support price for paddy notied by the Assam government in 2015-16 is Rs.1,410
(common grade) and Rs.1,450 (Grade-A) a quintal, most
of the famers in Nalbari district are selling it for Rs.1,100
a quintal.
who had an excess of the banned notes and so the bank

closed the exchange counter after three days. The tribal
people are without money as nobody engages them for
daily labour. A group of residents of Baimala village in
Ganjam district, all belonging to the Kondh tribe who
earn a living by making and selling leaf plates and working as daily wage labourers, are aggrieved that they have
not been paid for their work in recent weeks.
Seeds of despair
N AL BARI DIST RICT , A S S A M
BY SUSHANTA TALUKDAR
SIXTY-YEAR-OLD Hazarat Ali, a marginal farmer

of Dhamdhama area in Assams Nalbari district, about 85
kilometres from Guwahati, desperately needed change
for the new Rs.2,000 note that a rice trader gave him. He
had to buy potato seeds for his four bigha (one hectare
equals nearly 7.5 bigha) of land for the rabi season.
He had harvested 60 maund (one maund equals 40
kg in Assam) of paddy and sold six maund of that to the
trader. Twenty-two days after the demonetisation announcement, Ali went to the trader again to sell more
paddy. The trader offered to pay him in Rs.500 notes, but
Ali refused to accept it because the seed seller would not
accept it.
I need Rs.500 to buy 50 kg of potato seeds for the
entire plot. However, the seed sellers could not give me
43
According to the Assam Human Development Report (HDR) 2014, Nalbari district has the highest percentage of households (68.8 per cent) without cultivable
land in the State and 95.9 per cent households have no
irrigated land. The HDR survey data show that 84.3 per
cent of the households in Assam are marginal farmers
with less than seven bigha of operational holding, 12.3
per cent are small farmers with 7 to 15 bigha. In Nalbari
district, 90.9 per cent households have marginal operational holding. The report, compiled by the Guwahatibased think tank Omeo Kumar Das Institute of Social
Change and Development (OKDISCD) and the New Delhi-based Institute for Human Development, was published on October 3 this year.
Said Joydeep Baruah, economist and lead author of
the HDR: Demonetisation certainly casts an adverse
effect on agriculture in general and petty farmers in
particular. Most of the petty farmers depend heavily on
cash in hand as the prime source of working capital.
Therefore, when cash in hand is reduced, they face a crisis
in terms of working capital. It may be noted that the
working capital of petty farmers not only includes certain
wage components but also a substantial part of their
investment in terms of seeds, etc., for the next season.
Demonetisation, that too a sudden one, affects petty
farmers in three ways. First, now that we are at the peak
of the harvesting season, they are facing problems in
engaging wage-labour to do the harvesting, and once the
crop is lost in the eld it will cause irreparable loss to the
income of the petty producers. Second, as there has been
a general decline in aggregate spending following demonetisation, the crop prices have witnessed a decline,
creating a distress selling-like condition. Naturally, this
has resulted in a substantial squeeze in the income of
petty farmers. This in turn has resulted in the third which
relates to a lack of working capital for next seasons
investment. This squeeze in the income of petty producers needs to be viewed in a State like Assam along
with limited accessibility to formal agricultural credit,
including Kisan Credit Cards to petty farmers, and to the
absence of crop-insurance coverage. In the absence of
such safety nets, demonetisation will put petty farmers in
a perilous condition and it will have a far-reaching impact on the economy. Baruah is also an associate professor of Omeo Kumar Das Institute of Social Change and
Development in Guwahati.
hard work when Prime Minister Narendra Modi announced the demonetisation of high-value currency.
When the enormity of the announcement sank in, the
farmers found themselves in a situation where they had
cash but the District Central Cooperative Bank (DCCB)
refused to accept it in view of the restrictions imposed by
the Reserve Bank of India. They had no newly issued
notes to pay for labour or agricultural material. Like
other members of the farming community, sugarcane
farmers depend almost entirely on the DCCBs for nancial transactions.
As the harvest has just begun, it is not clear what
impact demonetisation will have on the macro sugar
economy but it is quite apparent that farmers across the
board are in a difficult situation mainly because of banking problems. The sowing of rabi crop has begun and it is
likely to be seriously affected if cash ow is restricted,
several farmers say.
In the rst few days [after demonetisation] we managed to deposit and withdraw cash even though the
queues were long. However, when the RBI clamped
down on the DCCBs operations and did not allow the
bank to accept the demonetised notes or let us withdraw
more than Rs.24,000 a week, that is when our struggle
really started, says Sarjerao Sawant, chairman of the
Ajinkyatara Sugar Factory in Satara.
Sugar factories pay sugarcane farmers through the
Sour note
ANUPAMA KATAKAM
W E ST ERN MAHAR A S HT R A
BY ANUPAMA KATAKAM
IT is the time of year when trucks loaded with harvested sugarcane move steadily on the roads leading to
the numerous sugar mills in western Maharashtra. November is the harvest season and sugarcane farmers were
looking forward to reaping the benets of one year of
FRONTLINE .
DECEMBER 23, 2016
M AN OHA R S ALUN KE , a sugarcane farmer from
Nagthane taluk in Satara district.

44
should not be exploited and corruption has to end. Many

of the farmers have only now learned to go to the bank,
forget using an ATM.
Traditionally, the harvest coincides with the marriage season. Salunke says it costs anywhere between
Rs.5 and Rs.10 lakh to conduct a marriage in their village.
Those who saved money cannot use it. Many postponed
weddings as contractors were not willing to give credit.
Many people do not have cheque books. It is these
practical aspects that have turned life upside down, he
said.
Raju Bhave works as a cane cutter and farm labourer.
He says he does not have a bank account and waits in the
line for hours every day to exchange his old notes. His
savings, approximately Rs.25,000, have not yet been
fully converted. The bank refuses to open an account,
saying that only after the crisis settles they will help. I
dont have documentation but my employer says he will
help.
Bhave earns about Rs.1,200 a week and is paid every
15 days. We have not been paid for one month and there
is very little money in the house. The cash I have has not
yet been exchanged. There is no time as the cutting and
sowing season is on. My wife cannot understand all this.
We need money for food and the childrens needs.
Ramchandra Hindutt works at the sugar factory and
earns an additional income from dairying. He owns eight
buffaloes that produce 20 litres of milk a day. I earn
almost Rs.900 a day from the sale of milk to a dairy. We
are usually paid in cash. But I havent been paid for a
month. I still have to give the milk as the buffaloes cant
stop producing it! The dairy said it will start cheque
payments. Let us see how it goes, he said.
In the farming community, sugarcane farmers are
probably more prosperous, according to a young politician from the district. Should there be a crisis, the sugar
lobby, comprising big politicians, will back them. If you
look at the larger picture, this community is ready to
adopt the digital payment method. Already in urban
areas, small retailers who never used swipe machines or
payment gateways have begun accepting cards. In due
course processes in the village will also change. The
mobile phone was a huge revolution in our villages. If we
work with that in mind and with better infrastructure,
the rural economy will denitely improve, he said.
DCCBs every 15 days. Farmers are free to withdraw cash

whenever required. It is a well-oiled system and farmers
trust it completely. But after the demonetisation decision
was announced and restrictions were imposed on the
DCCBs, farmers were told that the only solution was to
open an account in a nationalised bank to deposit their
cash.
Not many farmers have accounts in nationalised
banks because the banking network is poor in these
areas. There is just one Bank of Maharashtra branch in
this taluk. The DCCBs worked very well for us, says
Sawant. The government wants to prevent black money
from politicians being deposited through helpless farmers and therefore came down on the DCCBs. However, it
must be understood that farmers and people in other
sectors deal directly in cash on some fronts, so they do
keep a signicant amount of cash with them. The inability to deposit the money has been a problem for us,
he says.
A manager at a DCCB branch in the district says they
tried hard to explain the demonetisation process to the
rural folk. They understand cash and a savings account.
We were unable to explain why the DCCB could not take
their cash deposits, especially when the media were reporting that Rs.2.5 lakh worth of deposits were permitted. When the Jan Dhan scheme was announced, farmers
did not go in for it because the DCCB has always been
there for them. Who would have thought this was going
to happen? he said.
Manohar Salunke owns about 4 ha in Nagthane taluk
in Satara district. He says that during the harvest season
he pays women workers between Rs.140 and Rs.170 a day
and men Rs.200 to Rs.250. We make weekly payments.
I have asked the labourers to wait a few more weeks so
that I can pay them. They dont have bank accounts and I
do not have cash.
Salunke says this years crop has been reasonably
successful owing to sufficient rain and farmers hoped to
earn a good income. The mills are paying Rs.2.500 a
tonne of sugarcane. Farmers of Satara district have small
landholdings, ranging from 0.8 to two hectares. The yield
is reasonably high, with each acre producing a minimum
of 40 tonnes. On an average, farmers sell between 60 and
80 tonnes of cane, says Saluke. Not all the land is used for
sugarcane cultivation; a part of it is kept for cultivating
vegetables and ginger, another highly paying cash crop.
Fortunately, for sugarcane farmers, a minimum support
price [MSP] on sugar ensures we get a return. So even if
the yield is low we earn something.
We have a good crop but we are shocked by what the
government has done. How do we pay the labour? They
also have to survive. People are living on credit and the
goodness of the community. But for how long? asked
Sunil Salunke, also from Nagthane taluk.
They want us to use credit/debit cards and they talk
about a cashless economy. Half the time the ATM in our
area does not have electricity or is out of order. A proper
mechanism should have been put in place before making
such a drastic change, he said. I agree that farmers
Cotton worries
VIDARBHA & MARATHWADA, MAHARASHTRA
BY ANUPAMA KATAKAM
VOTARIES of demonetisation may see the Bharatiya

Janata Partys (BJP) victory in the Maharashtra municipal council elections, held just two weeks after the demonetisation announcement was made, as an indicator
of peoples acceptance of it, but the fact remains that the
45
VIVEK BENDRE
owing to a number of factors, like the vagaries of the

weather, massive debts owing to low productivity, allowances given to multinational seed companies, neglect of
cotton in the Centres policies, and uctuations in the
minimum support price. Suicides of farmers in the region
are well documented. Frontline spoke to several farmers
and traders in Yavatmal and Amravati districts to nd
out how they coped with the current crisis.
Most people say the lack of cash crippled daily life.
But worse has been the shutdown of the DCCBs following
the RBIs freeze on accepting deposits in the demonetised currency. It was also banned from exchanging the
old notes. Most farmers had their accounts only in
DCCBs. They want us to use nationalised banks. But the
districts have a very poor network of the big banks and
not everyone has an account. This is now taking its toll on
everything, said one of them, echoing the sentiments of
most farmers.
Last week I had to give labourers a payment of nearly
Rs.15,000, but I had no money. I was not able to get more
than Rs.2,000 from the DCCB. I stood in line daily for
eight to 10 days to get money and make the payments,
said Anant Dakhore, a farmer from Akolabazar in Yavatmal. I ended up paying penalty for the late payment of
my sons school fees. This was the second instalment, he
said. Despite the daily withdrawal limit of Rs.10,000 and
a weekly withdrawal limit of Rs.24,000, farmers were
able to draw only a fraction of that because cash was not
available.
The market day in the taluks is important for farmers
who come from across villages to buy and sell agricultural
produce, livestock, farm implements, and so on. Ashok
Patil, a farmer from Satefal village in Yavatmal, has his
only bank account at the Yavatmal DCCB. He transferred
money into the State Bank of India account of a friend to
A COT T O N F A R ME R near Amravati in Maharashtra.
rural areas have been hit badly by the cash crunch. Other
than the Marathwada region, the BJP swept the elections
with 893 of the 3,705 seats spread over 147 municipal
councils and nagar panchayats.
Kishore Tiwari, an activist and leader of the advocacy
group Vidarbha Jan Andolan Samiti, says the unusual
hardships in the rural areas seem not to have dented the
BJPs electoral success. Farmers believe that the demonetisation move will reduce exploitation. It has been a
cash-based economy, but the sentiments are with the
BJP, whose members are convincing enough to say that
they are on a mission to root out corruption, said Tiwari.
It is the mismanagement of the Finance Ministry that
has angered people, not the demonetisation. It will take
time to move towards a cashless economy in these areas
especially, but farmers seem to think it will be for the
better.
The BJP won almost every seat in the Vidarbha region, which comprises 11 districts.
VIDARBHA, NEVER OUT OF DISTRESS
For the past three consecutive years, the cotton-producing region of Vidarbha in north-eastern Maharashtra
faced drought. This year, sufficient rainfall ensured a
reasonably successful kharif crop, which was sown in
July. But farmers dreams came a cropper with the demonetisation. Traders are not buying their produce, or
buying it at terribly low prices, because of the cash
crunch.
The move has also hit rabi sowing. It is critical for
farmers to sow by mid November, but they need the
capital from the sale of the kharif harvest to buy seeds and
fertilizer. Farmers in Vidarbha have been in distress
FRONTLINE .
DECEMBER 23, 2016
46
withdraw money and pay his workers. More than half of

the farmers in Yavatmal have bank accounts with only
the DCCBs. Cooperative banks have always been with
farmers, for loan, insurance, relief amount, anything.
Nationalised banks check the credit worthiness of borrowers, but the DCCBs have been giving loans to all
farmers, including the marginalised ones. I do not understand the larger economics behind this, but there needs
to be immediate relaxation in the restrictions put on
DCCBs. If they are suspicious of malpractices in cooperatives, let them freeze the accounts of those who indulge
in them instead of punishing the small farmers, said
Pravin Deshmukh, president of the APMC.
This being the harvesting season, the markets were
open and we were receiving about 2,500 quintals of
produce. It has come down to mere 400-500 quintals.
For the rst three or four days markets were stopped.
When we resumed, there was not enough cash to pay
anyone, labourers or farmers. We had to make payments
by cheque. Not enough cheque books are available and
getting them is a lengthy process, he said.
Farmers who sell outside the market run the risk of
getting lower prices and being cheated with fraudulent
weights. Therefore, the farmers are holding on to their
produce. Moreover, traders do not have enough money to
give the farmers. Market activities have been reduced to a
quarter of what they were, according to an observer.
Those who receive cheques are not able to withdraw
the amounts immediately. The clearing takes three or
four days, but even after that the banks are not able to pay
the entire amounts.
As the banks have not been receiving enough cash,
they have a set limit, whereas the demand is high. The
traders have made payments to farmers through cheques
after this order. Farmers need to make outstanding payments to labourers and need to take care of their household expenses. The rabi season is about to begin. I feel
that this decision might harm 15 to 20 per cent of the
sowing in Kalamb, said Dattakumar Darne, president of
the Kharedi Vikri Sangh Kalamb. Darne, a social worker
and activist from Yavatmal, however, said that people
were aware of the difficulties they were facing. An environment has been created where everyone feels that they
are contributing to the larger good, he said. The emotional appeal behind the decision has stuck a chord with the
people, he said.
But the narratives of farmers paint a different picture.
At rst I didnt think it was an issue. Being a marginal
farmer, I do not employ labourers. My family and I work
in our farm. I had no money in my bank accounts; neither
did I have Rs.500 and Rs.1,000 notes that needed to be

exchanged, said Sunil Ade, a marginal farmer from Metikheda village in Yavatmal. He said the major inconvenience it had caused was the falling prices of the produce.
I needed money this week to take care of household
expenses. I took my 25 kg of cotton to a local trader and
sold it at Rs.38 a kg, whereas it fetches Rs.47 to 48 a kg in
the market.
Vilas Bhuyar, a farmer with ve acres (two hectares)
of land in Brahmanwada, Amravati, had difficulty in
paying his labourers. This is the peak harvesting season
for cotton. He had to convince the labourers to take
money later. Bhuvar said the labourers had been cooperative.
Satish Mahalle, a small-time trader in Amravati, has
stopped buying agricultural produce from farmers. His
entire business used to run on cash. He used to borrow
money and purchase cotton and soybean to get small
commissions on the sale. Since he cannot pay farmers by
cheque as there is no money in his account, he will not be
able to do any business this season.
MARATHWADA, HOPES CRUSHED
The situation is not any different in Marathwada. The

region comprising seven districts had a good monsoon
this year after four years of drought. The soybean crop
has been particularly successful and farmers were looking forward to an end to their despair when demonetisation struck.
The monetary crisis hit us at such a wrong time that
once again the region has been plunged into hardship
and despair, said an activist based in Osmanabad.
Marathwada grows a range of crops, with cotton,
sugarcane, corn and soybean being the most widespread.
The soybean harvest was very good this year, but traders
cannot pay us. In fact, they are taking advantage of the
situation by offering much less than the minimum support price, said Manoj Patil, a trader and farmer in
Osmanabad. We also start sowing by mid November.
The timing is very crucial for the rabi crop. Without cash
we cannot do anything.
He said traders were offering something between
Rs.2,200 and Rs.2,500 for a quintal of soybean, lower
than the rightful price of Rs.2,800. This difference means
a lot to the farmer. Owing to lack of cash, they are also
getting paid after 15 days, which is leading to more
difficulties.
Patil has the same woes as farmers across the country
with regard to the cooperative banks. We dont have
accounts in nationalised banks. Also many of us have
taken loans from the DCCBs. If we put in money, it may
be used to settle those accounts and I shall not have
anything for the next sowing season. As the region has
been suffering from years of drought, the debts are at an
all-time high.
Interestingly, Patil says demonetisation is a good
move. Watch Modi, he will catch all the looters and
black money hoarders. This is a small price to pay for the
country, he said.
There needs to be an
immediate relaxation in the
restrictions put on DCCBs.
47
ers, besides agricultural labourers, most of whom are

Dalits. The daily wages of Rs.200 for men and Rs.150 for
women during normal circumstances were the mainstay
of their sustenance, with wages from the Mahatma
Gandhi National Rural Employment Guarantee Scheme
(MGNREGS), the 100-day work as Pachammal and
others call it, supplementing their income.
But the failure of the rains this year has rendered the
lands fallow, offering no work whatsoever to the people.
Those who irrigate lands with water from wells are reluctant to employ labourers because of the non-availability
of lower denomination notes for payment of wages.
Hence, the only earnings for the villagers were the wages
from the MNREGS works that have been deposited in
their savings accounts in banks, which they are unable to
withdraw at present. Nationalised banks in rural areas
are facing an acute shortage of lower denomination notes
and are in no position to disburse the wages, which
amount to Rs.1,600-1,700 per person. We get six to
eight days of work in a month under the MGNREGS,
Pachammal said. It is the public distribution system that
has come to their rescue. The State-run fair price shops,
to some extent, have mitigated their problems, although
the 25 kilograms of free rice per family a month, which is
distributed through ration shops, is of inferior quality
and inadequate. In addition, these shops distribute 2 kg
of sugar, 600 grams of red gram and 2 kg of wheat,
besides some quantity of palm oil and a bar of soap,
Pachammal said. Even two meals a day cannot be met
with these rations. Just imagine the plight of those who
have a large family, she added.
Pachammal, however, is better off than many others
as she owns a cow, which yields a litre of milk a day. She
was supplying milk to a local society and earning about
Rs.600 a month. We would go and collect our money
from the bank as and when we needed, she said.
But this time it is different. Two weeks ago
MGNREGS workers, including Pachammal, went to the
bank at Kandachipuram, some 10 kilometres away, to
collect their money. Pachammals savings account had
Rs.1,600, which she badly needed, but the bank, which
caters to some 20 villages, had run out of cash, especially
the lower denominations.
Since then, and until now, we have been visiting the
bank almost daily to draw wages, spending Rs.10 for
transport. The bank issues 100 tokens a day to customers
who are willing to accept Rs.2,000 notes. The lucky ones,
ve to 10 of our MGNREGS workers, would get their
wages, she said. By noon, the bank would run out of cash
and close for the day. How can the bank disburse wages
in 100s and 500s when it has no supply, asked K. Sankar,
Pachammals son and a social activist.
Like my mother, many women with their children
have been waiting in line for hours at banks at Kandachipuram, Tirukkoilur and Mugaiyur, almost every
day since demonetisation was announced, to get their
wages, he said. On one occasion, the police had to be
called to control the restive workers in Mambalapattu
village near Villupuram. The disenchanted [workers]
Gawalantai Pawar, a micro entrepreneur from Yedshi village in Osmanabad district, takes a more pragmatic
view. He says the honest and the poor have nothing to
lose. There are inconveniences that we need to deal with.
I see some farmers stranded and not being able to sell
their soybean because of lack of money which is the
primary medium of exchange. It is a pity that in their
effort to curb corruption, the poor and the marginalised
have to suffer, he said.
MGNREGA:
No work, no pay
TAM IL NADU
BY ILANGOVAN RAJASEKARAN
ILANGOVAN RAJASEKHARAN
FOR 50-year-old K. Pachammal, a Dalit agricultural

labourer of Melvalai village in Tirukkoilur taluk of Tamil
Nadus Villupuram district, it has been double whammy:
the recall of high-value currency notes came on the heels
of a failed south-west monsoon and the north-east monsoon has been decient. The farmlands in the village,
which depends on rain for agriculture, are parched, as is
the case in most other parts of drought-hit Tamil Nadu.
No water, no money and no work, Pachammal said
ruefully.
The situation in many villages across the State is
tense, with people in panic and despair about an uncertain future. A cashless economy is not new for the
landless rural Dalit women like Pachammal is not new
since they are already familiar with a credit-driven economyreceiving loans during the sowing season and repaying them with interest after harvest.
But this is the rst time they have been forced to live
in a weird currency-less environment.
The demonetisation has also left a deep scar on the
rural economy by hitting hard small and marginal farm-
K. P A C H A I A M MA L , a Dalit agricultural labourer.
There is no water, no money and no work, she says.

FRONTLINE .
DECEMBER 23, 2016
48
E. LAKSHMI NARAYANAN
exercise. Banks are not able to disburse their wages since

lower-denomination notes are not available. We have
been visiting the bank branch every day since the rst
week of this month. The bank is yet to disburse our
wages, she said. The debt-ridden rural economy is banking on moneylenders for survival. I have received a loan
to meet our expenses. What else can we do? Saradhammal said.
Unfortunately, the States primary agriculture and
other cooperative societies and their banks have not
extended any credit to these farm workers or to those who
have less than an acre in this hour of need as they are
taking care of big landholders, who happen to be its
members, said Shankar. Pachammal pawned her gold
earrings weighing three grams for Rs.3,000 recently to
get her grandson treated at a private hospital for fever
and also to meet her familys contingency expenses.
But she is not alone in the crisis. V. Krishnamurthy
(45), a small-time Dalit trader who owns a grocery shop
in the nearby Silrampatti village, was also facing similar
problems. His shop, which sells groceries and vegetables
to the villagers to the tune of Rs.2,000-2,500 a day
during normal times, wears a deserted look now, with
sales having plummeted to Rs.200-400.
The village has no money, he said. The banks have
gone dry and the non-disbursal of the MGNREGS wages
has further aggravated the problems. I cannot tender
exact change for the new Rs.2,000 note, which is in
circulation among a few. Since vegetables cannot be
stored, I have stopped procuring them, he said.
In this situation, a few unscrupulous elements are
making a killing. Usurious moneylenders from the nearby Tirukkoilur and Villupuram towns are descending on
these villages in droves. Many residents have no option
but to borrow from the lenders at exorbitant interest
rates and also by pawning the gold jewellery despite
having money in their bank accounts. Krishnamurthy
availed himself of the opportunity, as he called it, by
getting a loan of Rs.10,000. The lender gave me
Rs.9,000 after deducting Rs.1,000 as the interest advance. I have to pay him Rs 100 every day as interest until
I return the sum of Rs.10,000, he said.
The woes of Krishnamurthy and Pachammal are of
pan-Tamil Nadu nature. In addition to a lack of agricultural activity, a drinking water shortage also looms large
over villages across the State. Our agitations and protests in the coming months will be for drinking water
too, said 60-year-old Ganesan, a farmer in Mugaiyur
village. In the last three weeks, no MGNREGS work has
been undertaken, said Ganesans wife, who has been a
regular worker.
A village panchayat official, however, said that with
little or no availability of smaller denominations, wages
could not be paid to the workers. Thus, the supplementary source of income to the Tamil Nadu rural [people] has been shut effectively, said Villupuram-based
social activist C. Nicholas. Even development works, official sources said, had been stopped. The foreseeable future looks bleak for the people of rural Tamil Nadu.
V. SH A R A D H A M MA L of Pottapuram village in Omlur

taluk shows her bank passbook with MGNREGA entries,
but she is unable to withdraw any money.
even staged road blockades and agitations at a few places

for not disbursing the wages, said an activist. Similar
incidents are taking place elsewhere in the State.
V. Saradhammal, 45, of Pottapuram village in Omalur taluk of Salem district also has a similar tale of woe.
With no rains, women farm workers in Salem district are
a distressed lot today. Saradhammal, who belongs to the
Vanniyar caste, a Most Backward Class, told Frontline
that agricultural work had come to a halt. For nearly a
month, there has been no work for us. Further, the eri
[tank] works under the MGNREGS have also been suspended. We are jobless and penniless, she said while
waiting at a bank branch to collect her wages for work
done three months earlier.
Women, especially from the Vanniyar and Dalit communities, are the biggest sufferers of the demonetisation
49
C OVER STO R Y
Compounding a crisis
Interview with Hannan Mollah of the AIKS. BY T. K. R A J ALA KS HM I
The problem is in the agricultural policy, which is basically anti-farmer. Eighty per
cent of farmers have been affected badly. They are small
and middle-level farmers,
sharecroppers, tenants, peasants and landless peasants.
Only a very small per cent
neocapitalist farmers and
rich, landed farmers and
landlordsare able to manage. They are the ones who
get institutional loans. The
smaller farmers cannot give any guarantee because they
dont have any pattas or land to offer as guarantee. So
institutional loans, given in the name of farming, are
either going to the big farmers or to agrobusiness. Besides, loans are given by bank branches in cities. Farmers
do not go to cities to get loans. A pro-farmer, pro-peasant
policy has to be formulated. We have a 15-point charter
demanding land reforms, remunerative prices, cheaper
subsidised inputs, market facilities, 4 per cent rate of
interest for rich peasants and interest-free loans for the
majority of farmers, and loan waivers. The total farming
community has one lakh crore of loans against them. The
government can surely waive this, considering the 13lakh-crore waiver it gave to corporates. Farmers should
get some pension, too, at least Rs.3,000. They also serve
the country. Government employees work for 25 years
and get pension, while farmers work for their entire lives.
The public distribution system should be universalised as
farmers are producers as well as consumers and 80 per
cent are poor consumers. The APL-BPL [above and
below poverty line] distinction should not be there. If
land reforms are done and land is redistributed, it will
help the landless come out of abject poverty. Why cant
the government do it? After all, we are talking of 70 per
cent of the population. We wanted to meet the Prime
Minister on these issues, but he did not give us an appointment.
SHIV KUMAR PUSHPAKAR
THE AGRICULTURAL COMMUNITY, WHICH

incorporates small and medium farmers and comprises
vast sections of the rural poor, has been hit hard by the
demonetisation move. Caught unawares between the
end of the kharif season and the peak of the rabi-sowing
season and facing the prospect of another year of nonremunerative prices, the countrys farmers have begun
to see an unfolding crisis. The All India Kisan Sabha,
which was in the midst of a countrywide campaign in
November, found farmers in despair. Excerpts from an
interview with Hannan Mollah, AIKS general secretary
and former CPI(M) Member of Parliament.
The AIKS campaign that culminated in a rally in Delhi
coincided with the announcement of demonetisation.
We believe that Indian farmers are in severe distress,
and demonetisation has added to their woes. I call it a
crisis and not a problem. Forty-one per cent of farmers
say they will quit farming if they have an option. Sixty per
cent are severely indebted and do not get institutional
credit. They borrow from moneylenders at high interest
rates ranging from 20 to 70 per cent. Nor are they getting
remunerative prices, contrary to what was promised by
the Narendra Modi government on the basis of the M.S
Swaminathan Commission recommendationsthat is,
cost plus 50 per cent of it. And the prices of inputs like
diesel, fertilizer and seeds have gone up. That is why they
are committing suicide. Agriculture is fast becoming a
loss-making venture. Farmers children do not want to do
farming. If farmers are not saved, how can the country be
saved? Seventy per cent of the people are still directly or
indirectly dependent on agriculture, and 50 per cent of
jobs in the country are in the agricultural sector, though
agricultures contribution to the GDP has gone down.
This sector has not got any attention since Independence.
The Congress-led governments did not do anything
about it, and the BJP [Bharatiya Janata Party] is also
going the same way; in fact, it is worse.
The AIKS had campaigned earlier, too, against farmer
suicides last year. What was different about the recent
campaign?
The government said it would take steps to reduce
farmer suicides, but in the last two and a half years, there
has been a 36 per cent increase. The government simply
doesnt care. Farmers are not responsible for the crisis.
FRONTLINE .
DECEMBER 23, 2016
What has been the impact of the rhetoric of unearthing

black money and the present demonetisation on
farmers and agriculture?
We do not need certicates from those who claim to
50
be ghting black money. The Left parties were the rst to

raise the issue of black money. The others joined later on.
During our 20-day campaign in November, we witnessed
the severe damage the decision caused to the rural economy. This is the rabi crop season, and seeds, fertilizers and
daily labour are required. And suddenly the farmers
found they did not have liquidity. We found that farmers
did not have money to buy seeds and to pay their agricultural labourers, who have to be paid on a daily basis.
Then, we found that there were standing crops in many
elds, and each day about 10 to 15 workers were required
for harvesting. Farming is time-bound. Seeds have to be
sown at a particular time. The delay can be very damaging. Rabi crop sowing has been delayed, and there is
going be a huge loss.
I spoke to vegetable growers. They said that they were
forced to undersell a certain kind of cauliower. Wholesalers have reduced the off-take from farmers and vegetable growers. There are thousands of farmers who grow
vegetables. Only a small percentage of farmers have bank
accounts. Most keep their money as 500 and 1000 rupee
notes. This money is required for the next crop and for
school or college fees or medical expenses. Banks are in
distant places. Many were unable to access their own
money after cycling for 10 to 15 kilometres. Agricultural
work has got seriously impacted. This is also the marriage
season, and it is a big thing in rural India. Small notes are
not available anywhere; notes of small denominations
constitute only 15 per cent of the total currency. With
only 15 per cent availability of such notes, how can one
run the household, business and work? Then there are
small traders dependent on the rural economy. They are
also in trouble. If you add up all these sections, one nds
that the entire rural economy is in a shambles. People do
not know what to do, how to manage their families and
cultivation.
How many days could farmers stand in a queue? So
now women and children are being made to stand outside banks. We saw this during our campaign. This has
damaged the economy. Farmers were already in crisis,
this has now added to it.
Some sections in the government argue that output will
not suffer much loss.
One can give any kind of gure. It is different from the
ground reality. It can be claimed that sowing has taken
place in several hectares. But if sowing is done and there
is no water and if the crop gets attacked by pests, the
output is going to be affected.
The government says that this will encourage people to
open bank accounts.
The zero balance accounts are now full of money, we
hear. Who is putting the money there should be found
out. Not the poor farmer, certainly. The main question is
those who have 95 per cent of the black money are
praising the move, big business and corporate houses are
praising it. It is not affecting them. Agro-based industries
are also suffering. Handicrafts are on the verge of closure.
They are unable to pay the daily wage in the absence of
liquidity.
Do you think lack of preparation has aggravated the

crisis?
Yes, they should have printed the notes to replace the
ones pulled out of circulation. Where are the ATMs in
villages? Around 30 per cent of our unorganised labour
force is illiterate. They have no conception of modern
technology. They dont have any PAN or bank account
numberhow are they expected to survive? A cashless
economy can be of benet to the middle class. In the
industrial sector, permanent workers constitute only 7
per cent of the workforce; the majority are casual workers. Then, some 30-35 crore are migrant workers who
have no address or identity. They live in slums and have
no bank accounts. They are also part of the rural population. There are permanent, seasonal and circular migrants. Tribal farmers are in great difficulty. How many
of them have bank accounts? Where are the bank branches in tribal areas? The cooperative banks were giving
some money to the rural poor, but they have dried up.
The government is destroying the cooperative banks.
Initially, cooperative banks were told not to take deposits; then after a hue and cry, the government relented.
Every day there is a new directive. It is worse than
Tughlaq. Finance is not childs play. Banks and the RBI
[Reserve Bank of India] usually give one order in one
year or one order in two years. In one single fortnight
after demonetisation, we have had some 20 orders issued
by someone or the other.
Agricultural workers form a large section of those
dependent on agriculture.
Their situation is the worst. A large number of them
are below the poverty line. They are illiterate; there is no
question of a bank account or a PAN number. Their work
is seasonal. The MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] promised them
hundred days of work, but nowhere has the number of
workdays exceeded 35. In some States, wages have been
pending for as long as three months.
It is only in Tripura, which has a Left Front government, where 92 days of work was given. The government
should allow people to utilise whatever money they have
in hand. At least 70 per cent of denominations should be
in small notes.
The government has been arguing that demonetisation
will rope in all the unaccounted-for wealth in the
country. What are your views on this?
Agricultural income is not taxed. Rich peasants who
have additional income can pay tax, but they have also
diversied into other areas. A section of them can be
brought under the tax net, but 70 per cent of the rural
population cannot pay tax as whatever they earn is used
up for basic survival. Fifty-four per cent of the women in
our country are malnourished. How will 70 per cent of
people have unaccounted wealth? This is absolutely foolish. This government believes in giving concessions to
corporates. Tenant farmers, sharecroppers and agricultural workers do not come under the tax net. It is foolish
to think that there is huge unaccounted-for money lying
with the majority of the rural population.
51
C OVER STO R Y
Voices from
the villages
What some farmers and agricultural workers at the All India Kisan Sabha
rally in New Delhi on November 24 had to say. B Y T.K. RAJALAKSHMI
a bad drought year for the fourth consecutive time. Amin
said: Demonetisation made matters worse. Banks were
giving only Rs.2,000 notes, which were useless as shopkeepers could not give back change. Our payments were
also held back as our employers said they did not have
T.K. RAJALAKSHMI
AMIN IBRAHIMULLAH, MOULA ALI AND

Saheb Ali of Sangli district, Maharashtra, all agricultural
workers, are part of a contingent of cultivators and workers who came all the way to New Delhi for the All India
Kisan Sabha rally on November 24. For them it had been
Our employers said they did not have

small denomination notes to pay us.
Amin Ibrahimullah, Moula Ali and Saheb Ali,
Sangli district, Maharashtra.
FRONTLINE .
DECEMBER 23, 2016
52
small denomination notes to pay us. The daily wage rate

is between Rs.150 and Rs.200. We came to Delhi with
much difficulty. Its our rst visit to the capital. We
travelled more than 2,000 kilometres. The organisers
paid up to a point and organised our stay, but we have to
pay the rest, for food and part of the travel. They have
taken pains to organise the rally for us, so we have to
make this sacrice.
WE DONT UNDERSTAND BLACK MONEY
T.K. RAJALAKSHMI
Laxman Ghode and Hari Bharwal, Scheduled Tribe agricultural workers, are from Akola in Ahmednagar district.
They are paid Rs.300 for 12 hours of hard work. A
drought-prone area, Akola has seen many tribal people
migrate briey to Pune for work. We dont understand
this black money. The poor dont have accumulated
wealth. Whatever we save is from our work. People have
kept some money aside for weddings. And now, that
cannot be exchanged easily, Ghode said.
The local shopkeepers, they said, compelled them to
make purchases in round sums of up to Rs.500. Even if
we need to make small quantity, we cannot do so as the
shopkeepers say they do not have change to give us the
balance. We end up not buying at all, he said.
THE CROPS ARE RUINED
Bagchand Lamiya belongs to Khatu Shyamji village in

Sikar district of Rajasthan. The government is encouraging online business. But small traders and shopkeepers who are not into online trade are suffering. There is no
work for the labourer. Neither is there any ration in the
shops. The farmer does not have seeds or fertilizer. Fasal
ho gayi chaupat [the crops are ruined], he said. Sowing
had taken place to the extent of 30 per cent only. Lamiya
said the National Bank for Agriculture and Rural Development (NABARD) had reduced the quantum of farming loans as well.
In Rajasthan, farmers had been up in arms over the
increased electricity tariffs when demonetisation happened.
The wholesale grain markets were refusing to buy
bajra and groundnut from farmers as they did not have
the new currency to pay them in. Distress selling was at
its peak. Farmers sold the harvested groundnut at Rs.15 a
kilogram while in the cities it was priced at Rs.70 a kg.
Moong dal was sold at Rs.35 a kg (It is Rs.200 or more in
urban areas); gram dal was also sold at a lower rate.
In the vegetable wholesale market at Jaipur, farmers
distributed vegetables for free. I heard workers of a
political party tell the farmers to give vegetables away for
free as the act would earn a lot of goodwill, he said.
Farmers like Lamiya are not optimistic about the harvest
in March.
Om Prakash is from Mithi village of Bhiwani district
in Haryana. The semi-literate agricultural worker is in
his seventies. He has three sons, one of whom is mentally
challenged. The other two do odd jobs. The nearest Grameen bank for him is in Jhuppa village, 9 km from his
home. In the fortnight following the demonetisation an-
Do I look as if I have
black money?
Om Prakash,
Bhiwani district, Haryana.
The shops in our area

are empty.
Gyani Ram (left), Ucchana,
Jind district, Haryana.
53
Shock and death

The impact of the announcement banning
notes on the common mans life has been
so severe that it pushed scores of them to
the point of death. B Y P U R N I M A S . T R I P A T H I
PRIME Minister Narendra Modi has been saying all
along that the demonetisation exercise was to help the
poor as the black money sucked out of the system would
ultimately benet them. But facts on the ground speak
otherwise. It is the common man who has been bearing
the brunt of the move.
Reports of how people were either dying of shock or
killing themselves out of frustration and stress or losing
their lives because of not being able to get treatment as
hospitals refused to accept old currency started pouring
in from all over India after the demonetisation exercise
began. There were uproarious scenes in Parliament too
over the issue.
Two weeks into the demonetisation drive, opposition members insisted that some 70 deaths had been
linked directly to the demonetisation announcement,
but the government refuted the charge by saying that
T.K. RAJALAKSHMI
nouncement, Om Prakash made two trips to exchange a

single 500-rupee note, which was all that he had. His
bank passbook reveals a balance of less than Rs.100.
Do I look as if I have black money? I have proof to
show that I stood in the line for hours and to date have
not been able to exchange the Rs.500. If I dont work, I
cannot eat, he said. Despite their age, he and his wife are
prepared to work under the Mahatma Gandhi National
Rural Employment Guarantee Act (MGNREGA), but he
says he has not been getting any work.
Harpur Singh is a farmer from Danta Ramgarh in
Sikar district. There is no money in the banks. There is
too much pressure on us. For every eight cooperative
societies, there is one bank. You can say that for every 40
villages, there is one bank. Farmers have been unable to
make deposits. Entire families are standing in lines. It is
the wedding season. No marriages are taking place because there is no cash. As it is we are not getting the price
for our produce and have been forced to undersell. The
fall in moong [pulse] prices is especially sharp. It sold at
Rs.6,000 and even Rs.9,000 a quintal in one season; now
it is down to Rs.3,000. The government is not buying
from us. The wholesalers reject the produce citing moisture. The farmers are keeping the produce at home, what
else can they do? The BJP promised to implement the
A VIE W of the rally in New Delhi.
FRONTLINE .
DECEMBER 23, 2016
most of the deaths were from reasons not linked directly

to demonetisation.
Over 25 deaths, mostly of the underprivileged, were
reported in the week immediately after the announcement. On November 11, 73-year-old Vishwanath Vartak
died waiting in a queue in front of the State Bank of
India branch in Navghar in Mulund, a suburb of Mumbai. He was there to exchange old notes.
On November 15, 75-year-old Lakshminarayana
went to deposit Rs.1.7 lakh he had saved in old currency
over the last few years. He collapsed while waiting in a
queue in front of the Andhra Bank branch in Marredpally, Secunderabad. He was rushed to hospital but was
declared brought dead.
In the capital Delhi, Mohammad Shakils scrap
business went for a spin following the demonetisation
announcement. Unable to make ends meet, he killed
himself. The Aam Aadmi Party (AAP) took up the
matter, and Deputy Chief Minister Manish Sisodia visited the family and offered help. The AAP also claimed
that the entire demonetisation exercise was a huge
scam worth lakhs of crores to force the common people
to deposit their hard-earned money in banks so that the
huge loans of big defaulters who were close to the Prime
Minister could be waived or written off.
Ludhiana, the industrial hub of Punjab, reported
four deaths in one week after November 8: two were
54
suicides and two others died of cardiac arrest at the

shock of losing their money. Lucky, 19, who was into
ragpicking and recycling activity, hanged himself following nancial hardship because of demonetisation;
he had taken loans and had an ailing mother to look
after.
Elsewhere, in a village called Mahua Ma in Uttar
Pradesh, an eight-year-old child died as his father could
not buy petrol to drive him to hospital. He was carrying
a Rs.1,000 note and the petrol pump refused to give him
petrol because it had no chhutta (change).
In Surat, Gujarat, a 50-year-old woman killed herself in the week following the demonetisation announcement after she could not buy ration to feed her
children. Reports of housewives going into shock because they thought that their hard-earned secret savings from household expenses had suddenly turned into
scrap were also rife. An old woman in Kushinagar,
Uttar Pradesh, had saved up Rs.2,000, which she had
exchanged into two Rs.1,000 notes only a day before the
announcement. She died of a heart attack on hearing
the news.
In Mainpuri, Uttar Pradesh, a one-year-old child
died as a hospital refused him treatment because his
father was carrying 500- and 1,000-denomination
notes. This was despite the governments instructions
that hospitals can accept old currency.
In Hyderabad, a 55-year-old woman killed herself

because she thought her savings of Rs.20,000 had gone
waste. In West Bengal, a man killed his wife for returning empty-handed from an ATM. He thought she
should have waited longer in the queue. In Kaimur
Bihar, a 45-year-old man who feared that his daughters
soon-to-be in-laws would not accept the Rs.35,000
dowry he had saved in old currency died of a heart
attack.
In Kerala, in a freak accident, a 45-year-old man
died after falling from the second oor of a building
housing a bank branch where he had gone to deposit
Rs.5 lakh he had saved in old currency. This was his
second visit to the bank for the same purpose. In Chhattisgarh, a farmer killed himself after he failed to exchange his Rs.3,000 which he had saved to send to his
children studying in Tamil Nadu.
Closer to the national capital, in Bulandshahar, a
child died in Kailash Hospital, which is owned by Union
Minister Mahesh Sharma, after the hospital refused
treatment because the father was carrying Rs.10,000 in
old currency.
Whether these deaths could directly be linked to the
demonetisation announcement or not is a matter of
debate, but there is no doubt that the unplanned move
of the government was instrumental in the loss of many
lives.
Swaminathan Committee recommendations on Minimum Support Price if elected to power. But now it says it
cannot do it. Where is the black money lying with the
farmer? The money that our womenfolk saved for emergency purposesis that black money?
Ramchandra, Raj Kumar and Dalbir are farmers
from Siwani tehsil, Bhiwani district, Haryana. I went to
the Jhuppa cooperative society to buy seeds and fertilizer.
They wouldnt sell against old notes. I was told that I
could buy if I gave Rs.50 extra. The water in our area has
uoride. We have sown mustard, and urea should have
accompanied the rst phase of crop watering. But we
didnt get the urea, said Ramchandra.
THE WHOLE DAY IS SPENT IN FRONT OF THE
BANKS
Said Gyani Ram from Ucchana, Jind district, HaryanaJab se note band hua hai, buraa haal hai [Ever since the
notes were recalled, we have had a horrible time]. The
government is not procuring the coarse variety of paddy
[moti jeeri] that is consumed by the poor. I had to sell it at
a much lower price. The lack of proper currency has had
an effect on sowing. We are not getting the certied seeds
and fertilizer from the government outlets. The whole
day is spent standing in front of the banks. I arrived at the
cooperative bank at 5 a.m. to nd hundreds standing in
line. The shops in our area are empty. The Ucchana
wholesale grain market is a big one. All harvested crops
are sold here, the year round. The government declared a
rate of Rs.1,510 for a quintal, but we are selling it between
Rs.1,000 and Rs.1,300 a quintal. Last year, we sold the
same paddy at Rs.1,470 a quintal. What will Rs.2,000 get
us? We buy either seeds or fertilizer. We cannot buy
both.
The nearest bank for Hansraj, a small farmer from
Naangal Danta Ramgarh, Sikar, is 10 km away. There is
no money there as well. It gets over before my turn comes.
I watched news on television. The government should get
the black money from outside. What black money would
the farmer have? We have not been able to sell produce or
purchase or sell livestock. What has been harvested has to
be sold.
No marriages are
taking place because
there is no cash.
Harpur Singh, Danta Ramgarh,
Sikar district, Haryana.
[Business is at a complete standstill], he said. The

nearest bank branch is two kilometres away. For three
days I have been standing in the queue from 4 a.m.
onwards. The bank people are giving us money in coins.
For three days the bazaar was shut down. I have a small
textile shop. But there are no customers.
Dashrath, Laxman and Madhu Bhendu, agricultural
workers, Palghar district, Maharashtra, said they had not
been paid their wages after the harvest of the paddy crop.
The employer says he doesnt have small denominations.
It is also the sowing season. But there is not much work as
the farmer has not been able to buy seeds. What shall we
do if there is no work and if we are not paid? We have no
other source of income or savings, Dashrath said.
Palgarh, incidentally, is the district where several
child malnutrition deaths occurred this year.
SOWING HAS COME DOWN FROM 90 PER CENT

TO 10 PER CENT
Pinku Paswan is a Dalit who owns some land in Kadumbar village, Saharsa district, Bihar.Kisan ka nuksaan ho
raha hai [The farmer is incurring losses], he said.
Who says the farmer has not been affected by demonetisation? The nearest bank branch is eight kilometres from my village. There is no money in the branch.
I have some land but have not been able to sow it fully in
the absence of seeds and fertilizer. Sowing has come
down from 90 per cent to 10 per cent.
FOR THREE DAYS THE BAZAAR WAS SHUT
DOWN
Ashish Baruah from Sonitpur district, Assam, is a small

shopkeeper cum cultivator. Karobaar bilkul band hai
FRONTLINE .
DECEMBER 23, 2016
56
C OVER STO R Y
Modis model villages

The adverse impact of demonetisation has not spared the two villages
adopted by the development man in his parliamentary constituency
of Varanasi. B Y A KS HA Y D E S HM AN E
them, so I fell for it [opening the account], said Dinanath, requesting help from Modiji even as he produced
copies of two passbooks, one issued in 2012 and the other
in 2014.
For several years, this resident of Nagepur in Modis
parliamentary constituency of Varanasi in Uttar Pradesh
has done laybrai (loosely translated as menial labour),
which includes transporting vegetables at the local Rajatalab vegetable market for sometimes as low as Rs.20 a
RAMESH SHARMA
DINANATH AND HIS WIFE, GEETA DEVI,

burst into loud guffaws in response to a question on how
the adoption of their village by Prime Minister Narendra Modi early this year had beneted the family. The
amused reaction was preceded by a discussion on their
zero balance bank accounts in a nationalised bank, and
the couple found the question posed by this correspondent rather superuous. Both accounts have no money. I
was told the government would put some money into
TH IS PI C T UR E T A K EN in September shows a toilet at Nagepur village, which was adopted by Prime Minister Narendra
Modi earlier this year. Village chief Parasnath Thakur said the bio-toilets were opposed by residents.
57
PRASHANT NAKWE
Be it small farmers, daily wagers, micro businesses or

families planning marriages, residents of the two villageswhile expressing strong political support for the
Prime Ministertold Frontline in no uncertain terms
that their villages were far from the stated ideal of becoming Model Villages and the adoption by Modi of their
villages had not shielded them from facing the adverse
impacts of demonetisation.
Consider, for instance, what Nagepur resident Dharmendra Patel had to say. What is the point of this village
being adopted [by the Prime Minister]? he asked. Before Modis November 8 announcement, Patel had accumulated Rs.85,000 in cash for his sisters marriage. But
he was apparently forced to deposit the amount in the
bank, which would not let him withdraw the sum in new
currency.
We had to go around asking people for small loans
and could gather only Rs.50,000 since banks were not
giving more than Rs.2,000 or Rs.4,000. When I asked
the cashier in our village bank why he was not letting me
withdraw cash when households organising marriages
were allowed to withdraw Rs.2,50,000, he said no such
decision was conveyed to him and I should go and ask
Modiji. We even approached the Varanasi-based Prime
Ministers Office for help, but got none, he claimed.
SOL A R PA N E L S ready to be installed in Jayapur village
in 2015. Modi adopted the village in November 2014.

quintal of, say, cauliower or potatoes. Following demonetisation, Dinanath said, his daily earnings had taken a hit from about Rs.200-250 earlier to Rs.100-150
because trade at the market had slowed because of little
availability of cash with the traders. Obviously, the fall in
daily earning is a matter of concern for him.
NO PARTICIPATORY APPROACH
The impact of demonetisation is one part of the local

residents woes, another being the entirely top-down,
NGO- or corporate sector-driven approach to public welfare works in the villages, undertaken without adequate
consultation or participation of the residents. For instance, works carried out in erecting solar street lights
and constructing toilets and roads have had mixed success in the two villages.
Jayapur village head Narayan Patel told this correspondent that C.R. Patil, a Member of Parliament from
Gujarat, who is seen as acting on behalf of the Prime
Minister in the villages, got a road built in three-four
days and it eventually broke. The solar lights and biotoilets were also not well received by the local residents,
he added. Some solar street lights were stolen and the
toilets were lying unused or rejected.
Nagepur village chief Parasnath Thakur said the biotoilets were opposed by residents. It was a Gujaratbased company that built them, and they were of no use,
he said. While he expressed hope that things would
gradually improve, Thakur pointed out the lack of any
qualitative change in the livelihoods of small farmers and
daily wage workers who comprised the bulk of the village
population. Both village heads suggested a lack of participatory approach in carrying out the works under the
scheme.
Among the works that did help the residents to some
extent include the setting up of two bank branches in
Jayapur and Nandghar (the centre of education for children) in Nagepur. There are a few other such initiatives
too, but few of them appear to match up to the lofty
mandate that Modis scheme has given itself.
ADARSH GRAM SCHEME
It was in March this year that Modi adopted Nagepur, a

village of around 4,500 residents, in phase II of his
Sansad Adarsh Gram Yojana, which seeks to create
Adarsh Gram (Model Villages) in each Parliament
members constituency. In a rather ambitious mandate,
the scheme, as described on its website, envisages integrated development of the selected village across multiple areas such as agriculture, health, education,
sanitation, environment, livelihoods, etc. Far beyond
mere infrastructure development, (the scheme) aims at
instilling certain values, such as peoples participation,
Antyodaya, gender equality, dignity of women, social
justice, spirit of community service, cleanliness, ecofriendliness, maintaining ecological balance, peace and
harmony, mutual cooperation, self-reliance, local selfgovernment, transparency and accountability in public
life, etc. in the villages and their people so that they get
transformed into models for others.
In phase I of the scheme, the Prime Minister adopted
Jayapur village, comprising 4,200 residents, in November 2014. It is located in the same Sevapuri Assembly
constituency of rural Varanasi as Nagepur. Reaching the
two villages takes less than an hours journey by road
from the heart of Varanasi city. Their problems and
concerns, however, continue to be far removed from
those of the city and are closer to those faced by other
underdeveloped rural parts of eastern Uttar Pradesh,
despite multinational corporations, including Vedanta,
implementing small projects in both villages as part of
their corporate social responsibility initiatives.
FRONTLINE .
DECEMBER 23, 2016
58
THE HINDU ARCHIVES
C OVER STO R Y
Livelihoods in peril
The devastating impact on the informal economy, which has strong
links with the formal economy, may have catastrophic implications for
society as a whole. BY K.P. KANNAN
drawn constituted around 85 per cent of the total currency in circulation while the replacement by new notes,
even after three weeks, is only a small fraction of it. This is
like sucking 85 per cent of the blood from the body in one
go and injecting new blood drop by drop.
The ostensible objectives of the new policy are the
NO ECONOMIC POLICY ANNOUNCEMENT IN

India in recent times has affected almost all Indians
instantaneously as the one made on November 8 by
Prime Minister Narendra Modi that all Rs.500 and
Rs.1,000 denomination notes will cease to be legal tender
(with some exemptions) within four hours. It is anybodys guess as to how long it would take for the Reserve
Bank of India (RBI) to replenish the notes already withdrawn. What is proving to be a catastrophic dimension of
the decision is that the total amount of currency with-
S E VE R A L TR AD I TI ON AL jaggery-producing units in
Mandya district of Karnataka have temporarily suspended

production following demonetisation.
59
farmers in agriculture who constitute around 84 per cent

of all farmers.
The informal economy is understood not just by the
size of the establishments or enterprises but also by the
employment dimension, which refers to those working
without any employment or social security provided by
the employer. Of the 472 million Indians identied as
workers, 82 per cent work in the informal sector in
enterprises employing fewer than 10 workers; 10 per cent
are informal workers in the formal or organised sector
and the remaining 8 per cent are formal workers in the
formal sector, i.e., those with some employment and
social security. Taking agriculture and non-agriculture
together, the informal economy of employment includes
a vast segment of the self-employed, constituting 52 per
cent of the workers (247 million), and another 30 per
cent are casual workers (138 million).
Most of the self-employed eke out a living in activities
such as street vending, rickshaw pulling, auto and taxi
driving, small-scale trading, and running small tea shops
and eateries, or as independent workers such as plumbers, electricians, artisanal workers such as weavers,
handicraft workers and a vast pool of poor women in
putting out systems as in beedi-rolling, food preparation, agarbattis, chikan work or whatever work they can
lay their hands on. This, of course, is in addition to the
vast mass of small and marginal farmers numbering well
over 125 million. Their livelihood is anchored on cash
transactions on a daily basis. They need cash to buy their
inputs such as, for example, fuel for vehicles or vegetables, eggs, and fruits for street vending. They need customers or consumers with cash to pay for their goods and
services. While some basic and minimal transactions will
elimination of fake currency in circulation as well as

black money, i.e., legal money amassed without paying
taxes. There is certainly a one-off benet in the case of
fake currency since it will become immediately invalid.
But this policy need not stop the production of fake
currency of the new type. As for the second, there has
been considerable discussion that black money is not a
stock but a ow as in the case of national income. There is
no certainty that even the stock portion of the black
money will be eliminated by this action because the
underlying assumption that all black money is kept in the
form of Rs.500 and Rs.1,000 notes is a seriously awed
one. Going by the raids of the Income Tax Department, it
has been reported that the currency component of black
money is around 6 per cent of the black income. If that is
the case, the question is, do you have to burn the house to
catch a mouse?
Not all Indians are suffering from this shock treatment meted out to the economy. There is hardly a problem for those in the cashless economy because a
well-functioning infrastructure is in place and continues
to evolve with new instruments. These are predominantly, if not only, the richer sections of societymore
educated, mostly urban and, more often than not, wellemployed or in well-earning businesses and professions.
Even then the Indian economy is predominantly run by
cash. According to the RBI, cash transactions account for
90 per cent of all transactions in the country. Given the
organic link between the vast informal, read livelihood,
economy and the formal economy, even card holders
have to resort to cash transactions for a variety of requirements. Therefore, the major as well as immediate impact
of the currency withdrawal policy is a severe hit on the
informal economy of the aam aadmi. Just look at some
basic features of this informal economy and there should
be no surprise why the economy is dependent on cash.
It is no exaggeration to say that India is a very large
economy consisting of a very large number of tiny entities
engaged in the production of goods and services. That
there are a few large private corporate entities and public
sector establishments accounting for a signicant share
of national output is also a fact. But the livelihoods of an
overwhelming proportion of Indians depend on the vast
low-income informal economy.
LIFE IN THE INFORMAL WORLD
From the establishments point of view, the informal

economy consists of all the unincorporated enterprises
employing fewer than 10 workers. The latest Economic
Census, conducted during 2013-14, puts this gure at
576.92 lakh, or 98.6 per cent of all establishments in
India other than agricultural crop cultivation and public
administration. This includes nearly 420 lakh self-employed, classied as Own Account Workers or Establishments, some of whom might be assisted by their family
members. This is in addition to the small and marginal
BU SIN E S S in the garment hub of Tirupur in Tamil Nadu
has taken a huge hit following demonetisation.
FRONTLINE .
DECEMBER 23, 2016
60
25 lakh migrant workers in Kerala alone and some of

them started returning to their villages since they nd it
difficult to get their daily consumption goods on credit.
There have been similar reports of migrant workers
returning from the construction sector in Bengaluru, the
garment sector in Ahmedabad and the powerloom sector
in Surat. Reports of closure of small-scale units in many
parts are pouring in, as for example, in jaggery-making in
Mandya in Karnataka, owing to paucity of cash to pay
wages and procure inputs. The otherwise vibrant garment industry in Tirupur in Tamil Nadu now reports
worker attendance of just about 60 per cent because of
the cash crunch. This is likely to affect exports. The local
economy that depends on the vibrant garment industry is
similarly grinding to a slowdown as many shops wait for
customers to come and buy their wares and goods. There
is a vicious cycle here because small establishments need
cash to pay their employees and they also feel the pinch
from the demand side when their business goes down
owing to the lack of cash with the public.
Some establishments and retail shops provide goods
on credit because they function in a moral economy that
has been built on trust over time and arising from mutual
familiarity. But this kind of moral economy breaks down
beyond a temporary period because the small-scale producers and traders need to replenish their stocks by
purchasing from elsewhere, very often with cash. While
the trickle-down process of cash unloading may give
some temporary relief here and there, there is an emerging sense of a generalised slowdown of the economy. The
staying power of the informal economy is too weak and
brittle that it feels the pinch immediately and directly.
But its link with the formal economy is beginning to feel
the pinch through the cascading effect: a whole range of
goods produced in the formal economy are procured
from the informal sector and is also sold in the informal
sector as in the case of personal products, garments,
small vehicles, fuel and so on.
be managed by whatever little cash they can get hold of

for personal consumption, business will not be as usual in
most parts of the country. In several industrial clusters
such as the glass industry in Firozabad, Thane in Maharashtra, Surat in Gujarat, Kollam in Kerala, to mention
only a few, the cash crunch has already begun to take its
toll by way of loss of work, since employers do not have
the cash to pay wages.
The other major category of casual workers live by
their earnings of daily wages. They are paid either on a
daily or on a weekly basis. For them, there are hardly any
savings to draw upon. For the rst few days they queued
up in front of the banks to change the old notes given by
their employers. But now the employers do not have
enough cash to pay them. In the cashew industry, for
instance, employers were forced to negotiate with workers who demanded payment of wages. Since there was no
cash, only part of the wages was paid. There are around
FORMAL-INFORMAL LINKAGE
M. PERIASAMY
The links between the formal and informal economies

work through two main effects. One is the consumption
effect in which people living by the informal economy
consume a range of products produced in the formal
economy. In turn, people in the formal economy also
consume a lot of products of the informal economy,
whether it is the simple grocery shop, paanwallah, autorickshaws or taxis or small eateries, the barber, the carpenter or the plumber. The second is the production
effect in which the formal economy depends to a significant extent on products and services from the informal
economy. Thus, agricultural products, construction materials such as sand and granite, spares and parts of the
automobile and similar manufactures or a whole range of
personal products that are later branded and packed for
sale are all impacted.
The informal economy is also needed for its production in a range of products and services, be it agricultural
inputs of fertilizer, machines and fuel or the yarn for the
61
could be deemed as such. That the share of graduates is

less than 10 per cent among adult Indians is something
that many living in the shining segment of urban India
may not be aware of.
Although there is a proliferation of debit cards to an
incredible 615 million, the RBI says that 88 per cent of
their use is for cash withdrawal from ATMs which accounts for 94 per cent by value. The number of credit
cards, on the other hand, is reported to be around 22.7
million.
A study by Fletcher School of Business of the Tufts
University conducted a couple of years ago reported that
fewer than 35 per cent of Indians above the age of 15 ever
used a bank account. Less than 10 per cent ever used any
kind of non-cash payment instrument. On the other
hand, ATMs have become popular as a place to store cash
and withdraw the required amount of money without
carrying it around. Another study by the same institution, based on a eld survey in Delhi and Meerut in Uttar
Pradesh, reported that the average percentage of people
in the sample having a credit card was just 7.4 while the
average for Delhi alone was 26. Even the educated had
only limited access to credit cards; 19 per cent among
graduates and 36 per cent among postgraduates.
Despite great advances in the spread of banking and
nancial technologies, India is a deeply unequal society.
By the estimates of the 70th Round of the National
Sample Survey Office, 60 per cent of total assets were
held by the top 10 per cent and 75 per cent of assets by the
top 20 per cent in 2013. The bottom 20 per cent had just
0.68 per cent of the total assets while the bottom 50 per
cent had a little more than 6 per cent. Such unequal
distribution of wealth has a cascading effect on the ability
to acquire education, health care, decent work and consequent capabilities to handle sophisticated information
technologies, including nancial instruments. They live
hand to mouth on daily earnings and wages, travelling as
footloose labour from one end of the country to another
in search of paltry wages under miserable work conditions. Even the relatively better off, the small producers
and some self-employed, eke out a living by earning small
amounts on a day-to-day or week-to-week basis, which
requires the economy to provide a free ow of small
amounts of cash in large quantities for the large working
and non-working population.
As the economy lurches into a prolonged period of
uncertainty, it is evident that the vast mass of the population engaged in informal activities will bear the brunt
of demonetisation. But to imagine that this would remain
conned to a vast underclass of Indian society would be a
fatal assumption, for, the strong linkages between this
section of society and the relatively more organised sector
would result in a catastrophe that the well-heeled seem to
be blissfully unaware of now.
weavers and a range of raw materials that are often

handed over to the subcontracting rms or workers engaged in the putting-out activity, which has gathered
pace in the name of outsourcing by large units. This is
because of the character of the Indian economy as a
complex web of multi-structural, multilayered and multi-technology system, from the most primitive activity of
gathering tendu leaves to the making of supercomputers,
reecting the uneven development of the Indian economy and society.
It is this generalised effect that perhaps forced, in my

view, former Prime Minister Manmohan Singh to talk
about a decline in the growth rate of the economy by 2 per
cent. Depending on the speed at which the replenishment of new notes happens, the decline in growth rate
could vary; if the current and the coming quarter do not
register a positive growth rate, the economy could well
settle to a growth rate of 3.5 per cent arising out of the 7 or
so per cent growth rate achieved in the rst two quarters.
INFORMALITY AND INEQUALITY
Many corporate honchos, who often double as policy

advisers, are going gaga over the current impasse as an
opportunity to push the agenda for a cashless economy,
which is now touted as the latest objective of the Central
government. They talk about the emerging digital infrastructure and its adoption in many urban areas. What
they ignore is the ground reality of Indias society and
economy that is unequal in many respects, with a vast
pool of illiterate and less educated people and sparse
banking facilities (not even 10 per cent of the six lakh
villages have a bank branch), not to speak of digital
infrastructure, in thousands of villages. Take, for example, the educational attainments of Indian adults. The
latest gures from the 68th Round of the National Sample Survey tell us that 30 per cent of adults are illiterate
while another 21 per cent do not have an education
beyond the primary level.
That is to say, those with practically very little education constitute 51 per cent of adult Indians. Another 17
per cent do not have more than middle-level school
education, although some would say, rightly so in my
view, that they have seen young migrant workers use
mobile apps to transfer money to their households. This
is small consolation as a generalisation on this basis
could lead to dangerous conclusions.
If the class of educated is to be taken as those with at
least a secondary-level pass, then one-third of the adults
FRONTLINE .
DECEMBER 23, 2016
K.P. Kannan is ICSSR National Fellow and former

Director, Centre for Development Studies,
Thiruvananthapuram. He served as member of the
National Commission for Enterprises in the Unorganised
Sector, which was chaired by the late Arjun Sengupta.
62
C OVER STO R Y
LIVES PUT ON HOLD

It is as if life has come to a standstill in the informal sector which
accounts for as high as 92 per cent of the workforce, which is almost
entirely cash dependent. The surgical strike has had other victims too,
such as foreign tourists and patients in hospitals.
Off the roads

M AH ARASHT RA
BY LYLA BAVADAM
THE governments decision to recall Rs.500 and

Rs.1,000 notes has taken a huge toll on the transportation business in Maharashtra, one of the biggest cashbased businesses in the unorganised sector. Dalbir Singh,
general manager of the Maharashtra Tank Lorry Owners
Association, which represents the majority of truck own-
T R UC K S A R E I D LE
SHASHI ASHIWAL
across Maharashtra
in the wake of
demonetisation.
ers in the State, said the sector was facing an acute

nancial crunch. Some 80 per cent of our road expenses
are in cash, he said, adding that these include fuel purchases, tolls, boarding of truckers and cleaners, vehicle
maintenance en route, and payments to loaders and
unloaders. These also include what is gently referred to as
unaccounted submissions at State borders, checkposts,
weigh bridges, etc. The association has more than 2,000
members who together own more than 10,000 trucks.
Some 60-67 per cent of the road expenses go to fuel,
and Singh said that as long as the Rs.500 and Rs.1,000
notes were being accepted, fuel itself was not an issue.
With the Rs.1,000 note completely out of circulation,

these would have been a problem but for the fact that
truckers are not getting any orders. The rate of orders
has drastically dropped. Traders are not giving orders to
suppliers, so what will trucks carry?
Trucks are lying idle all over the State. Those drivers
who are employed with companies are slightly better off
because they will receive their salaries if not their batta
(additional travelling allowance). Salaries of drivers who
are permanently employed with trucking companies are
paid on an annual basis. We give it to them when they go
home on their annual holiday. They do not want it on a
monthly basis because they live off their batta and say the
salary is like an enforced saving, Singh said. At the very
least, a drivers salary would be Rs.1,10,000.
But for those who depend on daily or per trip earnings, this period is fraught with tension. Drivers are paid
Rs.8,000 per trip, cleaners get Rs.4,000/trip and mathadis (loaders) get Rs.500-700, depending on the consignment. These daily wages have currently stopped because
the sector has been immobilised.
The little bit of business that struggles on also faces
hurdles because of the preponderance of Rs.2,000 notes.
What is a driver going to do with a Rs.2,000 note at a
roadside dhaba or for some minor repairs? And if we give
him change its mainly 10s, 20s and 50s. How many
bundles can he carry? There are no 100s or 500s. The
government should have retained the Rs.500 note. Our
drivers are simple people. They only understand straightforward cash transactions. For them to shift to cards and
electronic payment modes will be very difficult, Singh
said.
The limit on withdrawals was also strangling the
transport sector, he added. The All India Motor Transport Congress (AIMTC), with which the Maharashtra
association is linked, has successfully fought for and won
an increase in the weekly withdrawals to Rs.50,000 from
current accounts.
Also hit by the recall of notes, although at another
level, is the taxi business. Mumbais iconic black-andyellow taxis have been severely hit by the demonetisation
move. Drivers said that earnings had dropped to less than
half. In the rst 10 days, some parked their vehicles and
shifted to driving Uber and Ola taxis. It is a growing trend
for black-and-yellow taxi drivers to also work as drivers
for other taxi companies.
Parmatma Sharma, however, is not one of these. He is
a typical cabbie of the older era. He still owns and drives a
ramshackle Premier Padmini when the majority of
black-and-yellows have ditched this brand. Although he
has lived and worked in Mumbai for more than two
decades, he remains for all practical purposes a migrant.
He has never brought his family to Mumbai from Uttar
Pradesh but sends them lump sums of money every time
someone goes to his village. He has no bank account and
his existence is totally cash-based.
Not having a bank account suddenly became a big
problem for people like Sharma, who had managed very
well without one so far. Why do I need one? he asked. I
FRONTLINE .
DECEMBER 23, 2016
earn about 1,800 to 2,000 rupees a day. My essentials are

fuel for the taxi and a little bit of food for myself. I dont
smoke or chew tobacco and I sleep in my taxi. I try and set
aside Rs.300 every day to send home. After this demonetisation I have had to cut down on chai. Calling himself
a simple man, Sharma said he had no complaints about
his earnings or his life until November 8. When demonetisation struck, Sharma was forced to rely entirely on his
daily earnings of the past few days. It was quite frightening. Even though I know I have enough money, it suddenly seemed as if I had none, he said.
Further, he used to save his money in the big denominations as it was easier to send home, but when these
were banned he realised he could not take time off from
driving to go and stand in queues and exchange money. I
could not go and withdraw money from ATMs because
Im not an account holder. And suddenly business dropped off drastically because people were saving their
change. For that rst week I lived off about 500 rupees.
He says it was the kindness of a regular customer that saw
him through. His main quandary was changing the
Rs.14,500 he had with him. Unable to use banking services, he nally solved this problem by resorting to the
very black market that the government is saying it wants
to eliminate. He went to a dealer who said he would
take Rs.100 for every Rs.500 note that he accepted and
Rs.200 for every Rs.1,000 note. This ate into Sharmas
home stash but he said it was his only option. I got off
lightly, he said. My friends later told me the rates had
become more usurious.
Double victims
M UM BAI
BY LYLA BAVADAM
LYLA BAVADAM
THE footpath outside Tata Memorial Hospital in

Mumbai is like a dormitory. Belongings in plastic bags
hang on fences. Battered travel bags serve as pillows, and
then there are old rugs, torn sheets, bundles of personal
CA N C E R P ATI E N T Gopal Prasad Koshta could
not exchange his Rs.500 note.

64
LYLA BAVADAM
said: The problem is not in getting the money because

the banks are being very helpful. The problem is with my
weakness; walking even 100 metres is exhausting and
since one can withdraw limited amounts at one time it
means I have to go repeatedly. This is exhausting.
Gopal Prasad Koshta is 38 years old. He is with his
wife and small daughter. It is not their rst trip to Mumbai for treatment. Demonetisation happened on the 8th.
At that time we were at home in Varanasi. We were
scheduled to come to Mumbai anyway, but we had to
come even earlier because my cancer ared up. We quickly changed whatever money we had but kept one 500rupee note. Now, no one here is accepting this note, not
the hospital chemist, nor anyone else. Im not worried
about medicine because a trust is looking after that but at
some point I will have to have this note changed it is a
big amount, he said.
Manoramadevi and her husband, Kamleshwar Jaiswal, hail from Purnia district of Bihar. She has uterine
cancer, and like so many others who are referred to Tata
Memorial, they regularly visit Mumbai for treatment.
Like the others, Kamleshwar too said his immediate
concern was not the treatment, which he says the hospital
is looking after very well, but the uncertainty caused by
demonetisation. Our needs are few but we are feeling
the pinch and more than anything we are fearful about
how long this will last, he said.
He added: There are a lot of organisations who help
us voluntarily and get us food, but sometimes one wants
to eat something special something that pleases the
SU KH D E V S H A R MA (foreground), another patient, says
chemists insist on more purchases than necessary if a

Rs.500 note is given.
effects and the inevitable huddled gures weak from
cancer or the treatment of it, poor patients who come
from all over the country.
Most of them are so poor that they have never had to
bother with exchanging Rs.1,000 notes. As Kamleshwar
Jaiswal, who has accompanied his ailing wife from Bihar,
said: Hazaar ka note to haath me aata hi nahi [a 1,000
rupee note has never been through my hands].
The stories below show how demonetisation has affected them and turned them into double victims.
Sujit Kumar from Patna is 28 years old. He is recovering from surgery for cancer. He does not know what sort
it is but it has affected his face and mouth and he has had
it since he was in his early teens. Ive grown up with
cancer, he said. He sees his cancer as a burden on his
family and now the additional problems caused by demonetisation prompted him to travel on his own this
time so as to save money. I can manage on my own, he
said, putting on a brave face and smiling despite the
recent surgery that has left his face extensively bandaged.
He wears dark glasses because his eyes are weak and
extra sensitive to light. The devastating effects of the
illness have worn him out and his face belies his age but
he holds himself with dignity.
In the same touching grace-under-pressure manner
that was seen in everyone Frontline spoke to, Kumar
65
tongue, but I hesitate because money is suddenly limited.

Who knows what emergency will suddenly crop up? And
we dont know how long this money crisis will last.
Sukhdev Sharma (32) from Bokaro district in Jharkhand has had intensive and closely scheduled therapies.
Surgery, chemotherapy and now radiation have followed
in quick succession. His experiences have been similar to
the others. The chemist inside the hospital gives us
change for 500-rupee notes, but they dont always have
the medicines we need. And sometimes the prescription
is for medicines worth just 150 rupees. Chemists outside
tell us either buy more medicine or dont expect the full
change.
Kuch kar to nahi sakte. Sarkar ka hukumat hai [We
can do nothing. Its the governments orders], said Kumar. Weary acceptance and grace under pressure are
what these double victims express as they sit on the
footpaths outside Tata Memorial.
70 per cent drop

in business
DELHI
BY DIVYA TRIVEDI
MODI tere raj mein, katora aa gaya haath mein!

(Modi under your rule, we were reduced to holding begging bowls in our hands). Thousands of traders of Karol
Bagh raised such slogans on November 24 as they
blocked traffic in protest against the Central governments demonetisation move. Note nahi, PM Badlo!
(Not the currency, change the Prime Minister), screamed
the posters the traders carried as they marched through
the streets.
Karol Bagh is one of the oldest and biggest market
clusters in Central Delhi comprising 14 markets that
specialise in everything from leather goods to sanitary
wares to clothes and jewellery. Each of the markets
Bapa Nagar, Beadon Pura, Reghar Pura, Ajmal Khan
Road, Ghaffar Market, to name a fewhas some 5,000
small and big retailers and wholesalers. International
brands jostle with run-down shops.
The Assembly constituency is represented by the
Aam Aadmi Party, but the area has a sizable number of
Bharatiya Janata Party supporters. Murli Mani, the Vyapar Mandal president, echoed the sentiments of his fellow businessmen when he said the people will vote
decisively in the next parliamentary elections. While
traders were not against demonetisation per se, they were
angry that the move was implemented without planning.
The government should have rst ensured that there
was enough money in the banks for people to exchange
their higher denomination notes. Go to any bank or ATM
in Karol Bagh, cash disappears within the rst hour itself.
Except the very rich, who are capable of manipulation, all
FRONTLINE .
DECEMBER 23, 2016
other classes of people have been inconvenienced by this

unplanned decision, he said. Besides, it is becoming
difficult to trust Modi anymore. He keeps saying I, nowhere does he say we, Murli Mani said.
This is the peak wedding season in this part of the
country when families throng the market, but the usually
bustling Ajmal Khan Road in Karol Bagh wears a gloomy
look. The only crowds visible are those standing outside
banks and ATMs. Business has fallen by 75 per cent
since November 8, said Shilpa, sitting idle at a lehenga
store. This is worse than the off season, she said. A sign
outside a jewellery store read: We do not accept old
Rs.500 and Rs.1,000 notes, evidently to inform the
Income Tax officials who had come calling following the
gold-buying spree on the night of November 8. Income
Tax sleuths raided jewellery shops in Karol Bagh and Bali
Maran following reports that people were buying jewellery with back-dated receipts to get rid of their unaccounted money. We are getting some customers, but the
business class has completely disappeared, said Suresh,
a manager in a gold and silver jewellery store. While shop
owners waited for a rare customer to show up, a pave66
ment shoe-seller literally dozed off on his collection of

footwear. Seventy per cent of the business at Ghaffar
Market, which sells imported goods, had dried up, Pritam, an electronics store owner, said.
Although some shops in Karol Bagh accepted card
payment, 90 per cent of the transactions were in cash,
Murli Mani said. Overall business has been hit by up to
40 per cent. There are no buyers. Even if we accept cards,
right now the entire focus is to go to banks. Who has the
time to do any shopping anymore? he said.
Seema, a housewife, who was shopping for hosiery
along with her mother-in-law, said they were only buying
stuff they needed badly. Demonetisation has helped me
cut random costs and realise the value of money, she
said.
Signages such as Fixed Price and No Bargaining in
stores were replaced by 'Paytm accepted here and
Cards accepted here, but they were few and far between. Kamlesh, who owns a furniture shop, said he
would not get a point of sale (POS) any time soon.
When Paytm transfers the money to the shopkeepers account, a 2.5 per cent charge is levied. My prot
margin is only that much and what is the point in giving it

away to Paytm? he asked. While Paytm has slashed
merchant fees until December 31, the typical fee charged
by e-wallet companies such as Paytm and MobiKwik
range anywhere between 1 and 4 per cent. Not all sellers,
especially the ones selling items worth Rs.100-200, are
willing to pay the fee.
When one can get the full earning in cash, why go
through the rigmarole of technology? asked Kishan
Chand, a toy seller. Although Paytm saw a surge in new
merchants and customers signing up for it, it was yet to
become a reliable vehicle of transactions. Rather than be
considered a permanent way to transact, it was a quickx solution to tide over the crisis created by demonetisation. Several reasons were cited by a bunch of shoppers and shop keepers for not using e-wallets. Internet
connections were still not fully secure or stable in India
with data privacy being a huge concern for many. The
payment gateways and apps are unaudited. Where are
the checks and balances if my money disappears into the
system? asked Kunal, a Delhi University student. The
government can also simply block the Internet as it has
67
DIVYA TRIVEDI
THE E M P TY M AR KE T in Karol Bagh, Delhi.
done so many times in the past. How will I order a meal if

I am only dependent on an e-wallet and the government
decides to pull the plug on the Net?
The Labour Commissioners office has asked shopkeepers to open bank accounts for their staff and pay
their salaries by cheque. If this happens, it will be good.
But, apparently, it takes time to open an account. How
will I support my family until then? asked Raju, who
works as a helper in a garments shop.
While the demand for goods has dried up, so has the
supply from factories. Across markets in Delhi, shopkeepers complained that factories stopped work after the
demonetisation announcement was made. Go to Naraina, Okhla, Noida, Punjabi Bagh or even to Agra, Jalandhar and Amritsar from where a lot of stuff comes to this
market. All the factories have been hit as workers have
gone home. There is no money to purchase even raw
material, forget about payments to workers. How will
they manufacture? Murli Mani wondered. Some of the
workers complained that their employers were offering
them demonetised currency notes saying they could either take it or forgo payment.
We have been pushed back by a year in our business.
It will take a long time to recover from this mess, he said.
Small traders woes

C H E N N AI
BY T.S. SUBRAMANIAN
FRONTLINE .
DECEMBER 23, 2016
K.V. SRINIVASAN
SHABIR AHMED, a pavement vendor on Armenian

Street at Parrys Corner in Chennai, looks forlorn. He has
spread out on a wooden platform in front of him an
assortment of bangles, sticker-bindis, hair clips, packets
of earbuds and safety pins, plastic toys and other knickknacks. It is around 12:30 p.m. on Tuesday, November
29. A steady stream of people is heading to the nearby St.
Marys co-cathedral and St. Antonys shrine. Among
those going to the church are advocates from the nearby
Madras High Court. There is a swirl of humanity around.
But Shabhir Ahmed hardly attracts any buyers. A woman
cursorily looks at what he has displayed and moves on. A
few feet away is a row of pavement stalls selling rose and
jasmine garlands and candles. J. Parthasarathy, selling
rose garlands, seems to be doing distress sale. He sells the
garlands for Rs.10 each to two women devotees proceeding to the church.
Shabhir Ahmed said: Business is dull. I have not
paid my house rent this month and my house owner
keeps ringing me up. What was even more worrying for
him is that he has to pay the fees for his children, who are
studying in schools and colleges. My business is not
seasonal like textiles, which are generally sold during
festivals. I have normal business through the year. But
my trade has been hit now because nobody wants to use
their loose change and lower-denomination currency
notes as these are in short supply, he said.
A J E W E LLE R Y S HOP in Chennai wears a deserted
look on December 1.
68
K.V. SRINIVASAN
Chennai; S. Vijayalakshmi, who canvasses for customers

for a tailoring shop; the women staff of Saravana Stores;
or P.S. Anwar, a pavement vendor in Luz Corner who
sells knitwear bought from Tirupur, the hosiery town in
Tamil Nadu; the refrain is business is dull because there
is no money circulation.
Conversations with pavement vendors and shop
owners revealed two things.
The rst is that sales usually slump after Deepavali.
The festival fell on October 29 this year. The sales this
year were dull even before demonetisation was announced. Secondly, the majority of vendors and shop
owners said demonetisation would have been a welcome
move if it had been implemented properly. Subsequent
ad hoc announcements led to confusion, adding to the
travails of people standing in long queues in front of
banks and ATMs, they said.
T. Selvaraj (57) from Sathankulam, Tuticorin district,
sells banians and underwear on Ranganathan Street. He
used to earn Rs.1,500 a day; now he makes hardly
Rs.500. But he is ready to rough it out if the measure is
good for the country. K. Manikandan of Vaniyambadi,
B U SI N E S S I S D UL L in the ususally busy Ranganathan

Street in T. Nagar in Chennai.
A. Subramani, who sells fruits in the adjacent space,

is bitter that all businesses around him have received a
big blow after demonetisation. Since fruits rot quickly, I
buy only limited quantities now, that too only the varieties that sell, he said. When people buy fruits for Rs.100
and give me the newly introduced Rs.2,000 note, I cannot give the change. So I lose business, he said. What we
are earning now is spent only on food. We cannot spend
our money on needless things, Subramani added.
The garland sellers are a disappointed lot, too. Orders are not coming, was the brief reply from Kandan
when he was asked how his business was doing. Business
is dull, said K. Sudha. When people buy garlands for
Rs.100 and give us [a demonetised] Rs.500 note, how
can we accept it or give them the change? she asked. But
she condently declared, with a broad smile, that the
situation will be all right in two to three weeks.
Be it Shabhir Ahmed; Sudha; M. Sikander, who is a
pavement vendor on Ranganathan Street at T. Nagar in
69
selling tender coconuts nearby, was even more enthusiastic about demonetisation. Business is normal. Business is usually dull after the 25th of every month. My own
sales have come down from Rs.2,500 to Rs.1,500 a day.
Today is the 26th. Trade will pick up after December 1.
T. Parthiban, a security guard in a shopping complex
near Ranganathan Street, said the visible outcome was
that people were unable to go on a shopping spree.
But the most loquacious votary of demonetisation
was P. Janardhanam (60), who was buying bananas from
a fruit shop owned by A. Karthick on the pavement
adjacent to the Kapaleesvarar temple tank in Mylapore,
Chennai. Janardhanam owned a shop selling covering
jewellery at Rasipuram in Namakkal district. Although
sales in his shop named Rasi Covering had come down
by a third, he praised the Prime Minister for taking a
route towards uprooting black money from circulation.
Marimuthu, the manager at a petrol outlet at Raja Annamalai Puram, went ballistic. Demonetisation to ush out
black money was akin to a person setting re to a palace
to drive out a rat, he said. Equally furious was M. Jawahirullah from Kamudhi, Ramanathapuram district, a
vendor on Ranganathan Street. Modi announced it all of
a sudden at 8 p.m. Immediately bus operators forced
passengers to get down and abandon their trip as the
higher denomination notes they gave for buying tickets
ceased to be valid tender, he said.
C.D. Sudarshan, proprietor of Gajalakshmi Textiles
near Kapaleesvarar temple, put the issue in perspective.
He said: This is Ayyappa season [the months when
Ayyappa devotees make a pilgrimage to Sabarimalai in
Kerala]. Devotees are coming in to buy the black dhotis
and shawls or towels. Customers buy textiles worth
Rs.400 and give us the Rs.2,000 note. We are unable to
give them change. So our business has received a terrible
blow.
With Christmas just a few weeks away and Pongal
about 45 days away, vendors and shop owners are hoping
that the new Rs.500 notes will come into circulation and
their business will resume.
Misery made worse

H YD E RABAD
BY KUNAL SHANKAR
FRONTLINE .
DECEMBER 23, 2016
KUNAL SHANKAR
IT seemed as if Hyderabads heart just stopped beating. The jewellery shops lined up along the road leading
to the iconic Charminar employ security guards to regulate vehicles at the parking space outside them. On November 28, the parking slots were empty. Opposition
parties had called a nationwide strike to protest against
Prime Minister Narendra Modis demonetisation decision.
It is wedding season in Telangana. Business in Hyderabads Old City is usually brisk at this time of year. A
short drive from Charminar is Talab Katta, which was
once a drinking water reservoir, called Mir Jumla Lake,
M OHAM M A D I R FA N in his bakery in Bhavani Nagar,

Hyderabad. He says banks do not lend to small
businesses and so he does not see any point in opening
a bank account.
70
K.V.S. GIRI
THE S HOP - LI N E D S TR E E T LE AD I N G to Charminar in

Hyderabad is known for brisk sales all through the year. It
is a different story after demonetisation.
KUNAL SHANKAR
but which now is merely a large depression. Nearly half a

million of the citys predominantly Muslim working class
population lives in this area. Several of the citys cottage
industries making products ranging from incense sticks
to Hyderabads famous bangles are situated in the 20odd neighbourhoods near Talab Katta. Countless women, and often children, make these wares on the streets
outside their homes.
Mohammed Ayub and his brother Yusuf rent a 200square-foot space for Rs.1,500 a month and embroider
blouses along with two other tailors. The brothers have a
network of sari shops in the area, which deliver blouse
material to be embroidered. The work could last from a
few hours to a couple of days. The brothers made about
Rs.500 a day, but business has dropped by 50 per cent
since the currency recall.
Ayub opened a savings account at a private bank two
years ago, which he used only for a few months. Ayub
DAU L A T B I makes incense stricks at her home in
Hassan Nagar in Hyderabad. She tries to make Rs.50 a

day but since lower-denomination currency is in
demand, she is unable to meet her everyday expenses.
71
KUNAL SHANKAR
MOH A M MA D A YUB and his brother Yusuf at their embroidery unit in Bhavani Nagar.
realised it was of no use because he never had enough by

the month end to set aside. Besides, he says, there are no
bank branches in the entire Talab Katta area. I used to
lose half a days work if I went to the bank, said Ayub.
The brothers do not quite get the logic of going cashless
because they never possessed a lot of money in the rst
place.
A few streets down at Hassan Nagar, another neighbourhood in Talab Katta, is where a large chunk of
Hyderabads incense industry is located. Daulat Bi, who
does not know her age, is making incense sticks along
with her two-year-old granddaughter and other kids
from the neighbourhood. One kilogram of sticks fetches
her Rs.10. If she puts her mind to it, she manages to make
about Rs.50 a day. A few houses down lives her employer,
20-year-old Shaik Haneef, whose older brother used to
handle the business until he got a bank job. The raw
material for the incense sticks is piled up in the room he
has rented adjoining his house. Haneef says women come
from across the city to pick up the raw material and
return with nished rolls of sticks. He quips: The brands
FRONTLINE .
DECEMBER 23, 2016
you buy in the fancy stores in the city, they simply add
perfume to it. For the past three weeks, hardly anyone
has turned up for work. Haneef sincerely wishes that
the currency recall hits the rich hard. He says: I dont
mind the temporary hardship if the government is serious about its intention.
Begum Shaheeda, Haneefs neighbour who is listening to the conversation, says she opened the zero account, referring to one of Prime Minister Modis pet
projects for nancial inclusion, the Pradhan Mantri
Jan Dhan Yojana. She has had a balance of Rs.200 in it
ever since, her rst and only deposit. Begum Shaheeda is
hoping that rumours about the Centres plan to deposit
Rs.10,000 in every zero balance account is true.
In Talab Kattas Bhavani Nagar, Mohammad Irfans
wholesale bakery business of 15 years is running at half
the capacity. He has a wood-red clay oven next door and
employs ve young men. Retailers come to him to buy
bread at Rs.15 a dozen. Irfan says: Who doesnt want
nancial inclusion? Banks dont lend to businesses at
Bhavani Nagar. They dont trust us. I ran helter-skelter
72
for a month to open a zero balance account. I still have

zero balance.
Syed Amin Jafri, a member of the Telangana State
Legislative Council from Assadudin Owaisis All India
Majlis-e-Ittehadul Muslimeen (AIMIM), claims city
businesses are running at 20 per cent their capacity. Jafri
says demonetisation has affected the rich and the poor
alike. He points out that even a multinational company
like Amazon is forced to rely on the value payable post
[VPP] model for its operations in India. That is what my
generation, which grew up in the postal age, called cash
on delivery. This is because Indians believe in liquid cash
and not everybody is conversant with web transactions or
even writing out a cheque. Indeed several economists
have also warned against portraying the overwhelming
dependence on cash in the Indian economy as a negative
trait.
Jafri, like several others, believes and hopes that this
single decision of the Modi government will undermine
the Bharatiya Janata Partys divisive agenda. He says:
This move has united the rich and the poor against the
government. The two and a half years of divisive agenda
the BJP pursued after coming to power will not yield any
dividends for the government this time. It will be wiped
out.
In his weekly column titled Minority Report in The
Times of India, Jafri writes: With all the segments of
trade and markets coming to a near-standstill due to the
cash crunch, the States Own Tax Revenues (SOTR) have
taken a direct hit. The bulk of the States tax revenues
come from VAT (Value Added Tax) and other Taxes on
Trade, State Excise, Stamps and Registration, Motor
Vehicle Tax, etc. and these have fallen to a trickle since
November 9. Non-Tax revenues from mining and other
sources, including Rs.10,900 crore targeted from sale of
lands, have taken a plunge. To add to the States nancial
woes, the Union government is likely to curtail the releases of the States share in Central Taxes and Grants-in-Aid
as its own nancial position remains critical.
half, and with no established system of credit in this line,

vendors are suffering with their backs to the wall. To
make matters worse, they have no association or union to
represent them. They say that if they manage to deal with
this situation they will get back to their old earnings. The
big hole in their meagre earnings these days are haftas
they have to pay with the same regularity and the same
amount.
Navtej (name changed) runs a chaat stall. The young
man asked not to be identied because of fear of reprisal
from the police or the officials of the Brihanmumbai
Municipal Corporation (BMC) for speaking on haftas.
He is not a licensed vendor and survives by paying off the
police and officials of the municipality. His stall reects
its illegal status; it is makeshift in the extreme. When
on-duty watchers call out that a municipal truck is on the
prowl, Navtej would quickly abandon the rickety stand
and walk away bearing his food stuff and stove on his
head. Navtejs daily sales of bhelpuri, sev puri and other
delectables earned him Rs.3,000 a day. After November
8, he says his daily earnings have fallen by half. With the
average cost of a plate of chaat items being Rs.40, it is
easy to understand why his customers stopped coming.
The busy vendors

M U M BAI
LYLA BAVADAM
THE HINDU ARCHIVES
MUMBAI has its own economic ecosystem of chaiwalas, cigarettewalas, paanwalas, sandwichwalas, bhelwalas, and so on, small entrepreneurial ventures, usually
one-man shows, that full a very Mumbai niche, that of
serving people whose travel time is frequently as long as
ve hours from home to workplace and back. So wellentrenched are these small food businesses that they
survive despite the ubiquitous haftas (money extorted by
the police or others in authority) and municipal raids
which disturb their equilibrium.
But the storm they are not weathering very well is
demonetisation. Daily earnings are down to less than
A P A N I P UR I W A LA going to start his day in Mumbai.

73
VIJAY BATE
wichwala has not been seen since demonetisation. His

work is linked to the others, and if they shut shop or slow
down, he knows his services will not be required. The
seller of plastic bags is an old man. He walks around
lugging a bulky bag that weighs about 15 kilograms. He
says he used to visit about 30 small businesses on a daily
basis and at the end of the day usually had about Rs.500
to Rs.800. His business has been hit the hardest because
plastic bags are an extravagance right now. His stock lies
in his shanty and he says with the wry humour of someone who has hit rock bottom: At least its not perishable.
It was never a roaring business so how is he managing
now? He shrugs and gives no answer.
The entrepreneurial spirit is so strong in these vendors that they say they cannot think of working for
someone else. Some of them have gone home to their
villages as it is economical to do nothing rather than run
their businesses at a time like this. Shutting down, they
say, is a kind of saving; they dont have to pay haftas.
P A NW A L A S I N Mumbai. Their entrepreneurial spirit is

so strong that they say they cannot think of working for
someone else.
Its not as if people dont have money, he says, change

is an issue. He offers credit to regular customers and
even allows them to keep their own accounts, but big
suppliers do not extend the same courtesy to him. Its a
one-day credit system in this line, he says, explaining
that payments have to be made within 24 hours.
He started his stall about a year and a half ago and has
prospered since then despite the fact that he pays
Rs.15,000 every month to the police and varying
amounts to the municipal staff. At Rs.3,000 a day his
average monthly earnings are Rs.70,000. He uses this
money to provide vocational education to his younger
brother and pays Rs.5,000 for the small room he has
taken on rent in a bazaar. He also sends money to his
mother. Thus, although he earns a good income, Navtej
has a scal responsibility and most of this is a cashoriented one. His business (and this includes haftas) is
run totally on cash and so is the money he pays towards
his rent.
Other vendors are also in a similar situation with the
exception perhaps of the chaiwala, who said business
slowed just for two days after demonetisation but is
almost back to normal again.
The vendors are serviced by the dharwala (knife
sharpener) and the plastic bagwala. They make three
weekly rounds to these places. There is something extra
pitiable about their condition because their services are
easily dispensed with. The dharwala who visits the sandFRONTLINE .
DECEMBER 23, 2016
Migrant workers woes

BENGAL URU
BY RAVI SHARMA
RUPEN TANIT, the security guard on night duty at

the sprawling construction site that is to house training
facilities and other offices for the defence behemoth
Hindustan Aeronautics Limited (HAL) in Bengalurus
Doddanekundi, is palpably excited. Despite the ennui
brought on by the increasing cold and boredom associ74
either not functioning or with serpentine queues in front

of them, accessing his money is an uphill task for Mondal.
N. Krishna Kumar, who runs an agarbathi (incense
stick) manufacturing unit and employs more than 500
people, mostly women from across the border in Tamil
Nadu, was unable to pay salaries in view of the limits on
cash withdrawal. With most of his employees not having
bank accounts, Kumar hit upon the idea of tying up with
a local provision store for supplying provisions. His employees would buy the essential commodities and he
would settle the bill through cheque payment. He said he
handed over a cheque for Rs.18 lakh for the provisions
that were picked up by his employees, adding that the
logistics were an unnecessary waste of his companys
time. The governments demonetisation move has also
affected the sale of agarbathis. The companys turnover
in November was Rs.2 crore, far lower than its average
monthly turnover of Rs.9 to Rs.10 crore. Krishna Kumar
has indicated that he may have to trim his workforce if
business continues to slide.
Business has not been so good for Bikas Subba of
Darjeeling who came to Bengaluru two years ago to set
upno prizes for guessingDarjeeling Hot Momos. His
two momo mobile counters, which operate between 5
p.m. and 10 p.m. in an area in Whiteeld that has a huge
blue-collar migrant population, have seen a 50 per cent
dip in business. I used to sell Rs.3,500 worth of momos
at each of my counters every day. But now my customers,
the majority of whom work in nearby industrial units and
a cement factory, do not have cash to buy momos. I have
not managed to earn more than Rs.1,500 a day in the past
three weeks.
Pushcart vendors, pan shops and other small businesses are also facing a similar crunch. Said Kanchan
Gurung, from a hamlet near Pokhara in Nepal, who
works as a hair stylist in Bengaluru: I tried to open an
account, but the bank manager wanted too many details.
I do not have an Aadhaar card. I am trying to get one.
Most of my clients pay by card, so we are really short of
cash.
Scores of migrants workers

have been inconvenienced
by the demonetisation
decision. They are unable
to send money home.
ated with night duty, his alertness has apparently paid
off. During his vigil around the construction site, Tanit
spotted a mongrel dragging a doggy bag. He decided to
check the contents of the plastic bag. In the dim light
illuminating the site, he could see among the thrash,
bundles of Rs.1,000 notes almost falling out of the bag.
Just when he thought he was in luck, some thugs appeared and grabbed the bag from him and ran away.
For someone who has traversed 3,000-odd kilometres from a remote village in Assams Cachar district in
search of a job in Bengaluru and who has not been paid
his entire monthly salary of Rs.9,000, the bundles of
notes must have looked tempting. The company that
employs him paid part of his salary in demonetised notes,
which he had to exchange with the help of touts who paid
him Rs.900 for every Rs.1,000 note. The company told
us that it could pay us only in demonetised notes as the
cash available with it was only in higher denomination
notes. I had to pay my room rent and for my food. I
exchanged two Rs.1,000 notes at a local kirana shop and
two other notes through a fellow security guard who had
contacted an agent. We were lucky to pay only Rs.100 as
commission for every Rs.1,000 note. Some agents deducted Rs.200 to Rs.250 for every Rs.1,000 note. I have
now opened a bank account. Hopefully, next month my
salary will be credited to my bank account.
Scores of migrants from West Bengal, the northeastern States, Odisha, Chhattisgarh and Bihar, working
as security guards, cooks, drivers and construction workers in the city, have been inconvenienced by the governments demonetisation decision.
Tapan from Tripuras Khowai district came to Bengaluru three months ago. He is a security guard at an
apartment complex. The rm that employs him has
asked him to furnish his bank account details for salary
payment. Opening an account has become next to impossible because Tapan needs identity proof and a guarantor
for that. Some workers have requested their employers to
transfer their salaries to their colleagues accounts. But
withdrawing money from ATMs has not been easy.
These migrant workers are unable to send money
home. Rakesh Mondal from Kolkata, who works in a
cement plant, said although he had a bank account he left
his cheque book back in his hometown; he withdraws
money using his debit card. But with restrictions on the
amount that can be withdrawn and with most ATMs
Its e-pay in
tinsel town
C HE NNAI
BY ILANGOVAN RAJASEKARAN
HAS demonetisation dulled the razzle-dazzle of the

lm industry?
In Chennai, there is plenty of circumstantial evidence
to suggest that it has not. The common perception is that
the industrys entire nancial operations are on a cashand-carry basis, but the fact is that nearly 60 per cent of
its dealings are done through cheques and
e-transactions.
The industry at present is not as strained as reports
75
ILANGOVAN RAJASEKARAN
DU R IN G A R E C E N T F I LM shooting in Chennai, the crew enjoying a lunch break.
talks about magicians and astrologers. He said that those

who came into the industry fairly recently and with little
knowledge about production management were the sufferers. Rajkumar, whose next lm is ready for release,
said the industry is turning professional.
Production, distribution, publicity, and so on can be
carried out entirely through bank transactions. A mere
20 per cent of the total expenses might have to be handled in cash, mainly for minor expenses. A few units
have started direct mobile transfers of cash too. But he
issued a warning: This is not the time for new ideas and
concepts since the risk is heavy. Financiers and producers might be wary of nancing projects of uncertain
returns, he said.
Such creative adventurers would have to wait until
the situation eases, though the Tamil lm industry even
in good times languished in creative crisis, he said. The
majority of producers and directors have accepted that
the makers of small-budget lms are at the receiving end.
You need 70 to 90 workers and technicians a day even for
minimum-budget movies. One needs a minimum of Rs.3
lakh on a single day of shooting. Even to make a documentary, you have to have a minimum nancial support
of Rs.50 lakh, he claimed.
G. Shiva, president of the Film Employees Federation
suggest it to be, and proof of this is the shooting under

way for various projects in and around Chennai and in
other locations. A famous Tamil lm director-cum-producercum-actor who did not want to be named said that
all professionally run production units had not felt the
demonetisation squeeze so far. But it could disturb the
industry if the cash scarcity continued. Then it will be a
serious issue. The industry today survives on an indigenously established system, evolved over a period of time,
wherein everyone is linked to someone and hence no one
is going to be jobless and wageless. Of course, there might
be some difficulties in the disbursal of petty cash on the
day of shooting, the lm-maker said.
The uniqueness of the industry, he said, was that
performing artistes worked in tandem with creative
minds such as cinematographers and art directors, besides technicians and workers, to produce a successful
movie. From the kitchen to the shoot set, it is a collective
responsibility of everyone, wherein none would be left
out even at times of crises, he said.
Others in the industry endorsed his views. The industry is doing normal business today, but not without
fears of an uncertain future, said Sankagiri M. Rajkumar, a young director who pledged his house in his
village to shoot his rst lm, Vengayam (Onion), which
FRONTLINE .
DECEMBER 23, 2016
76
of South India (FEFSI), the apex body that integrates and

unies associations of workers, technicians and artistes
in south India, denied reports that the industry was
facing a deep crisis. He said he had not received any
adverse reports or incidents from production teams that
are on the ground shooting lms now. About 40 to 50
shoots are going on at various places. Both the skilled and
the unskilled receive their wages without any disturbance through e-transactions, he said.
Shiva, who is also national president of the All India
Film Employees Confederation, however, cautioned that
if the nancial uncertainty continued, the industry would
slip into chaos. You have to take care of all technicians,
junior artistes and unskilled labourers who get employment for a minimum of 10 to 15 days in a month. Hence,
we ensure that the lowest in the rung, like the trolleypusher or the light boy, too, is paid a minimum wage of
Rs.950 a day, he said.
He claimed that unlike in Mumbai where corporate
houses have started funding projects in a more organised
and professional manner, Kollywood business still buzzes around a few individual nanciers, moneylenders and
producers, besides a few banks. Only of late we have come
across big names in production, such as Lyca, funding
Tamil movies.
Shiva insisted that in the past ve to eight years or so,
major transactions were carried out through banks. The
wages of workers and technicians would be paid in
cheques or transferred to their accounts directly. Wages
meant for members of each unit, such as cinematography, art direction, lighting, catering, transport, junior
artistes, stunt actors and others, which come under the
particular production house, were paid to the respective
persons in charge, who then distributed them to their
employees mostly once in a week either through e-transaction or by cheque, he said.
This pyramidal system of work allotment and payment, Shiva said, made the industry a cohesive and tightknit entity. He, however, refused to talk about the payment modes to leading artistes. It is between the
producer and the actor concerned. We are in no way
connected with it, he said.
But demonetisation has hit cinema halls hard. The
scarcity of lower denomination currency notes has drastically reduced footfalls in movie halls across the State in
particular and the country in general. Barring a few
next-gen multiplexes and those in malls, where e-ticketing for reserved seats, food and beverage orders and valet
parking have been the sources of revenue, other theatre
houses, especially those in B and C centres, have had their
business shattered. At this hour of nancial emergency,
movies are given the least priority in any familys budget,
said a theatre owner in Chengleput, near Chennai.
Films that hit theatres about a week after the demonetisation, including a Tamil lm by Goutham Vasudeva
Menon, took a heavy beating. This forced many others to
postpone the release of their lms.
Similar postponements of releases have taken place
in Malayalam, Telugu, Kannada and other regional lm
industries too. Amid this enforced gloom, some see an

opportunity to cheer. Said Shiva: The postponements
have come as a windfall for those unfortunates whose
lms are lying in the cans for long. These people can now
nd theatres to release their lms.
Tourists nightmare
NE W D E L HI
BY DIVYA TRIVEDI
VACANT stares greet the odd tourist in Paharganj, its

rows and rows of shops empty with no sign of any business. This area opposite New Delhi Railway Station dates
back to the Mughal era and is a backpackers delight with
its sundry hotels, restaurants, curio shops and wholesale
markets. Its emptiness was the most telling visual of a
edgling industry in a cashless economy one month into
the demonetisation exercise.
Foreigners residing in India and tourists were hit
A S HOP I N P A HA R G AN J , Delhi. The area is

frequented by foreign tourists, but very few come now.
77
DIVYA TRIVEDI
IN P A H A R G A N J , Delhi, a shop-lined street that had milling crowds is virtually deserted now.
FRONTLINE .
DECEMBER 23, 2016
78
banks ran out of cash, her contacts and friends in India

helped her out. Or, another Israeli, said he had at rst
decided to leave the country, but after standing in queues
for three days he nally got some money. He would stick
around until the money lasts. If the situation did not
improve by then, he would be forced to leave, he said.
Chen and Judy said rich travellers could use plastic money and not face deprivation but budget travellers like
them were the ones put in difficulty. I was in Rishikesh
when this happened. More than me, I could see that
people who are dependent on tourism for their livelihood
were suddenly left in the lurch. People extended us credit
and I could see they genuinely wanted to help but were
helpless, said Judy.
Touts had sprung up in several places, offering to
exchange old currency notes for a hefty cut. With the
limit of $70 per passenger at airports, people were cancelling their plans. With money exchanges too running
out of cash, exchange rates dropped to below Rs.50 and
many foreigners had to make do with it. In several places,
this correspondent saw old currency notes still in circulation. Rs.500 notes were being given by customers to pay
DIVYA TRIVEDI
hard when the Rs.500 and Rs.1,000 notes were suddenly

declared not legal currency. The rst few days were the
worst with panic and confusion reigning supreme. No
separate provisions were made, neither were help desks
set up for them. While banks and the government remained unhelpful, touts offered to exchange old currency
notes for a hefty commission. Faced with uncertainties,
several tourists cancelled their plans and left the country.
November, December and January, being the coldest
and most pleasant months, are considered peak season
for the tourism industry. For budget travellers, Paharganj used to be the rst stop before heading off to Goa,
Rajasthan, Agra or other places. But this year, the place
has seen a 60-70 per cent slump in business. Vishal, 34,
who was born in the area and is now a restaurateur, said
the only other time he had seen such a slump was before
the Commonwealth Games in 2009 when some hotels
and shops were demolished for widening roads and
sprucing up the locale. Aaj ki tareekh mein, zero tourists
hain yahaan (Today, there are zero tourists here), he
said.
I wouldnt have had the time to even glance in your
direction when you entered through the door, this time of
the month last year. But now I have all the time in the
world to answer your questions, said Vikas, a tour operator. You can see we are sitting twiddling our thumbs
because 20-30 per cent of the business has been cancelled by clients and fresh bookings are not happening.
The timing could not have been worse for the tourism
industry, he said.
When the announcement was made, most hoteliers
stopped accepting Rs.500 and Rs.1000 notes and tourists had no option but to head to other countries, he said.
Tourists dont have Indian bank accounts but hoteliers
do. They could have accepted the old notes and got them
exchanged later, said Vikas. He was of the view that the
dismal state of affairs would continue for six months.
Imran, a tour operator based out of Connaught Place,
said 40 per cent of his bookings had been cancelled. And
as the exchange rates were pretty bad, people refrained
from exchanging the currency as well. People are hoarding whatever cash they have in 100s and the new notes.
As every day a new rule is made, people are not sure if
they should spend right now. Travelling and fun seem to
be the last things on anybodys mind at the moment, he
said.
Raja, a jewellery retailer and exporter to the United
States, Israel and Europe, was angry with the media for
showing that people were happy with the demonetisation
drive. Come to the homes of the poor to see how happy
they are. he raged. He claimed he saw some foreign
tourists begging for food on the second day after the
announcement. They had not been able to buy any food
with the old currency they had. Then someone gave them
tea. I dont know what happened to them later, he said.
Amit from Israel said her friend could not eat for
three days because she had no legal currency notes. She
said there were no separate provisions for tourists and
they too had to stand in long queues like others. When
J I TE N D E R M A D A N , who runs a cafe-cum-bakery at

Paharganj, shows the diary in which he notes the credit
he allows regular customers. According to him, the
government is hurting the wrong people.
79
for meals that may have cost Rs.200. Some, like the
Israelis, decided to stick together and support each other
through an exceptional period in a foreign land.
Much of Paharganj, too, got by on credit and barter.
Regular customers were allowed by hoteliers to use their
services and have the food on the promise of future
payments. Vishnu Prasad Upadhyay of Hotel Star View
told Frontline: The tourists who come for vacation have
disappeared. Now only the ones who travel for work are
coming. Initially, we helped many foreign tourists with
cab fares and free meals. They are our regular customers.
If we don't help them who will?
Jitender Madan, who runs a 40-year-old cafecumbakery, started to keep a diary for the purpose. According
to him, the government is hurting the wrong people.
Modi wants to nish small businesses with this move, it
would seem, and invite international companies to take
over. Instead of harassing small traders, he should go
after the bureaucracy which is the real culprit in black
money. My licence fee is Rs.500 but I am forced to pay a
bribe of Rs.25,000 every year. All departments of the
governmentpolice, crime, taxation, customs, municipal corporationsdemand bribes. So who are the ones
responsible for black money? Why doesnt Modi go after
them? he asked.
With a lot of time on their hands now, most shopkeepers and hoteliers were eager to discuss the economics of the move and claimed to have better ideas than
Modi on how to handle black money. The area, dominated by the Punjabi and Baniya communities, was
considered a stronghold of the BJP. Several businessmen
voiced their disaffection for the move. But it would not
translate into a vote for a different party, many of them
felt. Indians derive sadistic pleasure from the suffering
of their neighbours. Many people genuinely believe that
rich black marketeers will be put in the dock through this.
Personally, I know it is not true. But traders believe that
something good will come of this suffering and the vote
will not swing on such an issue. After all, it takes guts to
make a surgical strike of this proportion, said Raja.
Reports from Kerala to Punjab said that tourism had
been hit hard. A tourist visiting the Taj Mahal in Agra
reportedly tore up the notes and ung them outside the
gate. Foreigners residing in India for the past few years
too did not have it easy. Trevor from Vienna could not
step outside his house for three days. Finally, in his circle
of friends he found someone who was to leave India soon

and was happy to give him his currency notes. In turn, I
made an online transfer to his account, said Trevor. A
diplomat from Germany had to break her sons piggy
bank in order to run the house and a visiting professor
from Japan was left with no money at all, as the Japanese
currency he was carrying was in the denomination of
more than Rs.5,000 per note. Earlier, he withdrew
Rs.5,000 a week from the bank, but then the rule
changed and that too was stopped.
The talk in business circles of Delhi indicated that
people with unaccounted money had already managed to
turn it white. Oliver (name changed) from Texas in the
United States, who lived in India for three years, said his
landlord asked him for his passport so he could use it to
deposit money in his account. I refused him but know for
a fact that he used the accounts of his other tenants, the
maid and the driver to park his cash, said Oliver.
Building slowdown
C HE NNAI
BY R.K. RADHAKRISHNAN
DEMONETISATION and its aftermath have been

bad for construction workers in the informal labour markets in Chennai. In normal times, daybreak for them
begins with the search for work at one of the over 50
points in the city. Trucks in barely running condition pull
up at these points to pick up labourers whom the contractor who accompanies the vehicle, chooses.
During the third week after the currency withdrawal,
visits to these predawn labour markets in the south of the
city revealed that the number of labourers coming in to
seek employment had gone down by more than half. The
opportunities have come down, not many contractors are
coming these days, said a labourer waiting at the Tiruvanmiyur point on November 27.
Labourers who gathered at the other southern points
Neelankarai, Injambakkam, Sholinganallur and Thoraipakkammostly echoed this view. I will be forced to
go back to working in a house [as a domestic help] at this
rate, rued a woman in Neelankarai. She said that she was
not able to nd a taker for the second straight day on
November 28.
At many of these pick-up spots, about 70 labourers
nd work each day. Now this number is down to 20 or
less. Multiple accounts from labourers at these spots
indicated that they now had a less than 25 per cent
chance of being picked up. That explained the drop in the
number of hopefuls at the pick-up points along East
Coast Road and Old Mahabalipuram Road, both still
sunrise construction areas on the outskirts of the city.
The construction sector has backward and forward
linkages to approximately 265 ancillary industries and
they together created more than 45 million jobs either
My licence fee is Rs.500 but

I am forced to pay a bribe of
Rs.25,000 every year. All
departments of the
government demand bribes.
FRONTLINE .
DECEMBER 23, 2016
80
M. KARUNAKARAN
DAIL Y - W A G E C O N S T RU C T I O N workers at Kottivakkam in Chennai. The opportunities are coming down, not many
contractors are coming these days, say labourers.
directly or indirectly, noted Ranjeet Mehta, director,

PHD Chamber of Commerce and Industry, in an article
titled Real estate and construction sector set to create
maximum jobs, in Employment News of January 2016.
It is one of the fastest-growing sectors, contributing
about 11 per cent of Indias GDP. According to the National Skill Development Corporation, the real estate and
construction sector is set to become the prime employment generator in India, he wrote.
But it has been a long winter for those in the construction sector, and how long the bad times have lasted is the
only point of contestation. A builder who has delivered
close to 10 million square feet in office and commercial
space put it at two years, but two others said that the
downturn had impacted them for just over a year.
The downward turn because of unrealistic prices, the
slowing down of demand, the Real Estate Bill, demonetisation and, nally, a Provident Fund circular asking all
principal employers to pay only via bank transactions to

all employees have come together to bring the industry to
a standstill. It is like building Rome in a day, said a
builder, who did not want to be identied. Yes, we need a
lot of reforms in the sector, but to bring it all in the space
of under a year and expect compliance at an early date is
literally shutting down the industry, he added.
Many builders in Tamil Nadu and Kerala said they
had laid off workers, and many of the workers had returned to their homes in the northern States. The top few
builders appeared to have retained their labourers because labour constituted about 10 per cent of the cost,
and it was not possible to kick-start the business once it
began to pick up, one big builder told this correspondent.
Many builders are walking a thin line between solvency and bankruptcy. At any point of time, we have
projects nearing completion, projects that are near or
past the halfway mark, projects that have just com81
menced, and projects that will take off soon. Money from
all these go to make up our rotation requirements, said
an executive working for a big builder.
The new Real Estate (Regulation and Development)
Act, 2016, will mean that builders have to make sure that
they do not move money from one project to another. The
big players welcome the Bill, but it is expected to wipe out
the smaller players, who depend on cash rotation. The
November 8 announcement was the second shock this
year. If I have a cash ow issue somewhere in my system,
that will be the end, said a big builder who has built a
reputation in the luxury segment and in commercial
space. I am not looking to send my workers away, but
when I have cash ow problems, then everything else
everywhere gets affected.
He says he will be able to manage with cash ow
issues and the Rs.24,000 limit for about a month. But
when he has to pay his monthly interest to the bank, and
if he does not have sufficient funds, a host of problems
kick in. The builder can be blacklisted and be barred from
further loans. This is the problem. If the problem can
end at an early date, we will all be okay, he added.
A construction contractor revealed how he circumvented the ceiling on withdrawals: I have accounts in
ve banks. I send my employees rst thing in the morning to each of the branches. I have managed to a certain
extent. Please remember that even Rs.1.2 lakh is too
small an amount for me to run a week with. With many
others following this lead, Banks are running out of
money quicker, leading to even more frayed tempers and,
in some instances, such as in northern Kerala, unruly
scenes.
complying with the requirement, they contend that a

host of issues come in the way of implementation. Of the
total estimated 15.2 million short-duration out-migrants, more than 36.2 per cent are employed in the
construction industry. At present, only 9.8 million construction workers of the total 32 million are registered in
the country, Ranjeet Mehta noted.
The other issue is that most of the employees are not
exclusively construction workers round the year. As
much as 80 per cent of the employees have minimal
skills. They switch jobs, during the lean season or for
personal reasons. Some work for a length of time, do
other less gruelling jobs and return to construction for
short periods of time. So, contractors believe that they
will face a choice: (1) use the oating worker and run
into compliance issues with the regulatory authority, or
(2) stop some part of the work so the worker becomes
P.F. office compliant. Either way, we lose. How can you
insist on any of these things in places where nding
labourers itself is a problem, asked a contractor. This is
true for all areas of the country where there are lowintensity conicts. We simply will have to stop working
on projects in these places, he added.
Demonetisation has, so far at least, not been able to
end the black money that continues to ow in the sector,
if builders are to be believed.
At a registration office just a few days after the
announcement, we had gone for registration of 30 ats
[apartments]. The [main person] there refused to accept old currency as bribe. Then we had to scramble, said
a builder. The problem is that the day of registration is a
sentimental one for most people buying a home. Most
people also believe in auspicious timings. So, we had to
scramble because the [main man] refused to register
until money was handed over upfront. We even tried to
tell him that we will come back with the money because
we have many more registrations left. He refused to
listen, the builder added.
In another case, a builder was handed over old currency running into about Rs.6 lakh and told to deliver
new currency. What to do? We have to. We depend on
him, he added.
Perhaps the most fascinating case that this correspondent came across during the course of investigations
into this story is this. A builder was asked to take a
demand draft for a certain amount favouring a neighbouring registration office. He was asked to hand over
the draft to that office. The favour was returned by the
beneciary, that is, the official in that registration office
asked the same builder to take a DD for a certain amount
to be handed over to the person from whom he got the
earlier DD. What the exchange of DDs does is this: Some
people who register their property pay in cash. If the cash
is matched against the DD taken, then the cash can be
pocketed. Technically, there is no money missing from
the office.
Demonetisation has nothing to do with ending corruption. For now, it has made the life of anyone who
offers a service difficult.
I have accounts in ve banks.

I send my employees rst
thing in the morning to each
of the branches. I have
managed to some extent.
Amid all this came a direction from the Provident
Fund office asking the primary employer to pay all his
employees only via bank transfer. In effect, the primary
employer was responsible for the middleman (in this case
a contractor) having a P.F. account. If he did not, then the
primary employer had to pay directly to the bank accounts of his employees, regardless of whether they were
permanent or contract employees. That was not all. The
employee had to have an Aadhaar card, a bank account
and a Permanent Account Number. The bank account
had to be linked to the Aadhaar number before it was
submitted to the P.F. office.
While most builders say they have no problem in
FRONTLINE .
DECEMBER 23, 2016
82
Government claims
made as an
afterthought
Interview with A.K. Padmanabhan,
president, Centre of Indian Trade Unions.
S. JAMES
BY T . K . R A J A L A K S H M I
A SECTION of industry, namely big industry, has

been jubilant over the governments decision to demonetise 500 and 1,000 rupee notes and the drive
towards a cashless economy, but it has been largely
oblivious to the severe economic hardship imposed on
the industrial working class and the unorganised sector. The president of the Centre of Indian Trade
Unions (CITU), A.K. Padmanabhan, spoke to Frontline on the fallacy of the idea itself and the unfolding
consequences of the decision to demonetise. Excerpts
from the interview:
At least a section of the media has reported in

detail how all the industrial centres of the country
involved in textile, garments and many other labourintensive sectors as well as the construction industry
came to a standstill within 10 days of the governments
notication. Workers belonging to these sectors, including a huge number of migrant labourers, have
been forced out of work.
The government announced that daily-wage workers
will benet once the money goes into their account
as this will indicate whether they are getting paid
minimum wages or not. Do you see this as a benet
for workers?
We have been on a struggle demanding that workers should be paid minimum wages and all other
statutory benets. Not only that these are being denied, there is no enforcement machinery to oversee all
these. Whatever was existing in the form of enforcement machinery has been already dismantled.
If workers will be paid through their banks and
records can be properly maintained, it can help them.
But does this require demonetisation to ensure payment to workers through banks? Was it necessary that
workers are put to such difficulties? How many
months will it take to ensure that the millions in the
unorganised sector are to have a bank account in a
place where they can access it easily?
All these claims seem to be far-fetched and are
being made only as an afterthought, following the
severe crisis that has been thrust upon workers.
What has been the impact of demonetisation on the

industrial working class?
Every section of ordinary working people has been
put to difficulties never experienced before. The industrial working class, of which the majority are in the
informal sector, have faced the brunt of this attack.
There is no work and even the wages prior to November 8 [the day the Prime Minister made the announcement] are being denied. The government has put a
hold on the payments to be made. Even those workers
who had some savings have not been able to use that
money even for emergency requirements. The impact
of this action of the government will be very critical in
the rst two weeks of December as withdrawal of
wages will become almost impossible.
The government claims that this move will mop up
all the unaccounted wealth in the country? Is there
any basis to this claim?
Financial experts in the country and also from
many international institutions have said that this is
not going to happen. The [fact that] unaccounted
wealth is not kept in currency notes is well known.
This demonetisation is not going bring out the unaccounted wealth within the country. Everybody knows
that the larger part of the hidden wealth is kept outside the country.
Do you foresee unemployment levels rising as a

result of this and other negative social consequences
of this decision?
From the reports that are available within this
short period, it is doubtless that unemployment levels
will rise. With the huge numbers of unemployed and
those losing their jobs now, there is going to be a
severe crisis in society with long-lasting impact.
With a huge informal sector that employs the largest

number of people, how has this step affected work as
well as livelihoods?
83
C OVER STO R Y
Corporate, not
cashless
Corporate India consists of many small and medium units that need cash
to pay workers, buy inputs and distribute goods. Hence, the currency
shortage has led to workers losing jobs, at least temporarily.
B Y C.P. CHANDRASEKHAR
IN FINANCE MINISTER ARUN JAITLEYS PREBudget meeting with members of Indias Chambers of
Commerce and Industry and other special category capitalists such as exporters, they reportedly told him that
while demonetisation was a welcome move the government must offset the immediate downturn that industry
SANDEEP SAXENA
will go through. This was accompanied by a range of

demands varying from reduced corporate taxes to special
export incentives and accelerated privatisation. In sum,
India Inc. had its own ideas of how the short-term pain of
demonetisation could be converted into long-term gains
for itself, though the policies recommended to ensure the
realisation of long-term gains had little to do with the
abolition of the black economy and the end of corruption
and counterfeiting that the government claims motivates
the initiative.
On the surface, this stance of India Inc. seems to ow
from its ostensibly limited dependence on the cash economy, especially when compared with the unorganised
industry and the informal economy. What the demonetisation exercise did and continues to do is ush out old
currency from the system and limit access to new currency. To that end it requires holders of cash amounting
to 86 per cent of the value of currency in circulation to
exchange a small proportion of these notes for new ones
or deposit them in their bank accounts to be replaced
through a gradual process since withdrawal of currency
from these accounts is subject to stringent ceilings. The
implication of this is that the measure will hit hardest
those who need cash for transactions or who use it as a
store of value to hold wealth that they have not declared
in order to evade taxes or prevent detection of illegal
earnings. The pain suffered by the former is seen to be the
small sacrice needed to force holders of unaccounted
wealth to reveal their black assets and suffer the penalty
that would be imposed.
The argument that the hit to be taken by large industry will be limited is based on the presumption that its
need for cash is limited since most of its transactions are
settled through cheques, bank transfers or electronic
payment systems rather than payments in cash. This
independence from cash is seen as having increased in
FINA N C E MI N I S T E R Arun Jaitley with Ajay S. Shriram,
the then president of the Confederation of Indian

Industry, and Chandrajit Banerjee, CII director general, at
the inauguration of the National Conference and Annual
Session of the CII in New Delhi on April 6, 2015.
FRONTLINE .
DECEMBER 23, 2016
86
M. BALAJI
IN A G A R M E N T I N D UST RY unit in Tirupur, a le photograph.
workers are likely to be hit the hardest during what is for

them an excessively prolonged short term . But declaring the world of corporate India as largely cashless is an
exaggeration. Even if we restrict the discussion to industry, there are certain features of the organised sector
that are ignored by those who argue that industrial India
is substantially cash-independent. The rst feature is
that the registered manufacturing sector consists of
many medium and small enterprises (registered under
the Factories Act) that straddle the thin line between the
informal and formal economy. These units range from
those manufacturing cycles or lathes in Punjab to those
engaged in producing knitwear for export in Tirupur. It is
now clear that a substantial part of the transactions these
units undertake to buy inputs, pay workers and distribute
goods is in cash.
recent times when banks modernised their operations,

embraced the Internet and introduced the technological
ingredients needed for a largely cashless economy. The
conclusion is that corporate India will only be affected
indirectly by the demonetisation initiative, inasmuch as
it is resulting in a liquidity crunch and a contraction of
demand. Since that is seen as a short-term constraint
lasting until the demand for new currency is met by
supply from the mints, large industry has limited cause
for concern. Demands such as those made at the preBudget meeting overstate the difficulties faced and losses
suffered by corporate India.
PROLONGED SHORT TERM
There is some truth in this when seen in relative terms.

Agriculturists, petty producers and informal sector
87
tised formal sector. It is an integral part of the larger

economy in which black and white segments seamlessly engage with each other. In that economy the formal
industrial sector is required to engage in and prots from
black transactions. Moreover, there are enough alleged,
investigated and conrmed instances of black wealth in
the form of real and nancial assets besides cash in the
hands of leading business persons to establish that India
Inc. thrives on unreported transactions and the money,
wealth and corruption associated with that.
This discussion has some implications. It suggests
that the extent of Indias cash economy is not determined
by the cashless payment and transaction options that are
open to agents. So to exhort Indians to go cashless is not
the best way to deal with the currency shortage. In the
rst instance, the return to normalcy will be dened by
the pace at which new currency to replace the old can be
issued. In the longer run, structural features and processes that create the space for cash transactions need to
be addressed. Further, it is clear that the assumption is
the existence of a strong link between the degree of
prevalence of a cash economy in a particular segment of
the economy and its importance as a source of black
incomes and location for black money and wealth.
It is against this background that three kinds of evidence must be read. The rst is that close to a month after
the demonetisation was announced less than two-thirds
of the Rs.14 lakh crore in circulation in the form of notes
of Rs.500 and Rs.1,000 denomination have been deposited with the banking system and more than Rs.5 lakh
crore still remains in the system waiting to be converted
into legal tender. Second, that there has been a surge of
deposits in unlikely accounts, including Jan Dhan Yojana
accounts, pointing to an effort to nd ways of converting
old notes without breaching the Rs.2.5 lakh barrier
which triggers special scrutiny. And, third is that after a
period when the rush was for conversion or deposit of old
notes, the banking system is seeing a rush of withdrawals,
which creates the suspicion that this is for exchange of
old notes at a premium by those who can nd ways of
replacing the old with the new without attracting attention. Paying that premium (rumoured to be around 30
per cent) would be a far better option than revealing the
black income and paying a much higher tax and penalty
and inviting prosecution. All this corroborates the view
that demonetisation per se cannot even fully unearth
unaccounted-for or black money, let alone get rid of it.
It is also true that to the extent that business is not
affected by the measures announced by the government,
these are unlikely to be effective in shutting down the
black economy. Meanwhile, it is becoming clear that a
section of corporate India is looking to nd illegal ways of
protecting a part of its tax-evaded gains. Not surprisingly, official and unofficial spokespersons of India Inc. have
not only demanded benets in return for the pain they
are suffering but cautioned against harassment by tax
authorities of law-abiding citizens and a return to the
inspector Raj that reportedly prevailed before the era of
liberalisation.
Neither is the overall industrial

economy cash-free nor are the
operations of Indias leading
rms cashless in character.
Not surprisingly, the demonetisation exercise has
adversely affected their functioning. Both depressed demand and difficulties in obtaining inputs have been reported from different parts of the country. Moreover, the
currency shortage and the consequent rationing of legal
tender have made it difficult for employers to meet cash
payments. In many areas this has led to workers losing
their jobs, however temporary they may have been.
A second feature of the industrial sector is that the
organised and unorganised sections of it are not separated from and independent of each other. Rather, to reduce
costs and circumvent labour legislation, the organised
sector is increasingly outsourcing a range of tasks earlier
undertaken in-house to units in the informal sector.
Prots are inated by this ability to operate simultaneously in organised and unorganised forms. It is to be
expected that in some of these transactions too there is an
important role for cash, so the operations of the organised sector can take a direct hit from the demonetisation. In sum, even the more modern industrial segment
of the economy, which is seen as near-cashless, is bound
to be affected adversely.
The third is that some of the dynamic industrial
sectors (such as garments) that drive exports or that both
contribute to exports as well as satisfy the desires of the
rich and middle classes (such as gems and jewellery) are
ones in which manufacture and/or sale are based on cash
transactions.
However, even in the industrial sector the effects of
demonetisation are likely to be distributed regressively.
Small and medium units, which dominate Indias industrial landscape, are clearly more dependent on cash
transactions for their day-to-day operations than the
large rms that dominate many product markets and
deliver Indias leading brands. But neither is the overall
industrial economy relatively cash-free nor are the operations of Indias leading rms cashless in character. So
the longer the currency shortage lasts (and it will last for
much longer than the government claims), the greater
will be the damage inicted on the industrial sector.
All this leaves out the impact of the hit that black
money held in currency form will take. To the extent that
black wealth takes the currency form (it does, though by
no means to the extent the government claims it does),
corporate and industrial India will be an important target of the governments demonetisation drive. The black
economy constructed with unreported receipts that
have evaded taxes is not a seamy underside operating
parallel to the world of the registered and/or corporaFRONTLINE .
DECEMBER 23, 2016
88
C OVER STO R Y
INDUSTRY IN
TROUBLE
The cash crunch has hit industry hard, particularly small and medium
enterprises and traditional industries such as beedi and tea.
Small units, huge

problems
facing a massive cash crunch following the demonetisation. In particular, they are worried about the wages they
have to pay to migrant labourers from Bihar, Jharkhand,
Odisha and West Bengal, who do not have identity proofs
such as ration cards or Aadhaar cards and hence cannot
open bank accounts. Their wages, therefore, have to be
paid only in cash.
Entrepreneurs such as G. Venu, C. Babu and C.K.
Mohan deeply resent the ceiling of Rs.50,000 imposed
on weekly cash withdrawals from their current accounts.
They have unanimously demanded that the Centre increase the limit to Rs.2 lakh. Venu, who owns several
industrial units at Ambattur in Chennai, is the president
C HE N N A I A N D C OI MB A TORE , TA MIL N A D U
T.S. SUBRAMANIAN
S.S. KUMAR
THE entrepreneurs of small and tiny/micro industrial units in Tamil Nadu are apprehensive whether they
can make cash payments to their workers between December 5 and 10the usual disbursal period. They are
MIG R A N T W O R K E R S at a unit in the Ambattur Industrial Estate. Migrant workers can be paid wages only in cash. They do
not have ration or Aadhaar cards with local addresses and are hence unable to open bank accounts.
89
Severe slowdown
Small manufacturers in Maharashtra
who operate on cash may close shop.
This will lead to retrenchment.
BY A N U P A M A K A T A K A M
SEVERAL industrialists who had initially stated that

the demonetisation decision of the Narendra Modi government was a positive move and would be benecial
for economic growth in the long term now admit that
the slowdown in consumption in view of the liquidity
crisis is beginning to take its toll on manufacturing.
This, they say, will have a cascading effect and hurt
several areas, particularly employment.
Frontline spoke to a few large and small industrialists to obtain their views on what demonetisation
means for industry. The question was met with a range
of opinions, including whether the move is worth it.
Indian industry and corporate India was supportive of
the demonetisation drive in the rst few days of the
announcement on November 8. The position changed
as the weeks unfolded. While most of them agreed that
the short term would see a lot of pain, they said the long
term was uncertain but the economy should settle
down. Given that demonetisation was here to stay and
there were few options available, industry was resilient
enough to see this big move through, they said.
Sunil Mehta, who manufactures power generators,
said: There are plenty of reports and predictions. I
dont believe anyone has any idea or can predict what
the next few months are going to be like. We are already
seeing a massive drop in demand in consumer goods.
Once you have sucked out more than 80 per cent of the
cash liquidity from the system and have not replaced it
quick enough, it is bound to start showing negative
trends. When consumption drops, then you will see a
huge reduction in industrial manufacturing as well. It
has a spiralling effect and we are experiencing the
beginnings of that.
Mehta said industries were dependent on each other and a slowdown in manufacturing would hit the
economy. For instance, we supply generators to construction companies. With no money in the system, real
estate has been hit, and therefore construction will slow
down. Similarly, the cement sector caters to construction and it will see a downturn as real estate has been
impacted. We supply large industry with captive power
plants. If it goes slow, we also reduce production. In the
past week we have slowed down by 20 per cent.
When the gross domestic product (GDP) falls or
shrinks, it will have a severe impact on economic
FRONTLINE .
DECEMBER 23, 2016
90
growth. Is the move worth the so-called tax windfall the

government is hoping to gain by demonetisation? Is
the cost of this upheaval going to be benecial in the
long term? I hope so because what the government has
done is irreparable.
The steel manufacturer Navin Aggarwal said since
there was no precedent of demonetisation in recent
times it was hard to estimate the impact it would have
on Indian industry. However, he said: The short term
will see a lot of pain, especially to industries sensitive to
demand, mainly fast-moving consumer goods [FMCG]
and transport. Aggarwal said while most transactions
in their unit were through bank transfers and cheques,
cash, especially in large sums, played a part when steel
merchants came to purchase material. He said: Processes have to start changing to bring in transparency.
We have installed a credit card machine on our shop
oor. But then how do we charge Rs.4 lakh on a card
machine? The banks will have to be extremely well
equipped to deal with large businesses. It is interesting
though to see the shift towards a cashless market. There
SHAILESH ANDRADE/REUTERS
The immediate impact of

demonetisation was a fall in
automobile sales. This will
have a downstream effect
on all ancillary and small
component manufacturers.
A U NI T in Mumbai manufacturing components for
industrial pipes.
is some feeling of empowerment when a merchant pays
via card. Of course, he will have to account for every
penny, which was not the case before.
When it comes to employees salaries, Aggarwal said
established industrial units made cheque payments,
but employees would face the same kind of inconvenience people were dealing with across the country:
inability to withdraw cash and get change for higher
denomination notes, and long queues outside banks
and ATMs. He said if the slowdown continued there
would be a percentage of retrenchment. This is the
unfortunate aspect of any slowdown. It is human resource that will face the brunt of the malaise.
The status of the automobile industry in a country
is globally recognised as an indicator of growth, said
Gautham Patil (name changed), an automobile component manufacturer in Pune. The immediate impact of
demonetisation was a fall in automobile sales. This will
have a downstream effect on all ancillary and small

component manufacturers. When an economy is going
through a tough time, automatically the car industry
will see a decline. No one buys cars or two-wheelers
when times are rough, he said.
Two-wheeler sales dropped by almost 50 per cent
since demonetisation, he said. This drastic fall is expected to recover only by 2018. With a drop in sales small
auto part manufacturers, who operate on cash, may
close shop. This will lead to retrenchment.
We have reduced the shift timings in the factory
because production has slowed down, said 35-year-old
Raju Dutta, who works in Patils unit. We have been
assured of our salaries. I took a half day leave to stand in
the queue at the bank. I am not afraid of losing my job.
Our boss told us not to worry.
Patil said they tried to keep the morale of their
employees up. We dont know what the future has in
store. But I think everyone is in the same boat. Workers,
employers, both understand that.
An industry analyst said: Big discretionary spending has stopped and that will have a cascading effect on
industry. It will take at least six months for condence
levels to return. An expert in micro nance, he said the
informal and unorganised sector took the biggest hit.
Workers employed by factories or businesses can repay
their loans through banks. Those who pay in cash and
are unable to access it will have a hard time for a few
months.
An industrialist from one of the countrys oldest
business houses, who manufactures pumps and transformers in the Pune industrial belt, said the impact was
not so much on big industry as they were in a position to
bear the slowdown for a short period. However, companies whose end payment is cash, such as FMCGs, are
in for some trouble. Indians are recent converts to
consumption. They have begun to go back to needbased buying. This will have an effect on industrial units
that are manufacturing consumer goods.
The immediate impact, he said, would be felt on
lower value goods. The larger industry is anyway driven
by bank transactions and white money.
91
of the Ambattur Industrial Estate Manufacturers Association (AIEMA). Babu is the president of the Tamil
Nadu Small and Tiny Industries Association (TNSTIA),
Guindy, Chennai; Mohan is its general secretary. AIEMA
members had not reported any production loss until
November 28.There are about 1,500 units at the Ambattur industrial estate, one of the biggest of its kind in Tamil
Nadu; 90 per cent of them are micro, small or medium
enterprises. These units, which employ several thousand
workers, manufacture components and sub-assemblies
for automobiles, light engineering and heavy engineering
products, power plant equipment, garments and plastic
components. About 700 units are members of the AIEMA. Venu, who heads the association, is an engineering
postgraduate. He is the managing director of R.C. Das
Engineering Private Limited, which manufactures
equipment for power and cement plants.
At Ekkattuthangal near Guindy, there are about
1,200 micro engineering units that manufacture automobile components, forgings, press components, switch-
es, electric panels for engineering industries, aluminium

welded products, and so on. They also take on projects.
Production has been partially hit in the small units of
Ekkattuthangal, though there have not been any lay-offs.
PROBLEM OF WAGES
K. ANANTHAN
The problem of paying cash wages is what worries the

entrepreneurs at Ambattur and Ekkattuthangal. Venu
said: All our members welcome demonetisation, but
they are worried about how to pay the salaries and wages
in cash to our workers in the rst week of December.
Even in November, cash wages could not be paid because
of the weekly withdrawal limit imposed on current accounts. Mohan, who owns a unit that specialises in aluminium welding at Ekkattuthangal, pointed out that
Rs.50,000 a week was not enough to cover wage payments and other expenses that cannot be met without
cash. He recalled that rst a limit of Rs.12,000 was
imposed for weekly withdrawals, which was later pushed
up to Rs.24,000 and then to Rs.50,000. Even after the
TH E A S S E MB L Y L I N E for submersible pumps at Aquasub Engineering in Coimbatore, Tamil Nadu. The sale of these
pumps in Madhya Pradesh, Maharashtra and Rajasthan is depressed because farmers do not have cash.
FRONTLINE .
DECEMBER 23, 2016
92
tural and domestic pumps, wet grinders, mixers, castings, forgings and automobile components. It has a
number of big yarn, weaving and textile mills. The situation in Tirupur, the countrys hosiery hub and host to
scores of dyeing units, is also alarming.
The sale of agricultural pumps to farmers in Madhya
Pradesh, Maharashtra and Rajasthan is depressed.
Farmers who want to buy agricultural pumps have the
demonetised notes, but dealers are unable to accept
them, said V. Krishna Kumar, vice president (marketing), Aquasub Engineering and Aquapump Industries,
Coimbatore. These units manufacture bore-well submersibles, domestic pumps, agricultural mono-blocs, openwell submersibles, pressure boosting systems, single
phase jet pumps, and so on.
Krishna Kumar is also the vice president of the
Southern India Engineering Manufacturers Association, Coimbatore. He was in Mumbai on November 29,
after touring several States in the north, to attend a
meeting of the Indian Pump Manufacturers Association.
He said: Sale of agricultural pumps is seasonal business
and it will last for three months. This is the season in
Madhya Pradesh, Maharashtra, Rajasthan and other
States. But farmers pay only in cash, and they do not have
cash now. If the dealers cannot sell pumps to farmers,
there is no question of their buying from us [the
manufacturers].
The sale of mixers, wet grinders and pressure cookers,
all manufactured in Coimbatore, is hit because housewives do not have cash to pay for them.
Krishna Kumar said: We do not know how long this
situation will last.... It has affected the complete range of
industry in Coimbatore. It is having an impact on the
pump manufacturing industry in the town. Overall, trade
in Coimbatore has been affected.
restrictions were relaxed, there was no money in the

banks, and so even monthly wages could not be paid [for
October in November]. Not all employees of micro industries have bank accounts. We pay their wages in cash.
So we found it difficult to pay them even in November,
he added. Why impose a limit? It is my money I am
withdrawing from the bank.
Venu said much the same thing. The banks right
now do not have money, he said on November 28. They
do not give us Rs.50,000. They give us Rs.15,000 or so.
Mohan said: They could have gone about demonetisation in a little more planned manner. They could have
circulated the new Rs.500 notes, and Rs.100 and Rs.50
notes soon after the demonetisation.
Workers employed in micro enterprises need money
to commute to their workplaces and back home and for
buying groceries or eating in restaurants.
NOT JUST A QUESTION OF WAGES
The cash crunch also affects the small entrepreneurs

ability to pay for the local transportation of raw materials
that their units require and for ferrying nished products
to the industries who buy them. Vehicle operators accept
only cash payments. My product is ready. Its transportation has to be paid for in cash.... Some of the manufacturers were not able to get the money in cash even after
they sold their products, said Mohan. Purchase of tools
and consumables by micro industries can be done only on
the basis of cash and carry.
Other service providers must also be paid in cash,
Venu pointed out. The cash decit hampers the entrepreneurs ability to pay rent for industrial plots, buy tools and
consumables, maintain their machines and pay for
housekeeping. Venu said: For machine maintenance,
we have to pay only in cash. If we urgently need some
critical material, we can only buy them by paying cash. If
we give cheques, we will get the material three days later,
that is, after the cheques are realised. If we do not get the
material on time, manufacturing will be affected.
Supposing I need money for an emergency, I cannot
even approach the moneylender because he also does not
have cash.... All this has affected our production to some
extent. I will not say that production has been affected
totally, but to some extent, Mohan said.
Production has been affected, asserted Babu. I
have to pay the Electricity Board bill, the interest on my
bank loan, the local transporter for the transfer of material from one place to another, the loaders and others, all in
cash, he argued. He said two months interest on the
money that small entrepreneurs had borrowed from
banks should be waived. He said big car manufacturers
had already slashed the number of orders they placed for
automobile components from these small units.
Going up in smoke
J A NG I PUR , W ES T B ENG A L
BY SUHRID SANKAR CHATTOPADHYAY
AIZUL REHMAN (45), a beedi worker of Mahendrapur village in Jangipur subdivision of Murshidabad district, blames the demonetisation of Rs.1,000 and Rs.500
currency notes for the death of his wife, Marjina Bibi
(40). She suffered for two weeks before passing away in
the early hours of November 25. The old currency notes
that I had were not being accepted either by doctors or
medicine shops, and I could not change the money because of the huge rush in the banks and the lack of cash
there. Finally, when I was able to take her to Kolkata, it
was too late. Even though I had money, I could do
nothing, he said. The villagers, practically all of whom
make a living by rolling beedis, claimed that work had
dried up in the last couple of weeks and that their wages
stopped soon after the demonetisation announcement
was made on November 8. If the beedi industry closes,
we will all starve for we have no alternative means of
COIMBATORE SITUATION
The situation is grim for medium and small units in

Coimbatore, Tamil Nadus premier industrial and textile
centre. It is host to several hundred small and medium
industries that manufacture textile machinery, agricul93
JA NG I PUR S UB D I V I SI O N in Murshidabad district is the hub of West Bengals beedi industry. Here, rolling beedis in
Jorpukuria village in Farakka block.
able to make timely payments to their labourers, more

and more beedi units have suspended work. Officially
there are 12 lakh beedi workers in the region, but the
actual gure is much higher for beedi is a household
industry there, with all members of the family, from little
children to the elderly, actively engaged in rolling and
binding beedis. The official rate for the work is Rs.155 for
1,000 beedis rolled. However, the workers have to be
satised with a rate of Rs.125-130. On an average a
woman can roll about 600 beedis a daywe have other
household work to do as well. The income from that alone
is not enough, so our daughters too have to do it. Otherwise it will be impossible to make ends meet, said Tutu
Das of Nimtita village. Her 12-year-old daughter, Debi,
has been binding beedis from the age of nine. So inextricably linked is the economy of the region to beedi
manufacturing that the impact of demonetisation on the
livelihood, said Tonya Rabibi of the same village, whose

family of 10 is dependent on the beedi industry.
The villagers are not accepting the old currency,
which beedi contractors are being compelled to offer
them because of the unavailability of new currency, and,
as a result, for more than a week (as of November 27) they
have not received any payments. If we earned Rs.700 in
a week, the contractors offer an old Rs.500 note and two
Rs.100 ones. Nobody is accepting old currency, so how
can we use it? said another villager. If the lack of ready
cash in the banks is a serious problem in cities and towns,
it is particularly acute in the rural areas of Jangipur.
People are still able to get essential commodities on
credit from the local market, but they know that that
facility will end very soon.
Today, despair and panic sweep across the villages of
Jangipur, the hub of West Bengals beedi industry. UnFRONTLINE .
DECEMBER 23, 2016
94
SUHRID SANKAR CHATTOPADHYAY
SUHRID SANKAR CHATTOPADHYAY
industry has affected every aspect of life. The local markets have turned sluggish, and a large number of shops
remain closed for lack of business.
In Jorpukuria village in the Farakka block of the
subdivision, 65-year-old Anisha Bewa has been lying ill
for 14 days (as of November 26). Her grandson Raqul
Islam (24) has not even been able to take her to a doctor
because the doctor will not accept old currency. For days
I stood outside banks to exchange my money, but the
banks themselves do not have cash yet, he said. Raqul
works as a labourer in various places outside West Bengal. The money I have earned with the sweat of my brow
is now useless they tell me, he said. More than 90 per
cent of the men of the villages in the region work as
labourers outside West Bengal, while the women earn
from binding beedis at home. As the men troop back to
their respective villages from various parts of the country,
penniless for not having been paid for their labour after
the demonetisation, they nd the situation as bleak at
home as outside. Moiful Sheikh returned home from
AI ZUL R E HM AN , a beedi worker, with a picture of his late

wife and him together. He blames the demonetisation for
her death on November 25.
Andhra Pradesh with a due slip in his pocket to nd there

was no money to be made in the villages either because
the beedi units had temporarily shut down. The villagers
claim there has been no 100 days work in the region for
more than a year. Putul Basak of the neighbouring Andhua village said that earlier the contractor would supply
beedi materials every day, but now he comes only once a
week, and he has no money to pay us either. If this
continues, 400 families in this village will simply starve
to death.
The owners of the beedi factories too are helpless.
Imani Biswas, one of the biggest beedi barons in the
region and the owner of the popular Howrah Beedi, said
among the 18 big beedi factories, ve had already closed
down and it was a matter of days before his two factories
would also stop operations. We have dealings in crores
95
of rupees, and now we cannot take out more than

Rs.50,000 a week from the current account. I have
20,000 workers in the two branches of my company and
have to pay weekly wages of Rs.40-50 lakh. We cannot
pay our labourers, he told Frontline. According to him
the government gets revenue amounting to Rs.8-10 crore
every month from the beedi business in the region. But if
things continue like this for 10 more days [said on November 25], the industry will not be able to continue any
more.
West Bengal Labour Minister Jakir Hossain, who is
also the owner of Shiv Beedi, one of the States biggest
beedi brands, is of the same opinion. Where is the law
which says that even if you have money you will not be
able to give it to anyone? That is what is happening; we
have the money to pay the workers, but we cannot because of these rules imposed by the Centre. If workers
start dying because of this situation, we will hold the
Modi sarkar responsible for their deaths, Hossain told
Frontline.
Cup of misery
In our emaciated, shattered state, we do not know
what is black money and what is white. We only know
what a one thousand rupee note and a ve hundred rupee
note look like. What is legal or illegal means little to us in
our starving state. Those who are burning their black
money, or donating to temples, we request them to consider our plight. If you show us how to legalise that black
money, several thousands will live. Nothing can be more
pious or white than this act. Let the government think
about what is just and unjust. We will be grateful to you
as long as we livefrom the hearts of thousands of dying
tea labourers (Dinesh, Nagrakata, Jalpaiguri, West Bengal). Shontu Jha, a labourer on the Bhandiguri tea estate
in Jalpaiguri district, believes that demonetisation to rid
society of black money may be a correct thing, but it is
disastrous for the tea gardens. Owing to the lack of cash
in the banks and the restrictions on withdrawing money,
we are not getting our wages on time nor are we getting
proper ration supply. The weekly amount we get is spent
on essential commodities, and long before the week is
through we are left with no money. If the payment is
delayed, then our families are in deep trouble, he said.
The present wage rate of a tea worker in West Bengal
is a meagre Rs.132.50 a day, as on tea gardens the cash
component is only a part of the cost of employment of
labour. According to the Plantation Labour Act of 1951,
the management of a tea estate has to provide a tea
labourer housing, medical facilities, education, potable
water supply, concessional foodgrains and various other
amenities. However, it is common knowledge that very
few gardens actually adhere to the directions of the Act.
In most cases, the daily wage rate is all that a worker gets.
On November 24, after two weeks of not receiving
any money, the workers of tea gardens, in desperation,
obstructed the National Highway and held up rail traffic
to demand payment of wages. Those of Bhandiguri re-
NORTH BENGAL
BY SUHRID SANKAR CHATTOPADHYAY
SUPRIYO BASAK
THE tea gardens of north Bengal have for long presented a picture of neglect and abject poverty. Starvation
and death due to malnutrition and lack of medical facilities have become a common feature on the tea estates,
particularly in the Terai and Dooars region, in the foothills of the Darjeeling hills. The demonetisation has
pushed lakhs of tea garden workers eking out a desperate
existence there further to the brink. An advertisement
published in a local vernacular weekly, Janashartha Barta, on November 26, titled Tea Labourers Anguished
Plea, gives one an idea of their plight:
TE A W O R K E R S of north Bengal agitating against the

delay in the payment of wages.
FRONTLINE .
DECEMBER 23, 2016
96
SUPRIYO BASAK
Dinesh Barwa, of the closed Nyasylee Tea Garden of

Nagrakata, said that the entire economy in the region
was facing ruin. We have to go to other gardens for work,
but even there we are not getting paid. Our children are
going hungry, and there is no scope for any alternative
employment, not even MGNREGA [Mahatma Gandhi
National Rural Employment Guarantee Act] work. The
local shops have already stopped giving us goods on
credit, he said. The only safety net for the garden is the
State governments food security scheme of providing
rice at Rs.2 a kg. The availability of this has come down
of late, and the quality is terrible; it is not even t to feed
cattle, but we have to eat it because we have no other
option, said Dinesh.
Basudeb Basu, president of the Terai Sangram Cha
Samity Union, which is active in the Terai region, believes that the situation is spiralling out of control in
north Bengal. Economic terrorism is taking place. People are running out of the means to live. If the wages are
not paid regularly, the situation in north Bengal may get
scary and veer towards anarchy, he told Frontline.
A circular issued by the Reserve Bank of India (RBI)
laying down new rules for disbursing payment in the tea
sector in West Bengal has added to the confusion and
feeling of uncertainty among the workers. The RBI has
restricted withdrawal for the purpose of paying wages
according to a preset formula of 2.5 labourers a hectare,
each labourer drawing a fortnightly wage of Rs.1,400.
The central bank has also instructed that future payments to the workers be made directly to their respective
bank accounts. Banks operating in the region have been
instructed to open accounts for all tea workers.
Raju Sahani, a worker in the Karola Tea Garden,
Jalpaiguri, said that the tea unions of the region have
rejected these proposals. In the present scenario, how is
it possible for a worker to stand in line all day to withdraw
money from a faraway bank and forgo a whole days
wage? Can he afford this? They have no idea of the
ground realities, he told Frontline. Highly placed sources in the tea industry conrmed that the demonetisation
has severely affected the industry, particularly in the
payment of wages. Obviously, the government has not
thought through the issues relating to cash disbursals,
banking being what it is in these far-ung areas. It is
being sorted out, but it is going to take some time, said a
senior industry official. He also voiced reservations about
the restriction of payment to the formula of 2.5 labourers
a hectare. The ratio has been arbitrarily drawn up and is
causing havoc for a large number tea growers in meeting
the demand for wage, he said.
S.S. Ahluwalia, the Bharatiya Janata Party MP from
Darjeeling and the Union Minister of State for Agriculture and Farmers Welfare, wrote to Union Finance Minister Arun Jaitley on November 22 highlighting the
problems faced by the tea workers. Tea garden workers
are solely dependent on wages and in the absence of
wages they are now on the verge of starvation. Please
take corrective measures so that the tea garden workers
get their due wages, he wrote.
TH E D E MO N E T I S A T I ON has pushed lakhs of tea

garden workers in north Bengal, who eke out a desperate
existence, further to the brink.
ceived part payment on November 25 and were assured

the rest on November 29. But come November 29, there
was neither any payment of wages nor any ration supply.
We thought even if we do not get our wages, at least
there will be food from the ration, but that is also not
there. We now have nothing, Shontu told Frontline on
the evening of November 29.
At this time of the year, a ower blooms on tea bushes.
According to Shontu, the labourers are plucking these
owers to cook and eat. The schools are open, but children are hardly attending. Instead they are being sent to
pluck tea owers from morning, he said. The workers of
the garden have apparently never faced a situation like
this before the demonetisation. If the situation is this bad
in working gardens, it is far worse on the sick, closed,
abandoned tea estates, in the bought leaf factories, and
for the small growers. Among the total number of tea
gardens in the state, 87 are in the hills, 47 are in the Terai
and 156 are in the Dooars.
According to industry sources, more than 60 per cent
of the tea estates in the Terai and Dooars have been in the
red for a while, making the scenario extremely bleak for
the vast majority of tea workers of Bengal, particularly in
the post-demonetisation period; among the 2,64,976 tea
workers in the State, 2,10,744 are in the Terai and Dooars
region. In the past seven years, in this region alone more
than 200 people living on tea estates have died of malnutrition and lack of medical treatment. There are more
than 100 bought leaf factories in the region and over
40,000 small tea growers, accounting for over a lakh of
workers who are facing starvation if the present situation
is allowed to continue.
97
C OVER STO R Y
Bankless, cashless
Banking operations in rural areas have come to a grinding halt, and even
three weeks after the demonetisation announcement there seemed to be
no respite in sight. B Y PURNIMA S. TRIPATHI I N N E W D E L H I
Barely 100 kilometres from Delhi, a crowd of some
500 people laid siege to the Syndicate Bank branch in the
posh Shastri Nagar locality of Meerut, Uttar Pradesh,
held the bank staff hostage inside the bank, blocked the
Delhi-Hapur highway and started throwing stones. The
harried bank staff called the police, but the crowd pelted
stones at them too, injuring a Circle Officer and other
policemen. It also damaged an ambulance. The anger
erupted after the bank displayed a no cash sign immediately after opening the branch in the morning; most
WHEN 40 PER CENT OF THE 1.2-BILLION

population does not have access to banking facilities,
Prime Minister Narendra Modis move to abruptly
launch India into an era of cashless economy can only be
termed ambitious, to say the least. Especially so when
68.84 per cent of the population, that is 833.1 million
people, lives in the countrys 640,867 villages (according
to the 2011 Census). It was wishful thinking that 47,445
rural and 37,168 semi-urban branches of the scheduled
commercial banks (as of September 2016) would service
all these people. It is also next to impossible for such a
large number of people to use mobile banking facilities or
ATMs.
The number of ATMs in the country makes the entire
proposition sound incredulous. Together, the public sector banks in the country have 1,43,795 ATMs; of these,
only 29,885 are in rural areas and 40,756 in semi-urban
areas, says Reserve Bank of India gures. Urban areas
account for 42,610 ATMs and metro cities have 30,544
ATMs (gures as of June 2016). Private sector banks
have a minor presence in rural areas, with 4,764 ATMs,
while in semi-urban areas they have 13,110 ATMs. (In all,
there are 2,00,157 ATMs in the country.)
The business correspondents network which the RBI
has allowed to ll the last-mile gap in banking connectivity is also not enough to realistically meet the nancial
needs in rural areas. Figures say that until December
2012 there were 1,52,000 business correspondents, who
facilitated just 18.38 crore transactions valued at
Rs.16,533 crore. Against this backdrop, it is no wonder
that the rural economy in India has come to a grinding
halt. Some 20 days after the demonetisation announcement was made, farmers complained about wasting precious time in queues day after day in the sowing season.
With life becoming an unending wait in queues for cash,
the initial enthusiasm of sacricing for a greater cause
has given way to frayed tempers.
A BA N K I N G C O R R E S PO N D EN T helping a resident of
Basendua village in Bulandshahr in northern Uttar Pradesh
on November 16. Farmer Zakir Khan feels he has been
robbed of his hard-earned money.
FRONTLINE .
DECEMBER 23, 2016
98
people in the crowd had been coming to the bank daily for
cash but in vain.
In neighbouring Greater Noida, angry villagers laid
siege to an Oriental Bank of Commerce branch in Dankaur village and blocked the road for hours. Here, too, the
police came to the rescue of the bank officials.
Elsewhere in the country, especially in rural areas,
ugly incidents occurred after banks were unable to dispense enough cash. In the suburbs of Ludhiana, Punjab,
people locked the staff inside a Bank of India branch and
sat outside in dharna. The branch, managed by an allwoman team, remained in a hostage-like situation for a
couple of hours as the local police failed to respond to
their frantic calls. The police acted only after the branch
manager appealed to the District Magistrate via a WhatsApp group.
According to a senior State Bank of India official in
Vellore, Tamil Nadu, banks were facing a severe cash
crunch. The situation is especially bad in villages because the banks are not getting any cash. Some branches
are not even opening. People are panicking. To date we
have not received any 500-rupee note; there is hardly any
supply of 100- or 2,000-rupee notes either. We are nding it very difficult to meet the cash demand of our own
customers, let alone cater to those of other banks through
our ATMs, which too have been lying closed for many
days. People are now starting to get angry and are getting
into arguments and ghts with the staff, he said.

A woman manager of an SBI branch in Madurai
found a novel way to deal with the crisis. We have made
seating arrangements for women and elderly customers.
We have put every single chair available in the branch at
the disposal of our customers who have to stand in a
queue for a long time. We are also offering them water,
juice, etc., and try and talk to them with a smile. Since I
have more women staff members, we are generally able to
placate the angry customers, but I dont know how long
we will be able to manage like this because the cash crisis
is actually bad. We feel bad at not being able to meet our
customers demand because, after all, they are only asking for their own money. Sometimes my staff and I have
pooled in our own money to help those in dire need, said
the officer, who did not want to be named. According to
her, it was painful to see old people queuing up for their
pension and return empty-handed. This month I have
not been able to pay them their old-age pension. I promised them I would give two months of their pension
together. I shudder to think how we will manage because
there is still no cash. I cant even imagine how these poor
people are managing, she said.
UNORGANISED SECTOR
CHANDAN KHANNA/AFP
Johnsily, president of the Kanyakumari-based Malar Organisation, a federation of 2,000 self-help groups
(SHGs), says the situation is critical for workers, such as
weavers, masons and beedi workers, in the unorganised
sector. Her organisation has 33,000 members and all of
them are nding the going tough. I myself have gone to
12 ATMs on a single day to get cash, in vain. The condition of the poor, who have to depend on their daily wages
for survival, is pitiable. It is a sad state of affairs. Now it is
the time for salaries and old-age pensions to be disbursed. How are we going to manage that? she asked.
Explaining the rural crisis, D. Thomas Franco, general secretary of the State Bank of India Officers Association and president of Tamil Nadu unit of the All India
Bank Officers Confederation, said the cash position was
bad all over India, particularly in rural areas. The RBI
sends some cash to banks in the cities, but villages are
totally neglected. Some branches dont even open for
days. Branches are located far away from one another,
and there are hardly any ATMs. People in the villages
have no facilities to swipe their cards either. So all they
have is cash in hand and even that is now not available.
The situation is grimmer with the ban on district
cooperative banks, the backbone of rural economy, from
accepting or exchanging demonetised currency. According to the National Bank of Agriculture and Rural Development (NABARD), there are 370 district cooperative
banks managing 93,042 primary agriculture credit societies. Cutting off this crucial banking institution from
the entire process has meant keeping Rs.3.5 lakh crore
blocked from circulation. Villagers, who predominantly
depend on these cooperative banks, are left in the lurch
because they cannot deposit their old notes in their own
accounts, nor can they withdraw money because of the
99
ILANGOVAN RAJASEKARAN
WOM E N W A I T I N G O U T S I D E A B A N K at Mugaiyur in Villupuram district, Tamil Nadu, for their wages under the
employment guarantee scheme on November 30. They have been doing the rounds for days but to no avail.
cash crunch. Farmers who are members of these agriculture credit societies have no cash to repay their old loans,
and hence cannot get fresh loan to buy seeds or fertilizers
for the ongoing sowing season. For them, it is a catch-22
situation.
CRISIS OF CREDIBILITY
For cooperative banks, it has also been a crisis of credibility after the freeze on transactions since November 14.
The RBI has totally destroyed our credibility. People are
asking questions now. We are not able to give them loans
or cash or even take their old notes. Our cash crunch is so
severe that we are nding it difficult to meet our daily
requirements, said Dr Alok Kumar Srivastava, the CEO
of Bahraich District Cooperative Bank Ltd, Uttar Pradesh. According to him, farmers, who are their primary
customers, have been ruined.
What makes it worse for these banks is the fact that
the RBI is not even accepting the old notes that they had
collected before the ban was imposed on November 14.
It is difficult to understand why the RBI is bent upon
destroying our credibility. Until the ban on November 14
we were legally entitled to accept old notes but now the
RBI is not getting even these notes lifted. There is nobody
to listen to us. We have been operating under RBI guidelines because we have been given licence by the RBI itself,
but now they are making us feel like criminals, said
Mahesh Singh Yadav, the CEO of Ghaziabad District
Cooperative Bank Limited. According to him, the RBI is
not giving them any cash to meet even the small requireFRONTLINE .
DECEMBER 23, 2016
ments of their customers; they cannot accept old notes so

farmers cannot repay their old loans and get a fresh one.
The entire banking system in the villages has been destroyed and there is nobody to think of these problems, he
said.
Franco sees a conspiracy in the entire exercise: to
destroy public sector and cooperative banks and push
them towards privatisation and hand them over to progovernment corporate cronies. According to him, the
government has shown a discriminatory approach towards public sector banks all through the crisis. For
example, he said, from day one, private banks were given
more currency by the RBI.
Even State Bank of India, which maintains the highest number of currency chests (137), was asked to collect
cash from ICICI Bank in Madurai and HDFC Bank in
Coimbatore. State Bank of India, Indian Overseas Bank,
Indian Bank and Canara Bank have the highest number
of branches. But after November 8, ICICI Bank was given
Rs.4,500 crore, HDFC Bank Rs.900 crore, Axis Bank
Rs.700 crore and all the other banks together Rs.7,800
crore.
Is it a conscious move to shift customers to private
banks? Already the government has announced through
Gyan Sangam and Indradhanush that it wants to privatise public sector banks. The present move also appears
to be in that direction, he said. A couple of dishonest
bank officials who were caught exchanging old notes for a
commission, he said, were being used to discredit the
entire banking system.
100
C OVE R STO R Y
Blocked
artery
Kerala is worried about the
demonetisation drives impact on its
cooperative banks and societies
which form the backbone of the
States rural economy.
AMONG THE STATES THAT HAVE BEEN HIT

severely by the demonetisation drive of the Union government, Kerala stands apart as one where protests were
mainly focussed on the curbs imposed as part of it on
cooperative banks and primary cooperative societies.
The State Assembly passed a near-unanimous resolution against the restrictions imposed on the cooperatives
to accept old notes or receive deposits, the entire Cabinet
sat in a dharna outside the gates of the Reserve Bank of
Indias State headquarters, and a hartal called by the
ruling Left Democratic Front in protest against what
Kerala saw as an assault, above all, on its cooperative
sector institutions curtailed normal life for a whole day.
Those unfamiliar with the history of the cooperative
movement in Kerala will nd it hard to understand what
the fuss is all about or fathom the dependence of ordinary
people of the State on the cooperative sector.
Cooperative banks are our friendly neighbourhood
banks that are easily accessible for all our daily needs; but
now we are worried. This response by Saleena, convener
of a neighbourhood group (NHG) of women at Vennakode, a little-known village in Malappuram district, is
now the common refrain in Kerala.
Since the mid 1990s, such NHGs, part of Kudumbasreethe womens collective with a membership of
nearly 40 lakh women, representing over 50 per cent of
the households in the State, established for spreading
micro-credit groups, promoting entrepreneurship, and
empowering less-privileged womenhave been an inseparable part of Keralas social and political landscape.
The movement is known for the way it seeks to provide a
101
K.K. MUSTAFAH
B Y R. KRISHNAKUMAR I N T H I R U V A N A N T H A P U R A M
I N A C AS HE W FA C TOR Y , a le picture. In many

traditional sectors, like in the case of the cashew industry,
transferring meagre daily wages to bank accounts or
writing cheques has created its own unique problems.
Most of the workers are women from the lowest strata of
society and the majority of them have limited education.
They will get only a small part of their earnings in hand.
FRONTLINE .
DECEMBER 23, 2016
K.K. MUSTAFAH
dignied life for its members and a better future for their
families and to involve them in democratic
decision-making.
But the cash crunch that followed Prime Minister
Narendra Modis surgical strike on black money seems
to have affected the functioning of even these grass-roots
groups which also have close links with the cooperative
sector banks and societies.
The weekly meetings that we organise are meant to
collect thrift from among NHG members and disburse
loans based on the priority needs of members. But with
the availability of hard cash curtailed, the members are
nding it difficult to pay the thrift amount or repay loans,
and we are unable to access our NHGs deposits from the
local branch of the cooperative bank, Saleena said.
We often arrange linkage loans from the cooperative
bank, and in the past weeks loans already sanctioned for
weddings or construction of houses have been denied by
the bank at the last minute, another NHG leader, Suma,
convener of the Aiswarya NHG at Kurava panchayat near
Manjeri in Malappuram district, told Frontline.
Hard cash has become useless. The situation seems
to have affected most of the NHG groups and other
Kudumbasree activities in Kozhikode district. We are
worried about salary payments to staff and informal
labourers engaged by us, Saheed, Kudumbasree District
Mission coordinator, said.
Shortage of currency is very likely to affect the functioning of the NHGs. Such groups are not permitted to
keep the money they collect as thrift with themselves.
Most of it is deposited in cooperative banks. But now they
cannot withdraw their deposits according to their needs.
Each NHG will need Rs.30,000 to Rs.50,000 a week to
give loans to its members. The government has not yet
made an assessment of the new situation, T.K. Jose,
Principal Secretary, Local Self Government Department,
told Frontline.
Kerala accounts for 53 per cent of the total deposits in
the cooperative sector in India, and the network of cooperative institutions with their presence in every nook and
corner is today the lifeline of Keralas economy, especially
in rural and semi-urban areas. District cooperative banks
and primary societies have 4,800 branches and account
for Rs.1.8 lakh crore in deposits as against 6,213 branches
of all the nationalised banks that have Rs.3.8 lakh crore
in deposits.
In addition, the cooperative movement has presence
today in a variety of productive and service sectors, including dairying; fair-price shops; hospitals; industries
such as coir, cashew, handloom and beedi; IT parks; and
educational institutions. Its beneciaries include farmers, shermen and tribal people, labourers and other
workers, and government employees.
Though the poor and the lower middle classes, especially those employed in all the traditional sectors of the
Kerala economy, middle-income farmers and farm labourers, migrant labourers, small entrepreneurs and so
on have all been affected by the current crisis as in other
States, their misery has been made worse if they are
M I G R AN T W OR KE R S in a plywood factory in
Perumbavoor, Ernakulam district, a 2014 picture. Sales
have dropped and a large number of these labourers
are leaving the State.
linked in some way to the cooperative sector in the State

for employment or banking and credit facilities.
MILK COOPERATIVES
S. Gireesh Kumar, who runs one of the over 3,200

Anand-model primary milk cooperatives affiliated to the
Kerala Cooperative Milk Marketing Federation (MILMA), told Frontline that the dairy sector in Kerala, for
example, had been pushed into the worst crisis in recent
years because of the cash shortage. Our society is located
in Neyyattinkara taluk [near Thiruvananthapuram], a
region that has registered the largest milk production in
south Kerala. I require at least Rs.5.2 lakh every week to
pay our 220 member-farmers for the milk they supply
every day. At least Rs.30,000 to Rs.75,000 would be
distributed as small loans to farmers every week. In
addition, we supply farming inputs. But we can withdraw
only Rs.24,000 a week from the societys bank account.
Farmers are under severe stress because MILMA has
asked us to issue cheques instead of making cash payments that they need. At least two of our members have
resorted to distress sale of cows.
T.P. Markose, president of the Kozhippally Dairy
Farmers Cooperative Society, near Kothamangalam in
Ernakulam district, also said that the crisis had affected
102
S. GOPAKUMAR
small-scale dairy farmers in Kerala the most. We are

now being asked by MILMA to transfer the money to
individual bank accounts of our 240 member-farmers.
But they have to travel 4 km to the nearest bank. And
most people cannot afford to spend an entire day in the
queue. There is an acute scarcity of cash for daily needs.
There were a few emergencies, when a couple of farmers
had to take family members to hospital. We try to help
them by writing letters to the hospital authorities guaranteeing payment. Sale of other perishables, such as sh,
has also come down dramatically. Demand and price of
sh have dropped, and shers are reluctant to go shing,
T. Peter, secretary of the National Fishworkers Forum,
said. The shortage of hard currency has affected the trade
and after the ban on use of old notes at petrol stations
came into effect, kerosene and diesel sales too dropped,
indicating that shing trips were coming down.
PLYWOOD INDUSTRY
In the Aluva-Perumbavoor belt in central Kerala, a major

haunt of migrant labourers from north-eastern States,
the thriving plywood industrial units have all been
thrown out of gear. Sales have dropped to around 20 to
30 per cent, Mujeeb Rehman, president of the State
Plywood Owners Association, told Frontline on November 28. There are around 750 to 800 plywood units in
Kerala in addition to other wood-based industrial units.
We are unable to give away old notes, and business is dull
in the construction sector. But the media are asking us
only about the welfare of migrant labourers. From the
AT A P R I M AR Y M I LK cooperative society in
Thiruvananthapuram, a le picture. The acute scarcity of

cash has affected small-scale dairy farmers the most.
previous day, amidst reports that a large number of these
labourers employed in the unorganised sectors were leaving Kerala, the State government had launched an
awareness campaign in all districts asking migrant workers to open zero-balance bank accounts. The campaign
was launched on the instruction of the RBI and will
continue for a while, State Labour Officer K. Biju said.
Mohammed Ziyad, Ernakulam District Labour Officer (Enforcement), said the cash crunch had affected the
migrant labour population badly. Sixty to 70 per cent of
these workers, part of a huge oating population that nd
sundry work here and there, do not have bank accounts.
With daily wages ranging around Rs.500 and with the
shortage of lower denomination notes, people are not
willing to employ them. We have found that many of
them are returning home as they cannot survive here.
However, in the more organised construction sector,
contractors arrange for food and other needs and the
rules insist that their wages are deposited in individual
bank accounts. But even in their case, the workers are
nding it difficult to access their banks or ATMs because
they can only do it after work hours and there is a general
mistrust in society that makes life hard for them in these
difficult times.
However, Mujeeb Rehman said that a trend of migrant labourers leaving plywood units is not visible as
103
the cash crunch is applicable throughout the country

and the poverty and unemployment in their home States
are far worse than what they experience in Kerala.
RURAL ECONOMY AFFECTED
In the farming districts of Kerala, already facing severe

drought conditions and fall in prices, especially of crops
such as pepper, rubber, cardamom and coffee and other
hill produce, the cash crunch has led to severe drop in
sales and accumulation of farm products in the market.
There is a 40 per cent or more job loss in the rubber
tracts of Kanjirappally, especially as a result of the withdrawal of high-denomination notes and restrictions imposed on the cooperative sector. There are cooperative
societies with deposits of Rs.100 crore to Rs.200 crore or
more in the district banks but which are allowed to
withdraw only a meagre amount every week. This and the
shortage of hard cash have affected the entire rural economy of the State, P.M. Thomas, former managing director of the Pala Marketing Cooperative Society, said.
Demonetisation and the curbs on money transactions have affected Wayanad, a purely agricultural district, very badly, said Gopakumar, general manager of the
District Cooperative Bank. Wayanad District Cooperative Bank is the main nancier in the cooperative sector
for 27 primary agriculture credit societies and over 250
other cooperative societies catering to various sections of
society, including a large tribal population, plantation
labour and small farmers, in the northern district. Last
year we disbursed over Rs.120 crore as loans in the
district and today all transactions, including repayments,
have been severely affected, he said.
The State Assembly passed a

near-unanimous resolution
against what it saw as an
assault, above all, on its
cooperative institutions.
TRADITIONAL SECTORS
Wayanad has the largest population of the Scheduled

Tribes in Kerala. In many tribal hamlets, the majority of
the people depend on employment guarantee programmes, farming operations, cattle rearing and collection of forest produce. A day in the bank means loss of
daily wages, which many of them cannot afford. There is
a large section of the tribal population that does not have
bank accounts but depends on daily wages and the little
savings in hand.
Almost all agricultural activities in Wayanad have
come to a standstill, even though it is the key season for
paddy, areca nut and coffee crops. There is a severe
FRONTLINE .
DECEMBER 23, 2016
shortage of cash to pay the labourers, 80 per cent of

whom belong to the Scheduled Tribe communities. People have stopped engaging labour, and the fear of starvation has become a reality for many, Suresh Master,
district president of State Agriculture Cooperative Societies Association, said.
Keralas cooperative sector also runs hospitals and
these are witnessing a drop in the number of patients, K.
Ravi, manager of the Pariyaram Super Speciality Medical
College Hospital, told Frontline. He said the hospital had
not refused treatment to any patient so far if they could
not pay for their treatment. We have installed facilities
for them to pay by credit or debit cards, by cheque or have
even offered treatment on the guarantee of hospital employees. But we are totally in the dark on how to go about
it from now on, he said.
The liquidity crisis has also hit the largest labour
contract cooperative in Asia, the Vatakara-based Uralungal Labour Contract Society (ULCS), which employs
4,500 workers, 400 to 500 engineers and 200 office staff
and is often considered a role model for cooperatives
worldwide. An institution such as ours known for liberal
welfare schemes for its workers and cooperation among
members and participatory management by workers
should have received special consideration from the government. But we too are forced to make do with
Rs.24,000 every week. How can we pay the workers
numbering 4,000 in addition to about a 1,000 other
labourers that we employ at our various projects? We are
anxious about what the situation will be by the end of the
month, Paleri Ramesan, the president of ULCS, told
Frontline.
A similar situation prevails in one of the largest industrial cooperatives in India established in 1969, the
Kerala Dinesh Beedi Workers Central Cooperative Society, which now employs over 6,000 workers. Secretary
K. Prabhakaran said the management had decided to
transfer the wages into individual bank accounts. But
most of the workers are women from low-income families, often the only breadwinners, and in the rst week at
least they had to go without wages.
In many traditional sectors, the idea of transferring

meagre daily wages to bank accounts or writing cheques
has created its own unique problems. Kollams cashew
workers are an example.
Receiving a wage cheque creates its own problems
for workers here, R. Rajesh, managing director of CAPEX, the cashew workers apex cooperative society, said.
Most of the cashew workers are women who have to
depend on male members of their family for such needs.
They are from the lowest strata of society and the majority of them have limited education. Giving cheques to
these women is a recipe for disaster as then they will have
to depend on male family members who will spend a
large share of it on liquor and other non-essentials. Eventually, the women themselves will get only a small part of
their meagre earnings in hand.
104
C OVER STO R Y
AT TH E J A M MU A N D
KASH M I R Bank branch in
Srinagar on November 10.
NISSAR AHMAD
The Kashmir difference

Weather and violence have always made Kashmiris prepare for a rainy
day; demonetisation was just another storm that passed the State
without having any visible impact. B Y S H U J A A T B U K H A R I IN SR IN A G AR
JAMMU AND KASHMIR WAS PERHAPS THE
only State that did not go into panic mode after Prime
Minister Narendra Modi announced on November 8 that
higher denomination notes would cease to be legal tender. There were no long queues outside ATMs and banks
and no protests against the nancial crisis. Although
Ministers in the Modi government tried to link the current political crisis and the militancy-related situation in
the State with demonetisation, the fact is that the gures
caught them on the wrong foot.
More than one factor is responsible for the no-panic
situation in the State in general and the Kashmir Valley
in particular. Experts attribute it to the uncertain economy that has been prevailing in the State for the past two
decades since the conict began. Economic stability was

next to impossible although successive governments in
the State as also those associated with businesses have
been struggling to keep it going at a particular pace. With
most of the economy dependent on the service sector, it
has its own dynamic that plays out from time to time,
thus evolving a model that is different from the rest of
India. Real estate has been one major area where people
tend to invest rst. With Kashmir reeling under violence,
people would hardly keep large amounts of cash at home.
The tendency to turn the money earnings into gold has
become the order of the day in order to ensure the
security of earnings.
This perhaps helped the people withstand the -
105
nancial crisis that took more than 50 lives in the rest of

country. Jammu and Kashmir has just 1 per cent of the
total population of the country. It accounts for 1 per cent
of the countrys gross domestic product (GDP) and 2 per
cent of the total deposits in banks. But that would not
make the State different. Besides the peoples remarkable
resilience, which has seen them through violent incidents
since the 1990s, it is also their distinct behaviour that is
playing out in their different approach to the nancial
problem facing the country. The economic journalist
Masood Hussain put it succinctly when he said: We do
not live for just 24 hours.
He explained that the people of Kashmir have a
tendency to stockpile supplies; essential commodities are
bought in bulk from the market and stashed away for
months. This helps them to live life easily. This stockpiling mentality is essentially linked to the economic
uncertainty that the State has been facing for decades.
The economic situation in Kashmir post demonetisation
is to be understood in a particular context as well. That is,
the cash-to-GDP ratio for India is 12 to 13 per cent;
whereas in the case of Jammu and Kashmir it is 20 to 25
per cent.
The past ve months of

uncertainty with business
shutdowns has also
contributed to this
smooth sailing.
The past ve months of uncertainty with business
shutdowns has also contributed to this smooth sailing.
People spent the cash they had and so there were hardly
any big cash transactions post November 8. Even if big
business houses, which are a few, had stored cash, they
could use it easily, said one expert. Only politicians and
bureaucrats who may have hoarded cash might have
faced a problem in turning the unaccounted money into
white.
COMMUNITY BANKING
At the ground level, the role of the Jammu and Kashmir

Bank in making this happen cannot be ruled out. It
switched over to the new mode faster than the rest of
India. The bank has the distinction of having a monopoly
of over 70 per cent of the deposits and 90 per cent of
overall banking. Its close relation with the local people
has placed it on a different plane compared with other
nancial institutions. The noted economist and Finance
Minister Haseeb Drabu said that in the rest of India it
was commercial banking but here we have community
banking, and obviously Jammu and Kashmir Bank is
leading in that.
FRONTLINE .
DECEMBER 23, 2016
He said: Its level of trust and condence with its

customers is beyond ones imagination, so even if there
were problems they were resolved on a personal basis.
Drabu headed the bank from 2004 to 2009. He described the banks customer relations as emotional equity
and not nancial equity.
Parvez Ahmad, Chairman of Jammu and Kashmir
Bank, said: It was because of the cooperation of all that
we managed it. I think peoples nancial literacy has a lot
to do with it.
While the situation does seem better in the State than
elsewhere in the country, it remains to be seen how it will
unfold when government and private sector employees
get their rst salary after demonetisation. Some experts
believe that it is not going to be smooth; problems are
bound to be there. But one factor that is helping Kashmir
is that the harvest season is just over and it is the onset of
winter, the time of the year which is usually dull in every
respect.
Another important issue is that the government
claimed there was a decrease in militancy-related incidents in Kashmir following the demonetisation decision. Union Minister of State Kiren Rijiju claimed that 11
per cent of the deposits had come from Jammu and
Kashmir after November 8, suggesting that they were
hawala money. But a closer look reveals a different
reality. It is completely wrong. It is not possible and
cannot be justied with gures, a senior government
officer said. He said it was political rhetoric. Similarly,
Defence Minister Manohar Parrikar was caught on the
wrong foot when he credited demonetisation with a decline in stone-throwing incidents in the Valley. The statement was just as absurd and just as divorced from reality,
especially given the governments own statistics.
As the Modi government was grappling with the
fallout of demonetisation, Parrikar boasted of a result
that never was. In the last few days after the Prime
Ministers daring move, there has been no stone throwing
on security forces. Earlier, there were rates: Rs.500 for
stone throwing [on security forces] and Rs.1,000 for
doing something else. The Prime Minister has brought
terror funding to zero. I congratulate the Prime Minister
on it.
The truth is that the number of such incidents was
higher after demonetisation. Stone-throwing incidents,
according to the State governments own gures, fell
drastically in October. The State Home Department said
that there were 820 incidents in July, 747 in August, 535
in September and as low as 157 in October. Before demonetisation on November 8, the number of such incidents was 48 and between November 9 and 14, there
were 15 incidents. Even if one were to believe the Defence
Minister, there is denitely no zero incident in sight.
So the fact that Kashmir is different from the rest of
the country cannot be ignored. Conict has its own trajectory but it makes people resilient and makes them
swim against the tide. However, the dent inthe economy
owing to intermittent violence is something that cannot
be compensated easily.
106
BO OKS in review
After the Arab Spring

A well-timed effort at explaining why the dreams of the Arab Spring
were crushed and why the West Asia and North Africa region is now
experiencing such disorder and destruction. B Y T A L M I Z A H M A D
IX years after the Arab

Spring rst heralded
the agitated demands for
wide-ranging political reforms, the West Asia and
North Africa (WANA) region is convulsed in conicts that have destroyed
state order, strengthened
vicious authoritarian regimes, unleashed the
forces of sectarianism and
jehad, placed major regional entities at the edge
of war, and pulled in major
powers which are shaping
a new Cold War. These six
years have seen the deaths
of a few hundred thousand
people, the displacement
of millions, the destruction
of historic cities, and extremist elements indulging in
vile and violent acts not
seen in a thousand years.
Contemporary
West
Asia is a well-timed effort
at explaining why the
dreams of the Arab Spring
were crushed and why the
region is now experiencing
such disorder and destruction. The book has a useful
overview, essays on the
themes that are dening
contemporary West Asian
politicsIslamism, sectarianism and big power politicsand
papers
examining the situation in
different countries, so that
no WANA nation struggling with domestic and regional
challenges
is
Contemporary
West Asia
Perspectives on
Change and
Continuity
By Sujata
Ashwarya and
Mujib Alam (Eds)
KW Publishers,
New Delhi, 2017
Pages: 322
Price: Rs.980
excluded
from
the
discussion.
The Arab Spring was
the most signicant development in West Asia in a
hundred years. In fact,
during those heady days
the Arab people attempted
to overturn the legacy of
the last century, which had
institutionalised authoritarian rule under Western
tutelage, mired the Arab
people in military defeat
and economic failure, and
placed their polities on the
wrong side of every issue
that denes contemporary
human achievementparticipatory political systems, freedom, human
rights, gender sensitivity
and accommodation of minorities. The agitations for
change demanded the re-
moval of autocrats and the

reform of the monarchies
so that the Arabs would no
longer be exceptional in
the global rmament of human dignity.
While the uprisings
touched almost every Arab
country and led to the fall of
at least four tyrants, the
dissent was quickly and effectively quelled: Tunisia,
where it all started, is the
only country where the tyrant has been replaced by a
transparent, accountable
and accommodative order;
everywhere else, authoritarian rule has been reinforced with even greater
force as terried regimes
seek to strengthen themselves with occasionally
cooptive but usually coercive policies to extinguish
107
from the minds of their oppressed citizens all aspirations for change.
There are regional
ramications as well, since
the fallout of the Arab
Spring has given fresh resonance to old fault lines, so
that mobilisations of support to redress strategic
vulnerabilities are being
done in ways that revive
the sectarian divide and
make it central to the shaping of contemporary competitions, which is further
reinforced by the depredations of the jehadi militants that target the Shias
with greater venom than
they do regional state authorities. In fact, in several
instances, the latter have
made jehad their partner
in their confrontations
against regional enemies.
CHALLENGES OF
MODERNISM
In their introduction, the

two erudite editors see the
ongoing developments in
West Asia as contentions
between the pulls of tradition and modernity, which
in the Arab context, also
takes the shape of a conict
between group loyalties
and individual aspirations.
To complicate the scenario, West Asia has also experienced the failure of the
secular framework in the
domestic order, accompa-
nied by repeated economic

failures.
As in other traditional
societies that experienced
imperial
subjugation,
modernity in West Asia
was generally viewed as
the product of defeat at the
hands of Western powers,
and hence, its appeal was
largely supercial and restricted to a small elite. In
response to the crisis engendered by colonial domination, most Arabs fell
back into their traditional
moorings that, emerging
from their own heritage,
were believed to be more
authentic. Several valiant reformers, such as Jamaluddin
Afghani,
Mohammed Abduh and
Rashid Reda, did make efforts to reconcile the Islamic precepts of their
people with the political
precepts of a modern political order. But their projects failed in the face of
the reality of colonial occupation and the submissive
regimes the colonial masters put in place across
WANA, and the Westdominated authoritarian
regimes that emerged in
the aftermath of the Second World War.
Arab tyrants camouaged their rule with secular
appeals
to
nationalism and pan-Arabism, but they made little
impression on the Arab
masses, who saw these as
concepts embedded in foreign inuence that were
promoted by tyrants to win
favour with their Western
clients. Not surprisingly,
the Arab people found far
greater comfort in their
traditional identities that
prioritised their tribal and
clan identities. The editors
Sujata Ashwarya and Mujib Alam explain it thus:
Lack of democratic govFRONTLINE .
A P O S T ER O F Egypts ousted President Mohamed Morsi among the debris left from a
protest camp at Nahda Square at Giza in Cairo on August 15, 2013.

ernance thwarted the development of civic culture:
since the state and government were not theirs, the
people invested precious
little in incorporating
ideas handed over to them
by state authorities.
They also accurately
describe the resistance of
Arabs to their regimes
modernisation projects
thus: The model of progress offered by secular
modernisers failed to ameliorate the poverty of the
masses. Beset with external and internal conicts,
secular regimes remained
fastidiously authoritarian
and refused to risk policy
measures that could affect
real
developmental
transformation.
It is from this quagmire that political Islam
DECEMBER 23, 2016
emerged: it was the only

opposition force against
the Arab tyrants; it was also the only movement that
worked among the poor
and the disadvantaged,
those excluded from the
crony capitalism of their
rulers. It is the authentic
origin of this movement
and its grass-roots organisation and record of service
that
propelled
Islamist parties to power
in the rst ush of the Arab
Spring and not just the religiosity of Arabs, as the
editors contend. They
have, however, succinctly
set out the imperatives of
the Arab reform agenda:
freedom and constitutionalism in the political
sphere, dismantling of crony capitalism in the economic
area,
and
108
widespread social reform,

particularly expansion of
womens participation in
public spaces.
SECTARIANISM
ASCENDANT
The rest of the book looks

at the sources of conict in
WANA and the situation
in specic countries. The
narrative is not reassuring.
Sectarianism, which had
never been a major divisive
force in modern Arab politics, is now a central inuence. In his essay, Fouad
Kadhem, a researcher
based in London, has provided an excellent historical and doctrinal account
of this deep ssure in Islam, pointing out that in a
Muslim kingdom, oppression of one sect or the other
took place only when rul-
AP
ers with a narrow view of

their faith were in power:
this was true when the Shiite Safavids ruled Iran as
also the policies the Ottomans followed in their empire in the 18th and 19th
centuries.
However, he correctly
emphasises that the Safavids stressed their Shia
identity primarily to set
the Persians apart from the
Turks as part of their ongoing political competitions
with the Ottomans. In fact,
in the face of the depredations of the Wahhabi fanatics from Najd in the
18th and 19th centuries,
Shia and Sunni ulema
jointly urged the Ottoman
ruler to confront this predatory force.

In the 20th century,
sectarian identity was frequently superseded by a
secular identity when
Arab intellectuals and political activists joined nationalist or ideological
groupings, such as the
Baath or communist parties, even as Palestine
brought all Arabs together
in support of a shared national cause.
Much of this has now
been swept away by the deliberate introduction by
the United States of sectarian identity as the dening
feature of the Iraqi political order after its 2003 invasion. Viewing Shia
empowerment in Iraq as
benecial to Iran, Saudi
Arabia has embarked on
policies that directly confront Iranian hegemony
in West Asia, shaping what
Kadhem calls the globalising of sectarianism. In
this context, the shared
space between the two
sects is disappearing, while
the political divide between them is getting
dominated by extremists
on both sides who are competing to dominate the
political landscape in the
war of images, words and
actions.
Contradicting
this
trend, the Shia movement
in Lebanon, Hezbollah,
has evolved from a hard
doctrinaire and political
protest movement to a political party seeking to play
a prominent role in Lebanons contentious confessional politics. Starting
with accepting full Iranian

dominance, doctrinal and
political, Hezbollah, as the
Lebanese academic Joseph Alagha puts it, now
seems to shift within the
parameters of pan-Islamism and pan-Arabism,
while maintaining its Lebanese identity at the centre. But the entry of
Hezbollah into the Syrian
conict from May 2013
has changed the regional
scenario: Hezbollah is now
an integral part of the sectarian conict being waged
in Syria. More seriously,
this has also brought the
sectarian divide into Lebanon itself, with various jehadi groups in Syria
carrying out terrorist acts
in that fragile nation.
IRAQ AND SYRIA
DISINTEGRATE
Sujata Ashwarya, in her essay, discusses the sectarian

narrative in Iraq. She examines the rise of Al Qaeda
in Iraq (AQI) in response
to the sectarian politics deliberately shaped by the
U.S. during its occupation,
but holds the policies of
Prime Minister Nouri alMaliki as being primarily
responsible for the rise of
the Islamic State, or ISIS.
She sees the present Prime
Minister, Haidar al-Abadi,
as a conciliatory gure
who is seeking to shape a
united and pluralistic Iraq
that would accommodate
both Sunnis and Kurds in
the Shia-led political order. She correctly sees
bridging the sectarian divide as a daunting challenge: government actions
after Mosul has been liberated will tell us what the

territorial and political
shape of Iraq will be.
Syria gures prominently in the book: Shweta
Desai looks at the origins
and expansion of the insurgency in that country,
while Sukalpa Chakrabarti
examines the role of the big
powers in the conict.
Shweta Desai notes how
the interventions of regional powers in Syria
transformed a domestic
movement for reform into
a conictual situation that
has jehadi forces at its centre, the Sala militia
backed by Saudi Arabia,
the Al Qaeda-affiliated
Jabhat Nusra and the ISIS.
The conict has wreaked
havoc across Syria, with
the number of dead creeping towards the half-million gure, with no sign of
compromise from any side.
Sukalpa Chakrabarti
explains the circumstances
that have brought the U.S.
and Russia as key players
in the Syrian cauldron. She
sees the U.S. role as a continuation of the Carter
Doctrine of 1980 in terms
of which the U.S. committed itself to using military
force to ensure its control
over the regions oil resources and their free
movement. Russia, on the
other hand, rejects externally sponsored regime
change through violent
means and is therefore
committed to safeguarding the Bashar al-Assad
regime.
She also notes that
while the Gulf Arab re-
The agitations for change demanded the removal of autocrats and

the reform of the monarchies so that Arabs would no longer be
exceptional in the global rmament of human dignity.
109
gimes and their Western

allies continue to prioritise
regime change in Damascus, it is Russia that is robustly ghting the ISIS.
She refers to the U.S.-Russian diplomatic cooperation to end the conict as
supercial, but recognises that this is the only initiative that will ultimately
bring peace to Syria. She
calls for a grand strategy
to pull all the contending
parties together based on
partnerships rather than
Cold War constructs, but
it is doubtful that anyone is
listening.
TURKEY IN WEST ASIA
Two Turkish scholars have

provided good essays on
their countrys role in West
Asian affairs. The one by
Alper Dede traces the history of the Islamist movement in Turkey, while the
other, by Ismail Yaylaci,
discusses democracy as a
factor in Turkeys engagement with Arab countries
before and after the Arab
Spring. Dede notes that Islamist parties faced serious
difficulties
in
expanding their role and
space in Turkeys political
order that was constitutionally secular, a commitment that through much of
the 20th century was rigorously enforced by the
armed forces, which would
intervene forcefully whenever they thought that the
secular order was being
threatened by Islamist
inuences.
Still, Islamists overcame all odds to emerge
triumphant in 2002, and
then initiated their policy
of zero-problems neighbourhood policy when
they set up a series of positive engagements with the
Arab countries of West
Asia. It would have been
FRONTLINE .
interesting if Dede had explained the factors that led

to the steady emasculation
of the armed forces in Turkey, so that by 2002 they
just could not prevent or
dilute the democratic accession to power of the
Freedom and Justice Party
(AKP, in its Turkish acronym), with its Islamist vision and agenda.
The Arab Spring led to
suggestions from some
quarters, Turkish and
Arab, that Turkey could be
a role model for Arab dissidents pursuing reform,
but they withered away as
the Arab Spring was destroyed by Arab regimes.
Later, the Turkish leader,
Recep Tayyip Erdogan intervened in Arab affairs on
a more doctrinaire basis,
rst, by backing the Muslim Brotherhood regime of
Mohamed Morsi in Egypt
and then distancing Turkey from the Abdel Fattah
el-Sisi government after
the coup. Second, more seriously, Erdogan backed
the Islamist forces promoted by Saudi Arabia and
Qatar to overthrow Assad.
Thus, he allowed thousands of young people to
enter Syria from Turkey,
most of whom joined jehadi groups, including the
ISIS.
Yaylacis paper begins
with an apparent contradiction: he asserts that the
AKP, in its dealings with
West Asian countries, always adopted a discourse
of change in regional politics, but in the next sentence
says:
AKPs
discourse of transformation was gradual and evolutionary, which was in
favour of leaving the existing autocratic regimes intact. Yaylaci is at pains to
clarify that, unlike the
Western countries whose
DECEMBER 23, 2016
OUTI S D E A P OLLI N G station in Tunis on October 23,

2011. Tunisians turned out in large numbers for their rst
free elections, basking in pride in their status as
democratic trailblazers nine months after the toppling of
a dictator sparked the Arab Spring.
democracy projects were

both instrumental and selective, that is, they were
advocated selectively to
subserve Western interests, Turkey supported
home-grown democracy
in West Asia: hence, it was
such a strong supporter of
the Arab Spring agitations,
which its then Foreign
Minister Ahmet Davutoglu viewed as standing on
the right side of history.
This vision collapsed
quickly: Turkey under Erdogan has not only appeared
increasingly
authoritarian domestically
in its dealings with dissident groups and the Kurds,
and is now totally alienated from its earlier ideolog-
110
ical partner, the Gulen

movement. It is also embroiled militarily in both
Iraq and Syria, seeking to
stem the tide of the revanchist Kurds who are seeking their moment in
history. Turkey has never
been so far removed from
the idealism of the AKPs
rst days in power or more
recently, the rst weeks of
the Arab Spring.
THE PROSPECT OF
REFORM
The three papers on the

Gulf Arab countries, the
Saudi political scenario
and Yemen suffer from the
curse of Indian academic
publishingthe considerable time lag between the
AFP
writing of the paper and its

publication. Though no
fault of the writers, developments in the last year
and a half have rendered
the papers out of date.
Priyamvada Sawants
short essay on the implications of the Arab Spring for
the Gulf Arab countries
notes the agitations in
Oman, Kuwait, Bahrain
and, more mutedly, in Saudi Arabia, but just does not
do justice to this complex
subject that now sees Saudi Arabia and its Arab allies engaged in conict in
Syria and Yemen and in
confrontation with Iran,
while coping with complex
domestic political and economic challenges. Her
conclusion is particularly
weak: she regrets the inuence of religion on government and society and
advocates promotion of
civil society organisations
to promote democracy, but

does not indicate how this
is to be achieved in these
traditional societies.
It is a matter of regret
that compared with the
substantial studies contained in this book, Gulshan Dietls six-page piece
on Saudi Arabia is so unsatisfactory. First, it has
some factual errors: the
size of the Saudi royal family is at least 15,000, not
5,000-6,000; the children
and grandchildren of King
Abdulaziz number about
1,500, not 500. Again, her
frequent references to the
Sudairies, the seven sons
of Princess Hessa bint Ahmad Al Sudairy, as a bloc,
is outdated: Prince Ahmad
was abruptly removed
from his post as Defence
Minister; Prince Abdul
Rehman has been marginalised for a long time; from
the next generation, Prince
Khalid bin Sultan was removed as Deputy Defence

Minister; while Prince
Bandar bin Sultan was removed as National Security Adviser. More seriously,
with so many important
developments taking place
in the kingdom and the
signicant role it is playing
in the region, it is regrettable that the country has
been given such casual
treatment.
The essay on Yemen by
Prasanta Pradhan, while
also overtaken by rapidly
moving events in that
country, is good on the domestic and regional factors
that have led to the bloody
conict that has overwhelmed that unfortunate
nation. However, his presentation would have beneted from a deeper
analysis of the Iranian role
in Yemen, particularly the
charge of the countries of
the Gulf Cooperation
Council (GCC) that Iran
has actively backed the
Houthi
insurrection,
largely based on their sectarian affiliation. And,
while he has correctly
noted the strong SaudiEgypt agreement on the
Yemen question, it would
have completed the story
more accurately if he had
also noted that Egypt nally did not participate militarily in the Yemen
conict, but only provided
some ships to maintain the
naval blockade.
Amidst the sense of
gloom and pessimism that
pervades West Asia, Priya
Singh believes that the
victory of Egypts entrenched bureaucracy over
the forces of political
change is perhaps temporary and the compulsions
of urgently needed economic reforms will strengthen
the
push
for
111
comprehensive reforms in
the state bureaucracy. She
points out that the Arab
Spring in Egypt enabled
large sections of the population to experience
however eetingly, exceptional ashes of emancipation,
of
unrestrained
episodes of self-awareness,
self-determination
and
mutual
effervescence.
This, she argues, has laid
the basis for an active citizenry in Egypt, which will
in time challenge the capacity of the dictatorial
state to govern, though
she warns that this might
take a few decades.
This book is a valuable
and
timely
reference
source to understand the
turbulence that characterises West Asia, where major states are engaged in
proxy wars in which millions of people have been
killed or displaced, a whole
generation of Arabs in Syria, Iraq and Yemen has
been reduced to penury,
and forces of extremism
and sectarianism hold
sway across large swathes
of the Arab landscape, often with state support.
At the root of this turmoil is the resistance of authoritarian
rulers
to
demands for popular participation in state decision-making, for popular
scrutiny of state accounts,
and for the ability to hold
rulers responsible for their
actions and to replace
them periodically on the
basis of national consensus. This resistance to reform has made the Arab
world the last bastion in
the world of entrenched
tyranny. The editors have
done full justice to this
complex, even convoluted,
narrative.
Talmiz Ahmad is a
former diplomat.
BO OKS in review
Wildlife initiatives
On the excellent model of wildlife reintroduction
and conservation practices of the Kanha Tiger
Reserve. BY A . J . T . J O H N S I N G H
HEN the renowned

wildlife conservationist Dr George B.
Schaller planned to study
the tiger and its associated
species in the early 1960s,
he quickly surveyed several
protected areas in India,
which included the Hazaribagh National Park in
Bihar; the Chandra Prabha Wildlife Sanctuary in
Uttar Pradesh; the terai
and bhabar tracts, including the Corbett National
Park, along the Himalayan
foothills, which have a
high density of large mammals but are difficult places
for
continuous
observation because of extensive tall grass habitats;
sanctuaries in Rajasthan;
the Shivpuri National Park
in Madhya Pradesh; and
the Sundarbans and the
hill forests in the vicinity of
Darjeeling. Eventually, he
settled for the Kanha National Park in central India, which has vast
meadows (short grasslands) and abundant wildlife for easy observation.
Edward Pritchard Gee, an
Anglo-Indian planter and
conservationist from Assam, had called it the nest
reserve in India. Archibald
Alexander Dunbar Brander, a British forest officer,
served in this landscape in
the early 1900s and was instrumental in the declaraFRONTLINE .
Shaping Kanha
Dynamics of
Wildlife
Management
By J.S. Chauhan
and Rakesh Shukla
Kanha Tiger
Reserve and
Madhya Pradesh
Forest Department
Pages: 204
Price: Rs.700
tion of the Banjar valley as

a protected area in 1933.
The valley is now part of
the tiger reserve.
Jasbir Singh Chauhan
and Rakesh Shukla, authors of the book under review, are serving forest
officers and were trained
in the Wildlife Institute of
India, Dehradun. Chauhan, an Indian Forest Service (IFS) officer of the
1987 batch, did a ninemonth diploma course in
wildlife management at
the institute in 1994-95.
Rakesh did a three-month
certicate course in 1987. I
have taught both of them
in the classroom and have
walked with them in the
forests many a time. Chauhan is Field Director of the
Kanha Tiger Reserve and
Rakesh Shukla, who has a
doctorate degree in the
DECEMBER 23, 2016
ecology of the Pench Tiger

Reserve, has been working
as research officer for the
past two decades.
The authors rightly
write in the preface to the
book that this iconic landscape and its wildlife were
disturbed and decimated
by legal and illegal felling,
hunting, poaching, encroachments and devastating
forest
res.
Eventually, the conviction
that sound conservation is
vital for the landscape enabled both the wildlife and
the local people to grow
stronger. Several wildlife
areas in the central Indian
tract got notied as wildlife sanctuaries and tiger
reserves.
Prominent
among them is the Kanha
Tiger Reserve.
The reserve has a core,
or critical, tiger habitat of
112
917.43 square kilometres

and a buffer zone of 1,134
sq. km. While the core
zone is almost free of villages (over the decades, 36
villages have been translocated by the reserve management
through
incentive-driven voluntary
resettlement), the buffer is
pock-marked with villages
and revenue land. The forest area in the buffer zone
is only about 52 per cent
and the rest is constituted
by private and revenue
land. There are 161 forest
and revenue villages inhabited by a large number
of people and their livestock. Gonds and Baigas
are the native tribes of the
area.
The book has several
extremely valuable and
readable chapters with
beautiful pictures and in-
SURESH DESHMUKH
formative captions. The

chapters are an overview of
conservation, focussing on
the crisis of tiger conservation and the historical retrospective, which includes
information on the visit of
Sir Dietrich Brandis, the
legendary German botanist and forester who is regarded as the father of
Indian forestry. An account on the landscape has
a section on the Gond and
the Baiga tribes. The forests and vegetation section
has a note on the sal borer
beetle
(Hoplocerambyx
spinicornis), which can reduce century-old stately
sal trees to powder and kill
them. The account on
wildlife species includes
not only the tiger, but also
on lesser mammals such as
the giant squirrel (Ratufa
indica centralis) and the
ying squirrel (Petaurista

philippensis).
Conservation practices
mention the eco-development programmes and efforts
to
control
unpalatable plant species
(weeds), which can significantly reduce the carrying
capacity of wildlife habitats. The account on the
recovery of the hardground barasingha population and tiger dynamics, with a rare picture of a
tiger feeding on the rump
of a gaur bull, which is still
alive, is extremely valuable. Other chapters are on
biodiversity conservation
and conservation science,
which involves the use of
modern gadgets such as
camera traps and radio-telemetry. The concluding
chapters are conservation
commitments with special
A HE R D OF G AUR in the Kanha sanctuary. One of the
special management initiatives of the Madhya Pradesh

Forest Department is the reintroduction of the gaur in the
Bandhavgarh Tiger Reserve.
reference to obligations to
the brave and dedicated
frontline staff who are the
unsung heroes of wildlife
conservation, special management initiatives and
ecotourism. One remarkable aspect of people management in the Kanha
landscape is the various
employment-oriented
training programmes offered to tribal youth in the
buffer zone, which enable
them to get jobs even in
far-off cities. The programme is so remarkable
that even tribal girls are
willing to go and work in
cities in the hospitality
sector.
The special manage-
113
ment initiatives give a picture of the dynamic nature

of not only the Kanha
management but also of
the Madhya Pradesh Forest Department. Three examples of the special
management initiatives
are, one, the successful attempt in re-wilding orphan tiger cubs, which
have contributed to the
population and genetic diversity of the tiger in the
Panna Tiger Reserve,
where its population was
almost
decimated
by
poaching; two, the reintroduction of the gaur in the
Bandhavgarh Tiger Reserve, where the small migratory
population
A.J.T. JOHNSINGH
became extinct as a result

of the loss of the corridor to
development; and three,
the reintroduction of the
barasingha in the Satpuda
Tiger Reserve. The tiger
population in the Panna
Tiger Reserve is around
35, the gaur population in
Bandhavgarh in spite of
predation by the tiger has
increased to more than
100, and nearly 35 barasingha are ready to range
into the forests and grasslands from the predatorproof enclosure in the Satpuda Tiger Reserve.
WILDLIFE
REINTRODUCTION
My hope and suggestion is

that this excellent model of
wildlife
reintroduction
and conservation should
be followed by other
States. The important reason for the success of wildlife management and
conservation in the Kanha
Tiger Reserve is that only
exceedingly dedicated officers are posted as Deputy
FRONTLINE .
A F T ER RELO C A T I O N O F villages, a vast stretch of

grasslands are available for wildlife. The mango trees
indicate that a village had existed there before.
and Field Directors and

they are encouraged by the
government to continue to
work there for a decade or
so. Some of the officers
who fall in this category
are H.S. Panwar, A.S. Parihar, Rajesh Gopal, Himmat Singh Negi and K.
Naik, and, hopefully,
Chauhan will join this
group soon. This is an important aspect of wildlife
management, often neglected in India, as officers
need the time to understand the staff, the local
people and the landscape
for successful management. The reserve management takes care to
maintain cordial relationship with several conservation organisations such as
the World-Wide Fund for
Nature (WWF)-India, the
Wildlife
Conservation
Trust, the Wildlife Trust of
India and the Royal Bank
DECEMBER 23, 2016
of Scotland, and, in turn,

these establishments support the reserve in several
ways. It is one of the
strengths of the Kanha Tiger Reserve.
My association with
Kanha started in the early
1980s and my recent trip
was in November 2015
when in the company of
Chauhan, I watched a tigress walk towards our vehicle, as if to say hello to
Chauhan.
During our visit to the
grasslands, Chauhan was
worried about the abundant growth of Terminalia
tomentosa, an extremely
important forage species.
He stopped worrying
about it after I sent him a
picture of a young sambar
stag gingerly rising on its
hind legs and feeding on
the leaves of T. tomentosa.
The reserve management,
however, has to worry
114
about the invasion of numerous unpalatable species such as Cassia stula,

Desmostachya bipinnata
(an inedible grass), Flemingea bracteata (dominates the understory in
the sal forest), Hyptis suaveolens, Lantana camara,
Parthenium hysterophorus, Phoenix acaulis (invades the grasslands) and
Pogostemon benghalensis
in both the core and the
buffer zones. In fact, the
problem of invasive species of plants and animals
(largely shes), which
drastically reduce the carrying capacity of the terrestrial and freshwater
habitats across the country
for valuable species should
be a cause for worry.
Field managers and
those interested in wildlife
conservation will nd the
information provided in
the book highly valuable.
Dr A.J.T. Johnsingh,
Nature Conservation
Foundation, Mysuru and
WWF-India
FRONTLINE
DEC E M B E R 2 3, 2016
INDIAS NATIONAL MAGAZINE
WWW.FRONTLINE.IN
Farewell to Fidel
C O VE R F E ATUR E
SOLDIER OF
Fidel Castro, who defended the values of the revolution that he led in
his country and extended his moral and material support to the forces
of progress wherever they found themselves up against dictatorship and
imperialism, walks into history. B Y J O H N C H E R I A N
FRONTLINE .
DECEMBER 23, 2016
116
.SOCIALISM
pay tribute to
Fidel Castro as
they march to
Revolution Square
in the Cuban
capital on
November 28.
FIDEL CASTRO MADE NO SECRET OF THE FACT

that he led the revolution on behalf of the dispossessed
not only in Cuba but all over the world. Fidel Castros
heroism and revolutionary deeds before coming to power
are now historic lore. The attack on the Moncada
Barracks, his trial following his capture in which he
declared history will absolve me; and the leadership he
provided to the band of revolutionaries who
accompanied him on the Granma and went on to

achieve the revolution have continued to inspire
revolutionaries and other progressive people.
Among his rst moves after coming to power was the
nationalisation of foreign-owned companies and
comprehensive land reforms. The revolutionaries led by
Fidel Castro wanted to once and for all end the
domination of foreign powers and interests in Cuba.
117
REUTERS
S TUD E N TS OF
HAVA N A
UN I VE R S I TY
AP
Under the cruel Fulgencio Batista dictatorship backed by

the United States, workers had few rights and there was
widespread unemployment. After the 1959 revolution,
the real wages of workers saw an immediate rise and
unemployment vanished. Within three years, the literacy
rate in Cuba went up to 96 per cent, a gure which
rivalled that of its next-door neighbour, the U.S.
Education was made free, along with health care. The
informal apartheid that had existed before the revolution
ended. Cubans of colour were admitted to private clubs
and beaches. Afro-Cubans were among the biggest
beneciaries of the revolution.
It was the expropriation of U.S.-owned companies
and estates that led to U.S. hostility towards the Cuban
Revolution from the very outset. The acute antagonism
between Havana and Washington drove the world to the
FRONTLINE .
DECEMBER 23, 2016
FE B R UA R Y 6, 1959: Fidel Castro during his
triumphant march to Havana after the fall of the

Fulgencio Batista regime.
verge of a possible nuclear holocaust in 1962in the
so-called Cuban Missile Crisis. The year before, the
Americans had failed in their attempts to overthrow
Cubas socialist government. Fidel Castro had
announced soon after the revolution that the government
would adhere to the communist ideology. The
Eisenhower administration had by then imposed
economic sanctions on Cuba. After the defeat of the
Central Intelligence Agency (CIA)-led forces in the Bay
of Pigs invasion, the John F. Kennedy administration
imposed a full-blown economic blockade. In a 1960
speech, Kennedy said that Castro had conscated over a
118
NYT
billion dollars worth of U.S. property, underlining that

the U.S. main concern was the protection of its nancial
assets in the island.
STANDING UP TO THE U.S.
Fidel Castro literally played a hands-on role in the

thwarting of the U.S. attempt at regime change through
the means of an invasion in 1962. He was on the front
lines directing the Cuban forces. I took part in the
capture of nobody knows how many prisoners, he has
recounted in his autobiography My Life. The prisoners
were humanely treated and released after the Kennedy
administration paid a token amount as war reparation to
Cuba. After the Bay of Pigs asco, the Kennedy
administration made more plans to destabilise socialist
Cuba economically and politically. Cuba thereafter was
HA VAN A , 1959: With comrade-in-arms Che Guevara.
continuously in the U.S. cross hairs until the diplomatic

breakthrough in 2015.
The U.S. persuaded most of the Latin American and
Caribbean countries that were under American inuence
and tutelage at the time to economically and politically
boycott Cuba. After the Bay of Pigs humiliation, the
Kennedy administration announced An Alliance for
Progress, earmarking $10 billion in development aid for
the region and urging the governments there to institute
agrarian reforms. According to Fidel Castro, it was the
communist revolution in Cuba that made Washington
reassess the concept of agrarian reforms. The
administration that had never wanted to hear the word
agrarian reform, that had considered it a communist
119
FRONTLINE .
DECEMBER 23, 2016
120
AFP
D E C E M B E R 14, 1974: With Palestine Liberation
Organisation chairman Yasser Arafat, who was visiting Cuba.

idea, was now suggesting that there was a need for
agrarian reform in Latin America, he observed in his
memoir. He believed that Kennedy had realised that a
radical revolution, much bigger than the Cuban
Revolution, could occur across Latin America if the
necessary reforms were not carried out. It is another
matter that most of the money the U.S. disbursed was
stolen by right-wing military dictators and oligarchs who
ruled the roost in Latin America in those days.
ALLIANCE WITH SOCIALIST BLOC
AFP
The Organisation of American States (OAS), which was

under Washingtons thumb, was used as an instrument
to destabilise the Cuban Revolution. The Cuban
government had little option but to strengthen economic
and political ties with the socialist bloc led by the Soviet
Union, though Cubas natural trading and cultural
partners were in its immediate periphery.
Cuba emerged strengthened from its alliance with
the Soviet Union, despite the so-called Cuban Missile
Crisis. The October Crisis, as it is known in Cuba, was
one of the most dangerous events witnessed after the
Second World War. The world was on the verge of a
thermonuclear war as a consequence of the United
States aggressive brutal policy against Cuba, Fidel
Castro observed. The Soviet Union had placed SS-4
AP R I L 1963: At Krasnodarskiy Krayat, the country
residence of Nikita Khrushchev in the Soviet Union. With
Leonid Brezhnev (left), Secretary of the Central Committee
of the Soviet Union, and Krushchev (right).
121
THE HINDU ARCHIVES
NE W D E L H I , MA R C H 7 , 1 9 8 3 : At the seventh NAM summit, between Prime Minister Indira Gandhi and K. Natwar Singh,
Secretary General of NAM. Castro was the outgoing Chairman.

ballistic missiles in Cuba to protect the country from an
imminent full-scale U.S. invasion. The crisis was
ultimately resolved with the Soviet Union blinking and
withdrawing its nuclear weapons. Fidel Castro himself
was not too happy with Moscows action, as it was done
without his consent. All the same, Soviet Premier Nikita
Khrushchev did get an undertaking from Washington
not to launch an invasion of Cuba and also to stop the
constant overights of U.S. Air Force planes over the
island. Moscow also got an assurance that the U.S.
Jupiter missile aimed at the Soviet Union would be
removed from U.S. military bases in Turkey.
BEYOND CUBA
But Cuba under Fidel Castro was not in any way cowed
down by the U.S. As Fidel Castro told his biographer
Ignacio Ramonet: They internationalised the blockade;
we internationalised guerilla warfare.
Che Guevara, his trusted comrade-in-arms, decided
FRONTLINE .
DECEMBER 23, 2016
to go to Bolivia to ght against the corrupt, U.S.-backed

regime there. Che already had secretly been to Congo in
1965 with a group of fellow Cubans to help guerilla
ghters there to defeat the Western-backed government
that was installed after the assassination of Patrice
Lumumba, the charismatic left-wing Prime Minister.
Though that initial Cuban foray into the African
continent was not very successful, Fidel Castro and the
Cuban Revolution were determined to play a proactive
role to thwart the Wests imperialist and neocolonial
designs in Africa and Latin America.
Soon after the revolution, Raul Castro and Che visited
Cairo to establish contact with African revolutionary
movements. They also visited Gaza to express solidarity
with the Palestinian cause. Close relations were
established between Cuba and the National Liberation
Front (FLN) in Algeria, which was ghting a bloody war
of independence. Cuba trained FLN ghters and sent
arms to Algerian guerilla ghters through Morocco.
122
Cuba also provided medical aid and shelter for wounded

Algerian ghters. Fidel Castro says in his memoir that the
rst group of Cuban medical doctors to be sent overseas
was sent to Algeria. Today there are more than 190,000
Cuban doctors working selessly in underdeveloped
areas all over the world. When there was a devastating
earthquake in Pakistan, Cuba was among the rst
countries that dispatched doctors and medical aid.
Cuban doctors also work in war zones, saving lives.
After Algeria won independence from France in
1962, close military and security ties were established
between Havana and Algiers. Cuba even sent in some
troops to Algeria in 1963 when the country came under
attack from Morocco, a close ally of the West. Cuba also
actively helped progressive republican and left-wing
governments in the Arab world, in Syria, Iraq and South
Yemen. South Yemen in the 1970s had a socialist
government. Cuban forces helped the Syrian army in the
1973 war with Israel. Cubas military ties with Iraq were
cut after Saddam Hussein went to war with Iran in 1980.
DECOLONISATION IN AFRICA
PATRICK AVIOLAT/AP
From the very outset, solidarity with forces that were in

the forefront of the decolonisation struggle in Africa was
a hallmark of the revolution. Cuban forces intervened on
the side of the Ethiopian government under Mengistu
Haile Merriam, a self-proclaimed socialist. Somalia,
under Siad Barre, launched an invasion of Ethiopia in the
late 1970s with Western encouragement. Cuban
intervention was crucial in the defeat of the Somali army
in the Ogaden war, as the conict was called. The 1960s
and 1970s saw the rise and consolidation of many leftwing movements on the African continent, many of them
inspired by Fidel Castro and the Cuban Revolution.
Political movements such as the African National
Congress (ANC) in South Africa, the South West Africa
MA Y 1 9, 1998: With Nelson Mandela at a meeting of
the World Trade Organisation in Geneva, Switzerland.
Peoples Organisation (SWAPO) in Namibia, the

Popular Movement for the Liberation of Angola (MPLA)
in Angola and the Mozambique Liberation Front
(FRELIMO) in Mozambique had close links with
Havana.
The Cuban contribution to the decolonisation
struggle in southern Africa was especially crucial. Many
historians concede that but for Cuban military
intervention at a critical juncture, the decolonisation
struggle could have taken a different and unwelcome
turn. In Angola, Mozambique and other countries,
renegade counter-revolutionary movements could have
emerged triumphant, as they were backed by the West
and apartheid South Africa. South Africa had the most
powerful army in Africa. Its forces had entered Angola to
support surrogates like Jonas Savimbi in a bid to oust the
ruling MPLA soon after the country gained
independence. The MPLA at the time was a left-wing
party inspired by the Marxist ideology. Gabriel Garcia
Marquez, a close friend of Fidel Castro, has described
Cubas contribution to the decolonisation struggle
beautifully and graphically in an article titled Operation
Carlotta, the code name for the Cuban military
expedition to Angola. The MPLA leadership, just after
taking power, faced a concerted military attack backed by
South African forces and supported by the U.S. The
Angolan government appealed for urgent help from the
only country it knew would be willing to help at short
notice.
The MPLA leaders, who had been prepared for
guerilla struggle rather than full-scale war, then
understood that only an urgent appeal for international
solidarity would enable them to rout this concerted
attack by neighbouring states, supported by the most
rapacious and destructive resources of imperialism,
wrote Marquez. The Cuban Communist Party, fully
aware of the risks involved, acceded within 48 hours to
Angolan President Agostinho Netos appeal for Cuban
troops to help the beleaguered Angolan forces. By the
time the decisive battle of Cueto Cuenavale was fought in
1988, there were 40,000 Cuban troops in Angola. Fidel
Castro was personally involved in overseeing minute
aspects of the battle, which saw the defeat of the mighty
South African army.
There was not a single dot on the map of Angola that
he [Castro] was unable to identify, nor any feature of the
land that he did not know by heart. His absorption in the
war was so intense and meticulous that he could quote
any statistic relating to Angola as if it were Cuba itself,
wrote Marquez. The Cuban leader would often spend 14
hours at a stretch in his command room, sometimes
without sleeping or eating, overseeing the military
moves, according to Marquez. Six thousand miles from
home, the Cuban army entered into combat with the
armies of South Africa, the largest power in the
continent, and Zaire, the richest and best armed of
Europes and Americas puppet regimes, Fidel Castro
reminisced.
The Soviet Union was not consulted when Cuba
123
AFP
JA NU A R Y 30, 1979: With Saddam Hussein (centre),

then the Vice President of Iraq, and Raul Castro, then
Defence Minister of Cuba. Saddam was visiting Cuba.
decided to send troops to Angola. The Soviet leadership,

in fact, had let it be known that it was not too happy with
many initiatives the Cuban leadership took to shore up
national liberation movements in Africa and Latin
America. At the same time, it should be acknowledged
that Soviet help in the supply of arms, along with the
Soviet Unions diplomatic and nancial support, played a
key role in the decolonisation struggle in Africa. In Fidel
Castros words, Cubas contribution was decisive in
nally bringing independence to Angola and in doing the
same thing in Namibia in March 1990. It also made a
signicant contribution to the liberation of Zimbabwe,
and to the toppling of the apartheid regime in South
Africa.
MANDELAS TRIBUTE
It was no surprise that Fidel Castro got the loudest

ovation on the historic occasion of Nelson Mandelas
swearing in as the rst President of a democratic and
multiracial South Africa. When Mandela visited Cuba in
1991, he delivered a moving speech thanking the Cuban
people: We are humbled and full of emotion here. We
have come here today recognising our great debt to the
Cuban people. What other country has a history of
seless behaviour as Cuba has shown for the people of
Africa? Mandela said. The decisive defeat of the racist
army in Cuito Cuinavale was a victory for all Africa. This
victory in Cuito Cuinavale is what made it possible for
Angola to enjoy peace and to establish its sovereignty.
The defeat of the racist army made it possible for the
people of Namibia to achieve their peace and
independence. Mandela went on to emphasise that the
defeat of the racist forces in Cuito Cuinavale made it
possible for him to be a free man and visit Cuba.
AN INSPIRATION TO LATIN AMERICA
Fidel Castro, along with Che, will of course forever be in

the hearts of the people of the Americas. Che did not die
in vain in the jungles of Bolivia. Neither was the sacrice
of Salvadore Allende, who died ghting with the AK-47
that Fidel Castro had presented him, in vain. Today, the
political map of the region has undergone a dramatic
FRONTLINE .
DECEMBER 23, 2016
change. Many of Fidel Castros disciples and admirers are

in power. The rst thing that Hugo Chavez did after
being released from prison in 1993 was to visit Fidel
Castro. Venezuela and Cuba today have a close
relationship. Fidel Castro and Chavez together played a
key role in building alternative regional groupings free
from the meddling of the U.S. The Bolivarian Alliance for
the People of our Americas (ALBA) is one such grouping,
which includes countries like Cuba, Venezuela, Ecuador,
Bolivia and Nicaragua. Even before Fidel Castro
demitted office, the U.S. efforts to keep Cuba
diplomatically isolated had failed. In fact, it was the U.S.
that became friendless in Latin America as many
countries looked up to the Cuban model for inspiration.
Fidel Castro saw to it that the Cuban people had the
freedom to live without worrying about access to food,
shelter, health care and education. Cubas preventionfocussed holistic model has helped it achieve one of the
best health-care systems in the world, with the highest
ratio of doctors per capita. Cuba under Fidel Castro
emerged as a sporting superpower. Until a decade ago,
Cuba gured consistently among the top 10 medal
winners in the Olympic Games. Even today, Cuban
boxers, wrestlers and athletes are counted among the
worlds best. Cuba has shared its expertise in sports with
many countries, including India. Indias success in
boxing can to a large extent be attributed to boxing
coaches from Cuba.
Fidel Castro had a special place in his heart for India.
Almost immediately after the revolution, he sent Che to
New Delhi to establish contact with the Indian
leadership. Cuba became an active member of the NonAligned Movement (NAM). His electrifying presence at
the Delhi NAM summit was one of its highlights. He
struck up a close friendship with Indira Gandhi, who was
the Prime Minister at the time. In Cuba, many girls born
in the 1980s were named Indira. He would have been
disappointed in his last days when India started
distancing itself from NAM and moved closer to
Washington. Cuba, however, still attaches particular
importance to its relationship with India. Prime Minister
Manmohan Singh was one of the few leaders who were
allowed to visit Fidel Castro after he fell seriously ill in
2006.
Until the very end Fidel Castro remained suspicious
of the U.S., though he accepted the Cuban governments
decision to restore diplomatic ties. His distrust now
seems justied. Donald Trump, the President-elect, has
threatened to reverse the Obama administrations
diplomatic opening to Cuba. He has said that he wants a
better deal to be negotiated with Cuba. On the
campaign trail, Trump promised the rabidly anti-Castro
Cuban American community concentrated in Miami
that he would scuttle the deal signed by Washington and
Havana. Anyway, Fidel Castro has had the last laugh: he
always maintained that U.S. democracy was a sham.
What better illustration could there be than the election
of Trump as the President, and that too with a twomillion-vote decit?
124
AP R I L 21, 1959:
PATRICK A. BURNS/THE NEW YORK TIMES
Fidel Castro waving a

Cuban ag to greet
supporters in New York,
which he visited three
months after toppling
Fulgencio Batista. He also
went to Washington, D.C.
C OVER F E A TUR E
Defying imperialism
from its backyard
Despite the sanctions the U.S. imposed on Cuba and the many attempts it
made to get rid of Fidel Castro, the Cuban Revolution has not collapsed
and Castro outlasted 11 U.S. Presidents. B Y VIJAY PRASHAD
125
THE HINDU ARCHIVES
FIDEL CASTRO DIED AT AGE 90. THE CENTRAL Arbenz in 1954, and he watched as the U.S. helped
Intelligence Agency (CIA) of the United States and Cu- overthrow Brazils Joao Goulart in 1964 and intervened
ban exiles had tried for decades to kill him. In the U.S. in the Dominican Republic in 1965 to prevent the restoCongress Church Committee Report (1975), U.S. politic- ration of the democratically elected government of Juan
ians wrote: The proposed assassination devices ran the Bosch. In Africa, most spectacularly, the West and a
gamut from high-powered ries to poison pills, poison section of the Congolese military assassinated the demopens, deadly bacterial powders and other devices which cratically elected President Patrice Lumumba. These
strain the imagination. One of these devices was an men were not communists but liberal, anti-colonial naexploding cigar, which was to be given to Castro at the tionalists. Their liberal nationalism pitted them against
United Nations. None of these succeeded. In April 1959, local elites and U.S. multinational corporations, at whose
when Castro visited New York, he marvelled at the head- behest the U.S. government acted to prevent them from
line of an American paper: All Police on AlertPlot to being in power. A decade later, when other nationalists
Kill Castro! The Cuban leader ducked all these attempts, attempted to come to power in Central Americafrom El
634 by one count. He gave up smoking in 1985 and Salvador to Nicaraguathey faced the same fate. Castro
suffered poor health over his last decade. It was old age was their beacon. Cuba had escaped the dragnet of
imperialism.
that took him, not the wiles of the CIA.
Castro knew that the CIA would not be able to do in
Cubas new revolutionary government in 1959 made
noises that sounded awfully familiar to the elites in Cuba what it had done in Guatemala. In October 1959,
Washington, D.C. They did not hear echoes from the Castro met with the Soviet intelligence agent Aleksandr
Soviet Union (Union of Soviet Socialist Republics, or the Alekseyev. Alekseyev, a veteran KGB agent, reported to
USSR) since Castro had not made his intentions towards Moscow that Castro had presciently told him: All U.S.
communism clear. What they found objectionable was attempts to intervene are condemned to failure. Why
Castros agenda: to conduct land reforms, to expropriate was Castro so certain of his position? The Cubans knew
the entrenched elite and to expel the American maa. that over 90 per cent of the population had supported the
The template for the U.S. displeasure at the Castro gov- revolution against the dictator Fulgencio Batista. The
ernment was set in Guatemala, where the CIA conducted encrusted elite ed rapidly to the U.S., 144 kilometres
a coup in 1954 against the democratically elected govern- away, where they set up shop in Miamis new Little
ment of Jacobo Arbenz. His crime was land reform and Havana. The CIA went to work amongst these exiles to
protection of workers rights, both anathema to the old nd a Castillo Armas to lead the revolt against Castro and
rural elites and the U.S.-based United Fruit Company. to nd an assassin to kill him. When the CIA-backed
When Arbenzs nationalist government went to work, the exiles tried to invade Cuba in April 1961, they were routed
by the Cuban forces and the armed
CIA planned to assassinate leadCuban population at the Bay of
ing gures in his government and
Pigs. The attention now went toto allow its proxies to start an
wards the assassination of Castro,
armed struggle. In 1952, the CIA
which would sow chaos and allow
created a disposal list containing
a U.S.-backed force to seize power.
the names of 58 leaders in the
That was the hope.
country. The text on assassination
In April 1960, the U.S. State
is chillingly precise: The simplest
Department created a memorantools are often the most efficient
dum on Cuba. It found that the
means of assassination, the CIA
majority of Cubans support Caswrote, pointing towards hamtro and that there is no effective
mers, axes, wrenches, lamp stands
political opposition on the island.
or anything hard, heavy and
Communist inuence, the memhandy. The CIA also primed its
orandum noted, was pervading
agent on the ground, Carlos Casthe government and the body politillo Armas, who had no qualms
tic at an amazingly fast rate.
about brutality. If it is necessary
What could the U.S. do to underto turn the country into a cemetery
mine the Castro government on
in order to pacify it, Armas said, I
behalf of the old Cuban elites and
will not hesitate to do it. Arbenz
the U.S.-based corporations? The
was dispatched in a coup in 1954.
only foreseeable means of alienCastros fate, by 1960, was to be
ating internal support, wrote the
the same.
State Departments Lester D. MalCastro saw what the U.S. 1 9 5 4 : Carlos Castillo Armas at his
lory, is through disenchantment
would try to do as he moved on his headquarters in Esquipulas, Guatemala.
and disaffection based on ecosocialist programme. He had seen An agent of the CIA, he led the coup it
nomic dissatisfaction and hardwhat happened to Irans Moham- sponsored against the democratically
ship. The U.S. government must,
mad Mossadegh in 1953 and to elected government of Jacobo Arbenz.
FRONTLINE .
DECEMBER 23, 2016
126
AP
MA R C H 5, 1960: Cuban leaders in a funeral procession for the victims of an explosion on the Cuban ship La Coubre in
the harbour in Havana, which the Cuban government blamed on a U.S. bomb attack. From left: Fidel Castro, Osvaldo
Dorticos, Ernesto Che Guevara, Defence Minister Augusto Martinez-Sanchez, Ecology Minister Antonio NunezJimenez, the American William Morgan from Toledo, Ohio, and the Spaniard Eloy Gutierrez Menoyo.
therefore, use every possible means to weaken the

economic life of Cuba. Castro knew this. During his
meeting with Alekseyev, Castro said that he did worry
about Cubas economy.
As with many colonies, Cuba had been forced into a
one-crop economy, in its case sugar. The Batista government had relied upon sale of sugar to the U.S. and on
tourism from the U.S. Both would have to end if Cuba
was to succeed. The only danger for the Cuban Revolution, Castro told Alekseyev, is Cubas economic weakness and its economic dependence on the U.S., which
could use sanctions against Cuba. In one or two years, the
U.S. could destroy the Cuban economy. In October
1960, almost two years after Castro came to power, the
U.S. Congress decided to embargo exports to Cuba. This

blockade (el bloqueo) was extended in 1962 to basically
throttle the island.
What saved Cuba was that Castros government had
the support of the islands people and the Soviet Union,
which provided Cuba with material assistance. Castro
told Alekseyev in 1959: Never, even under mortal danger, will we make a deal with American imperialism.
Instead, Cuba turned to the USSR for assistance. This
assistance, which included military protection, would
last until the USSR collapsed in 1991. In a stroke, Cuba
lost its market for sugar and its supplier of foodstuffs and
fuel. The U.S. saw an opening. The U.S. Congress tightened the noose. The Torricelli Act (Cuban Democracy
127
RAUL CORRALES/THE CANADIAN PRESS/AP
AP R IL 1961: Fidel Castro during the Bay of Pigs invasion, in which CIA-backed Cuban exiles were routed by Cuban forces
and the armed population of the island nation.
Act of 1992) and the Helms-Burton Act (Cuban Liberty

and Democratic Solidarity Act of 1996) extended the
embargo to include foreign companies. Cuba was isolated. It was during this Special Period that Cuba had to be
innovative: reusing, repairing and recycling its products.
It was a difficult time, and yet the Cuban Revolution did
not collapse. It did not follow the USSR into oblivion.
Why did we resist? Castro asked a decade later. Because the Revolution always had, has, and increasingly
will have the support of a nation, an intelligent populace,
which is increasingly united, educated and combative.
Every chink in the armour is an opening for the U.S.
to insinuate itself against the Revolution. Castro had
aggravated the U.S. by providing material assistance to
national liberation forces across Africa and Latin America and medical and educational aid to his neighbours in
the Caribbean. Castro took a leadership role in the NonAligned Movement (NAM), which Cuba hosted in 1979
and 2006, and in the more radical Organisation of Solidarity with the People of Asia, Africa and Latin America
FRONTLINE .
DECEMBER 23, 2016
(OSPAAL), which is based in Havana. Cuba did not

retreat into a shell. It went outwards, building solidarity
networks across the world to help it break the embargo.
In fact, during the Special Period, the Indian communist
movement raised 10,000 tonnes of wheat and 10,000
tonnes of rice, which were shipped to Cuba. Each Cuban
received a loaf of bread from that shipment. Castro would
call the Communist Party of India (Marxist) general
secretary Harkishan Singh Surjeet the Bread Man.
Such solidarity, in material and moral terms, kept Cuba
going and allowed it to stand rm against U.S. pressure.
When NAM became pliant and OSPAAL became dormant, Cuba turned towards the pink tide in Latin
Americawith the rise of Venezuelas Hugo Chavez and
Bolivias Evo Morales providing a new llip to Cuban
ambitions. The weakness of the pink tide threatens to
push Cuba once more into isolation.
Castro outlasted 11 U.S. Presidents, including Barack
Obama. The Americans reached out to Cuba, via the
Vatican, to begin diplomatic relations. Castros brother
128
ADALBERTO ROQUE/AFP
ROBERTO CANDIA/AP
MA Y 1 , 2001: Castro leading a march past the U.S. Interests
Sections building in Havana on Labour Day. The building was the

U.S. embassy before diplomatic relations were severed in 1961
and was reinstated as the embassy on August 14, 2015.
Raul accepted the invitation to a dialogue partly to break

out of the isolation. There was no clear sign, however,
that the U.S. wanted to invalidate its 60-year history of
supporting Cuban exiles and big corporations who are
eager to exploit the Cuban landscape and its population.
The talks between the countries produced no real breakthrough. Some gestures were allowed, such as the start of
some direct ights between the U.S. and Cuba. Also,
Obama restored diplomatic relations between the countries in 2015: The Cuban embassy opened in Washington, D.C., on July 20 and the the U.S. embassy opened in
Havana in August with Secretary of State John Kerry
there for the raising of the ag. Obama became the rst
sitting U.S. President to visit Havana after the 1959
Revolution when he made a trip in March 2016.
Nothing more was on the table. But even these small
moves are now to be rolled back by the administration of
Donald Trump. Trump believes that the death of Castro
J ULY 21, 2006: Castro with Venezuelas

President Hugo Chavez at an event in Cordoba,
Argentina. The rise of Chavez and Bolivias Evo
Morales provided a new llip to Cuban ambitions.
will hasten the end of the Cuban Revolution. The U.S.,

which had wanted to assassinate Castro all these decades,
has come to believe that the Revolution is merely his
fancy and not a commitment of the Cuban people. Trump
will squeeze the Cubans for more concessions until the
negotiations will break down. There is no appetite in
Washington for peace. In one of his last pieces in Granma, Castro wrote of the uncertain destiny of the human
species. He worried about the ascension of Trump and
other like-minded politicians, but he also worried about
the policies of Obama. None portend well for the planet.
Trump and Obama might appear different, Castro suggested, but they are united in their fealty to the U.S., the
most powerful imperialist country that has ever existed.
Both Trump and Obama, wrote the old revolutionary on
his deathbed, will have to be given a medal of clay. The
earth cannot afford to give them anything else. They have
already laid claim to everything.
129
AFP/ EL TIEMPO/HO
The Fidel Castro

I believe I know
BY GABRIEL GARCIA MARQUEZ
HIS devotion is to the word. His power is of seduction.

He goes to seek out problems where they are. The
impetus of inspiration is very much part of his style.
Books reect the breadth of his tastes very well. He
stopped smoking to have the moral authority to combat tobacco addiction. He likes to prepare food recipes
with a kind of scientic fervour. He keeps himself in
excellent physical condition with various hours of
gymnastics daily and frequent swimming. Invincible
patience. Ironclad discipline. The force of his imagination stretches him to the unforeseen.
Jose Marti is his foremost author and he has had
the talent to incorporate Martis thinking into the
sanguine torrent of a Marxist revolution. The essence
of his own thinking could lie in the certainty that in
undertaking mass work it is fundamental to be concerned about individuals.
That could explain his absolute condence in direct contact. He has a language for each occasion and a
distinct means of persuasion according to his interlocutors. He knows how to put himself at the level of each
one, and possesses a vast and varied knowledge that
allows him to move with facility in any media. One
thing is denite: he is where he is, how he is and with
whom he is.
Fidel Castro is there to win. His attitude in the face
of defeat, even in the most minimal actions of everyday life, would seem to obey a private logic: he does
not even admit it, and does not have a minutes peace
until he succeeds in inverting the terms and converting it into victory.
His supreme aide is his memory and he uses it, to
the point of abuse, to sustain speeches or private
conversations with overwhelming reasoning and
arithmetical operations of an incredible rapidity. He
requires incessant information, well masticated and
digested. He breakfasts with no less than 200 pages of
news. Responses have to be exact, given that he is
capable of discovering the most minimal contradiction in a casual phrase. He is a voracious reader. He is
prepared to read any paper that comes into his hands
at any hour.
He does not lose any occasion to inform himself.
During the Angola war he described a battle in such
detail at an official reception that it was hard work to
convince a European diplomat that Fidel Castro had
not participated in it.
His vision of Latin America in the future is the
same as that of Bolivar and Marti, an integrated and
FRONTLINE .
DECEMBER 23, 2016
FI D E L CA S TR O with Gabriel Garcia Marquez in March
2007 in Havana.
autonomous community, capable of moving the destiny of the world. The country about which he knows the
most after Cuba is the United States: of the nature of
its people, their power structures, the secondary intentions of its governments. And this has helped him
to handle the incessant torment of the blockade.
He has never refused to answer any question,
however provocative it might be, nor has he ever lost
his patience. In terms of those who are economical
with the truth, in order not to give him any more
concerns than those that he already has: he knows it.
He said to one official who did so: You are hiding
truths from me, in order not to worry me, but when I
nally discover them I will die from the impact of
having to confront so many truths I have not been
told. But gravest are the truths concealed to cover up
deciencies, because alongside the enormous achievements that sustain the revolutionthe political, scientic, sporting, cultural achievementsthere is a
colossal bureaucratic incompetence, affecting daily
life, and particularly domestic happiness.
When he talks with people in the street, his conversation regains the expressiveness and crude frankness of genuine affection. They call him: Fidel. They
address him informally, they argue with him, they
claim him. It is then that one discovers the unusual
human being that the reection of his own image does
not let us see. This is the Fidel Castro that I believe I
know. A man of austere habits and insatiable illusions,
with an old-fashioned formal education of cautious
words and subdued tones, and incapable of conceiving
any idea that is not colossal.
I have heard him evoking things that he could have
done in another way to gain time in life. On seeing him
very overburdened with the weight of so many distant
destinies, I asked him what it was that he most wished
to do in this world, and he immediately answered me:
Stand on a corner.
Gabriel Garcia Marquez is a Nobel prize-winning novelist.
This is an edited extract of an article from the Cuban
newspaper Granma published in The Guardian on the eve
of Fidel Castros 80th birthday.
Guardian News Service
130
C OVER F E A TUR E
Fidels vision
will live on
Interview with Sitaram Yechury, general secretary, Communist Party of
India (Marxist). B Y VE N KI TE S H R AM A KR I S HN AN
Your immediate response to the news of Fidel Castros

death contained reminiscences of a meeting in 1993.
You have talked about having seen a revolutionary with
great connect to the people as well as a leader of
governance with great attention to details. Can you
elaborate on the context of this meeting and how it
brought out these two aspects?
That meeting started quite late at night and went on
for many hours, almost into the early hours of the next
K.V.S. GIRI
SITARAM YECHURY, GENERAL SECRETARY

of the Communist Party of India (Marxist), remembers
Fidel Castro in his many dimensions: as a revolutionary
icon whose life remained a consistent inspiration for
political activists; a political thinker and practitioner
who charted new paths and advised fraternal parties on
political and organisational matters; an emotional individual who expressed his affection ingenuously, made
impulsive gestures and showed elderly concern towards
those who met him. In particular, Yechury cherishes his
memory of a meeting in Havana in 1993, when he and
Jyoti Basu, who was then the Chief Minister of West
Bengal, were called for a long discussion with Fidel Castro. The meeting went on late into the night. In between,
Yechury made an excuse and stepped out for a smoke.
Next morning, an aide of the Cuban President turned up
at Yechurys room with a special gifta huge box of
Cuban cigarsand a message for the Indian communist:
The Commandante wanted me to tell you that he too
liked his cigars in his time, but there would come a stage
when everybody, including you, would have to give it up
on the diktats of our body.
Yechury says that an abiding humanism held together the seemingly diverse characteristics in Fidel Castro.
In essence, he was a great humanist and hence a masterly visionary who crafted and led a unique and creative
people-oriented political praxis.
Here, Yechury shares his memories of the Cuban
leader in conversation with Frontline. Excerpts.
S I TAR A M YE CHUR Y: Fidel Castro was a great

humanist and hence a masterly visionary.
day. The year was 1993, and it was one of the most
difficult periods in the history of Cuba. The collapse of the
Soviet Union had a direct bearing on Cuba and its economy. And 1993-94 was the worst. In fact, Time magazine
did a cover story, just a few days before we reached Cuba,
with Fidels photograph, questioning how long Cuba
could survive now that the Soviet Union had fallen. There
were shortages of virtually everything [in Cuba]. Yet,
Fidel was in command and full of optimism that Cuba
would survive and move ahead. We asked him for the
131
reasons for this optimism. He responded in great detail,

highlighting Cubas strengths and weaknesses. He listed
the areas where Cuba could advance economically, pointing out where it could move forward smoothly, where it
needed careful planning and where greater care was
required. He spoke of the petroleum sectorhow Cuba
had planned and devised alternatives to go beyond the
dependence on the Soviet Union in this sector. This
involved domestic innovations using sugar cane with
gasoline. This also involved exploring the Venezuelan
alternative of going into that market. He delineated plans
on developing tourism and the concept of special development zones.
Specically, there was a road map to enhance the core
strengths that Cuba possessed in the elds of science and
medicine. The country was the pioneer in neurosurgery
at a time when even many advanced countries would not
venture into this eld, as was later acknowledged globally. It was the rst to develop the Hepatitis B vaccine.
The human development indices were priorities right
from the early days of the liberation, and these continue
to be among the best in the world. But at that time, there
was also a clear understanding that the focus on goods
economy or manufacturing economy was decient. Plans
were being devised to address that. New avenues to
generate productive employment were being charted
out. It was in this context that he probably asked me
about the details of what India was producing, how much
steel, how much cement, and so on.
The relationship with China also improved during
this period. We saw concrete signs of that when we were
there. It was, literally, a reshaping of the Cuban economy
and its inputs. Of course, he repeatedly stressed that all
these plans were built on the great resolve of the Cuban
people to protect and take forward the spirit and the
gains of the revolution. During that conversation, it was
evident that Fidel had imbibed Lenins denition of
Marxism as a creative science that involved concrete
analyses of concrete situations. So, concrete conditions
had changed. If your analysis did not change, you were
not a Marxist. In that sense Fidel was a living example of
rallying people with revolutionary fervour going hand in
hand with concrete analyses of concrete situations.
Evidently, a principal factor in the conversation would
have been the collapse of the Soviet Union and the
socialist bloc. In many ways, the collapse was lifealtering for the communist and Left movements across
the world. Did the discussion at any point go into the
reasons of the collapse, at least as a possible lesson or
a warning while building up a socialist society?
Not directly. The CPI(M) had by that time formulated its opinion, and this had been conveyed to the Cuban
party. The Cuban party had informed us separately, not
in the conversation with Fidel, that it agreed with most of
our positions and with our understanding of why the
collapse happened. The fact that Fidel had also gone
through our document or had been briefed about it became evident when he said during the conversation that
he agreed that what happened in the Soviet Union was a
FRONTLINE .
DECEMBER 23, 2016
convergence of the internal and the external. Our understanding was that while the Soviet Union had the might
to face and even resist the external challenges, including
militarily, the internal weaknesses had increasingly kept
undermining it. That was the essence of our understanding of the situation, and he expressed his agreement. That was the only reference.
But I also remember an interaction between Fidel,
comrades EMS [E.M.S. Namboodiripad] and Harkishan
Singh Surjeet in 1987, when we all gathered in Moscow
for the 70th anniversary of the October revolution. After
one of the key sessions at the anniversary celebrations,
EMS pointed out that some aspects of the new thesis that
Gorbachev was proposing were problematic. It talked
about inter-penetration of contradictions leading to
some combination of socialism with facets of imperialism to create a superior model. EMS had called me to
dictate an article at ve in the morning, and obviously he
was thinking seriously about this. Later, after discussions
between EMS and Surjeet, it was decided that the CPI
(M) would place on record its objections to these aspects
of the Gorbachevian thesis and seek further discussions.
We were the only Communist Party at that meeting to tell
132
THE HINDU ARCHIVES
would make a speech or not. But he did, and it was in his

usual style. He spoke for about three hours and covered
almost all the major issues faced by the world.
There is also the view that the Sao Paulo forum was one
of the unique political instruments that Latin American
leaders, including Fidel Castro, developed to build up a
broad anti-imperialist movement leading to the
generation and advancement of new ideologies of Left
radicalism and concepts of building up a socialist
society...
CH IL D R E N F R O M C UBA S Oriente province asking Fidel
Castro to open some of the boxes of toys which were being

loaded on a plane to be dropped throughout the province.
The essence of the Cuban leaders political praxis was his
abiding connect with the people, says Sitaram Yechury.
the CPSU [Communist Party of the Soviet Union] this.
That evening, Fidel happened to meet our delegation,
and then he, too, agreed that the CPSU proposals required more consideration. Fidel, too, was, in his own
way, making it clear that he had reservations about the
Gorbachevian thesis. There was a level of clarity in this
understanding. We were able to see this clarity manifesting at the level of governance in 1993.
When was your last meeting with him?
That was in 2002. This was the meeting of the Sao
Paulo forum. Fidel was instrumental in forming the forum as part of the Latin American resistance against U.S.
imperialism. I had to speak, and the custom there was
that the speakers would be on the dais. So, there was
personal interaction, though not at the same level as in
the 1993 meeting. He was not very well when he came for
the forums meeting. There were some doubts whether he
There were indications even in the 1993 conversation

with Fidel that he had visualised the potential that the
unication of the Left and democratic parties across
Latin America on an anti-imperialist platform could
have in ultimately building up new socialist state models.
The movement was indeed founded on the Jose Marti
thought that stressed on political independence for countries and intellectual independence for all people. Fidel
had perceived the growing crisis in global capitalism even
in the late 1980s, which should have hastened to a stage
of recession in the early 1990s. But the collapse of the
Soviet Union and the socialist bloc in the early 1990s and
the economic globalisation that gathered momentum
simultaneously put off the crash and the recession for
another decade and a half. If the Soviet collapse had not
happened, the recession of 2008 would have been witnessed in the 1990s. But it was Fidels concrete analysis
for concrete situations approach that not only ensured
the survival of Cuba in the face of the most despicable
political, economic and military attacks by the imperialists following the Soviet collapse but also resulted in the
articulation and formation of new modalities of struggle
based on the Jose Marti thought. This consolidated in the
late 1990s and early 2000s, leading to triumphs of the
Left across Latin America, from Brazil to Venezuela to
Bolivia.
But unlike in Cuba, many of these triumphs of the Left
could not be sustained on a steady basis. There have
been major political vacillations and uctuations, which
at times created social and economic havoc. There is
also a view that Cuba has remained steady because the
political leadership was able to invoke a sort of
nationalism to retain support, while the Left leadership
in other Latin American nations have not been able to do
it.
I would think the latter part of your question reects
an incorrect understanding of both the problems that
one has seen in many Latin American countries as well as
Fidels political and historical legacy. The essence of
Fidels political praxis was the abiding connect with the
people. The very history of the Cuban revolution, including the failed attempts in the early 1950s to the
victory in 1959, is testimony to this. It was the constant
fostering and development of connect with the people
that created the rousing support to the young revolutionaries in 1959. Because of this connect, Cuba was able
to take important, decisive steps towards building up a
socialist state and society right from its early days. This
133
THE HINDU ARCHIVES
DE CE M B E R 1992: Fidel Castro speaks as CPI(M)

general secretary Harkishan Singh Surjeet and the partys
Member of Parliament M.A. Baby listen, along with others,
at a ceremony in connection with the arrival of the
Caribbean Star carrying aid from India to Cuba, in Havana.
could not be replicated fully or satisfactorily in other

Latin American countries where the Left came to power.
In other words, Fidel was the one who understood and
implemented the slogan all power to the Soviets. Now,
what does it mean? The communist party may be the
ruling party. But the real power vests with the Soviets,
with the local communities. In the local communities,
the majority may be non-communist. The job of the
communist is to convince the non-communist about the
relevance and importance of a course that the party has
visualised under the circumstances. It underscores both
the primacy of peoples power as vested in the local
communities and the organisational rigour that communist organisations should have in maintaining and advancing a constant dialogue with the people. Fidels
contribution to the international communist movement
should be understood from this organisational perspective, too.
A constant debate within the Left, especially the
communist parties, across the world is about the
deviations of the revisionist or sectarian variety that the
political organisations of these parties make from time
to time. This, according to these parties, has hampered
the progress of the party organisations as well as the
Left movement and its ideology. Given your experience
of Cuba and Fidels political praxis can it be said that it
contains some model of a non-revisionist, non-sectarian
Left.
You cannot have an organisational structure that is
completely bereft of revisionist or adventurous tendencies. The dangers of both the deviations are inherent. The
strength of an organisational and political structure
would be in being able to identify these deviations and
resist them in time. That can only happen if your links
FRONTLINE .
DECEMBER 23, 2016
with the people are strong. If you are divorced from the
people, then both these deviations will triumph. You will
start thinking that what you are thinking is what the
people are thinking. Then you may jump into adventurism and decide that if you just give a gun to the people, a
revolution would happen. Similarly, a right-wing deviation also happens when your original objective of giving a
political alternative to capitalism is given up and when
you are looking at only giving reforms within capitalism,
you are not actually improving the livelihoods of the
people. Instead, you are getting sucked into the capitalist
system. The organisational structure set up and led by
Fidel for a long time had the safeguards to resist these
deviations. And the major and primary safeguard was the
continuous emphasis on the live links with the people. As
all of us know, the Cubans are extremely fun-loving
people. I have seen members of the central committee or
the provincial committees after their party meetings going to the local councils and their areas and mixing with
the people in their sessions, meeting, dancing, drinking
and eating. In all these sessions, the political and governance issues also would come up regularly. It is a very
organic and creative organisational way. And this was
shaped to a great extent by Fidel. This is what I had seen
always among Cuban communists, pre-Soviet fall, postSoviet fall and through the rise and trajectory of the Latin
American Leftist upsurge.
Did you see the same stream even after Fidel retired
from active politics and governance?
More or less. The reason I say more or less is because the Cuban leadership itself had pointed out that
there were times when moves in one direction were
pursued rather one-sidedly, such as in areas like promotion of the tourism industry. Similarly, there were some
issues in the development and strengthening of economic self-reliance. Some of these tendencies were visible in
the late 1990s, too, when Fidel was in office. But, once
again, most of these have been addressed and corrected,
leading to a judicious mix.
With Fidel becoming a historic memory now, how do you
think Cuba will cope with the situation?
We need to look at things in perspective while answering this question. Fidel voluntarily stepped down
from office 10 years ago. Before that he had survived 10
U.S. Presidents from Eisenhower to Bush junior and the
638 assassination attempts that the U.S. Presidents and
their multifaceted machinery had unleashed on this
small countrys leader. Cuba, too, has moved on without
Fidel at the helm of affairs. Now, he is no more. But, as we
know, Fidel will live on not only in Cuba but across the
world among millions of people. At this juncture, the
biggest thing for Cuba is to demonstrate that what Fidel
created was not fragile and vulnerable. It is challenging.
But I am sure that the whole of Latin America will stand
with Cuba in facing this challenge. Notwithstanding the
reverses to the Left in some countries, the Jose Marti
vision is something that unites the whole of Latin America. And I am certain they will unite and stand up for this
vision and the legacy of Fidel.
134
C OVER F E A TUR E
Valediction for the

Comandante
Fidel Castros vision was at the root of what his comrades and then
increasingly larger numbers of his compatriots began to aspire for.
Fidel, the original leader, also became the symbol of what others who
came after him managed to achieve collectively. B Y AIJAZ AHMAD
Revolution is a struggle to the death between the
future and the past.
Fidel Castro
You made this possible.
Nelson Mandela to Fidel at his own
inauguration as President
We lost Fidel. We gained a history of examples
and wisdom.
Joao Pedro Stedile
RDO/AFP
FIDEL ALEJANDRO CASTRO RUZ, SON OF A

Galician immigrant, chief among the makers of the Cuban Revolution, as commanding a gure in the history of
Latin America as Bolivar or Jose Marti, is no more. He
survived 10 United States Presidents who all tried to kill
himin over 630 documented assassination plotsand
nally succumbed to natural death, due to prolonged,
fatal illness and advanced old age.
Fidel Castro was the last of the great revolutionary
gures in the political tradition traceable to 1917: Lenin,
Mao, Ho Chi Minh and a few others. He mentored his
younger friend, Hugo Chavez, to inherit his mantle in
Latin America and beyond, but Chavez was himself cut
down by a mysterious cancer, at much too young an age
and at the prime of his powers, even as he was just
beginning to garner a global stature. Fidel was 90, ill for
over a decade, a ghter in the realm of ideas until the very
end, as he had promised when he stepped down from the
presidency in 2008, but he was also almost unique in the
history of the great charismatic leaders to have methodically prepared, since at least 1997, a transition from his
THE UR N W I TH THE AS HE S of Fidel Castro is driven
through Sancti Spiritus, Cuba, on December 1, during its
four-day journey across the island for the burial in
Santiago de Cuba.
135
own leadership to a set of institutions that were led by

revolutionaries drawn from three successive generations,
ranging from Fidels own comrades of 1959 to much
younger ones born after the revolution. His dying feels
very much like the closing of a heroic age. The revolutionary process, of course, goes on, in all its complexity
and with great many twists and turns, producing magnificent new leaders in their own time and place, but it is
difficult to think of one who occupies quite so central a
position, beyond his own country or continent.
The loss seems to be all the greater in this precarious
present of ours in which proto-fascist forces of the Far
Right are ascendant in so many parts of the world. Progressive forces still seem to be more powerful in Latin
America than elsewhere, but the region is beset by at least
two worrisome processes. First, Cuban socialism is itself
going through a process of profound restructuring, with
elements of market economy and consequent market
rationality getting assigned an increasingly larger role; a
process that is likely to lead eventually to a system not
unlike that of China or Vietnam though in a much smaller national economy that is proportionately very vulnerable to the possible aggression but also to the lure of
its mighty, wealthy neighbour only 90 miles away. Second, the turn toward the Left that had characterised so
much of Latin America in the recent past seems to be
faltering as the constitutional coup in Brazil, the electoral
results in Argentina and the ongoing crisis in Venezuela
would testify. In this difficult situation, Fidel Castros
special acumen, with its unique combination of revolutionary optimism and lucidly rational calculation of the
balance of force, shall be greatly missed.
We shall return to some of this. The Comandante has
in any case departed, and the torch shall soon be passed
to a younger generation.
AN AUDACIOUS REVOLUTION
RODRIGO ARANGUA/AFP
All revolutions require great audacity. The Cuban one

was more audacious than perhaps all others. The two
A W O M A N C R I E S while waiting for the convoy carrying

the remains of Fidel Castro, in Cienfuegos, 240 km
south-east of Havana, on December 1.
FRONTLINE .
DECEMBER 23, 2016
great revolutions of the 20th century, the Russian and the

Chinese, occurred in backward, mainly agrarian societies
but in countries of continental size that had centuries of
great imperial history and cultural sophistication behind
them. Russia had great natural resources at its command, and the Soviet Union rose to become a superpower
second only to the U.S. China had been the worlds largest
economy for a long time, its experience of having been
eclipsed by the West was not very old, and it has again
risen now, after radical departures from the original
revolution of 1949, as the worlds largest economy. Neither had ever been fully colonised. The Czarist Empire
actually had colonies of its own, and China could only be
categorised as a semi-colony even in the worst days of
Western domination. Each of those revolutions occurred
in the midst of chaos caused by a World War, led by well
established communist parties, with the experience of
many years of revolutionary struggle, and commanding a
mass baseespecially so in the Chinese case.
And Cuba? It was a tiny island, barely 90 miles from
the U.S. coast of Florida, with a long history of settler
colonialism and a plantation economy based on two
centuries of slave labour. It had experienced a violent
transition from centuries of formal Spanish colonisation
to informal U.S. colonialism in 1898, followed by successive dictatorships that were beholden to their U.S. over-
136
THE HINDU ARCHIVES
MA Y 2 3, 1963: Fidel Castro, then the Prime Minister of

Cuba, addressing a mass Soviet rally at the Lenin
Stadium in Moscow.
lords and were supported by the Catholic Church. Like

many of the smaller African countries, Cuba was a singlecrop agrarian economy; the sugar cane was king. Havana
boasted a very urbane, highly sophisticated upper class.
Gambling casinos and widespread prostitution businesses were the underbelly of that sophistication, a veritable
playground for American tourists and playboys. Unlike
in prerevolutionary Russia and China, there was no signicant culture of Marxist or communist ideas.
Fidel Castro was a revolutionary since his student
days, participating in uprisings in Colombia and the
Dominican Republic even before he and his comrades
organised an attack on the Moncada Barracks in Santiago de Cuba, on July 23, 1953, with a view to inciting an
uprising against the U.S.-sponsored dictatorship of Fulgencio Batista. However, he was, until the seizure of
power in January 1959 and for quite some time after that,
primarily a left-wing democrat and an anti-imperialist
nationalist, not by any means a communist. Che Guevara,
his closest comrade, and Raul, his younger brother who is
now the Cuban President, were more conversant with
Marxist ideas, but they, too, were engaged in anti-imperi-
alist struggle and a democratic uprising against the dictatorship of a foreign agent. In its origins and in its seizure
of power, the revolution was nationalist. This is of great
signicance. The key distinction here is between two
kinds of modern nationalisms in countries that have
suffered Western capitalist domination in either the colonial or some non-colonial form. On the one hand, we
have the bourgeois nationalism of the sort that we have
had in India and which is deeply devoted to safeguarding
the bourgeois interest, rst the national bourgeois interest and then, logically, bourgeois interest in general,
insofar as the national and the metropolitan units of
capital do eventually converge. On the other hand, we
have what I have here called anti-imperialist nationalism, of the genuine kind, which has an irreconcilable
conict with imperialist capital. The U.S. welcomes and
embraces one kind of nationalism (bourgeois nationalism) and ghts against the other kind (the anti-imperialist kind).
I have argued elsewhere that U.S. imperialism in fact
makes little distinction between communism and antiimperialist nationalism. Gamal Abdel Nasser in Egypt,
Joao Goulart in Brazil, Jacobo Arbenz in Guatemalaand many others like themwhom the U.S. tried to
overthrow, often successfully, were by no means communists, and it was as nationalists that they sought to nationalise foreign assets of the imperialist kind. The U.S.
views all such nationalists as communists. In the process,
they force some of these anti-imperialists to become
communists. Serious Chinese scholars have suggested to
me that Mao Zedong himself was primarily an antiimperialist nationalist, that his New Democracy theses
and other such writings suggest that what he envisioned
was not a socialist appropriation of private property but a
mixed economy and a multi-class alliance that included
the national bourgeoisie, and that it was the experience of
the Korean War, in which some key members of the U.S.
establishment contemplated a full-scale invasion of China as well as a possible use of the atom bomb against it,
which convinced him to abandon that nationalist model
and implement the fully communist programme of a
socialist transition.
FIDEL STARTED OUT AS A NATIONALIST
That argument about Mao has much weight but is still

debatable. About Fidel Castro, there can be little debate.
He was not, and he never claimed to have been, a communist when he led a successful national uprising against
Batista and captured power in January 1959. The main
point, however, is this: Fidel had actually led a genuinely
nationalist, ant-imperialist revolution. He was forced by
the American reaction to his anti-imperialist nationalism to become a communist. The irony here is that
Dwight Eisenhower and John F. Kennedy, the two U.S.
Presidents, and Nikita Khrushchev, the First Secretary of
the Soviet Communist Party, drew the same conclusion:
that his refusal to retreat from his genuinely anti-imperialist convictions would necessarily lead him to becoming
a communist. In other words, the settled position of U.S.
137
imperialism to treat anti-imperialist nationalism and

communism as equally dangerous to it is in fact correct.
The logic of anti-imperialism necessarily leads to communismand the imperial centre knows it.
Fidel Castro and his comrades captured state power
in January. The U.S. authorities grasped the logic correctly, from the standpoint of their own class interest,
and as Noam Chomsky summarises the reactions from
the U.S. government: Eisenhowers March 1960 plan
called for the overthrow of Castro in favour of a regime
more devoted to the true interests of the Cuban people
and more acceptable to the U.S., including support for
military operation on the island and development of an
adequate paramilitary force outside of Cuba. In May, the
CIA [Central Intelligence Agency] began to arm guerillas inside Cuba. During the Winter of 1959-1960, there
was a signicant increase in CIA-supervised bombing
and incendiary raids piloted by exiled Cubans.
Signicantly, Fidel Castros Cuba reacted by refraining from any aggressive response and went to the Security Council instead, with all the evidence. That was of no
avail and U.S. hostility continued. In early 1960, the then
Senator John F. Kennedy spoke of Cuba as a communist
menace imperilling the security of the whole Western
Hemisphere and raising the question of how the Iron
Curtain could have advanced almost to our front yard.
The Bay of Pigs invasion came a year later in April 1961
after Kennedy had become President. This continuity
between Eisenhower and Kennedy, the Republican and
the Democratic Presidents, the military General and the
Boston liberal, shows that in fact the U.S. ruling class as a
whole formulates a policy that is then implemented regardless of who is at the helm of government, with undoubtedly some minor differences between one
administration and another. Kennedys hostility towards
Fidel Castro of course continued unabated, in plans and
policies that need not detain us here, except to point out
that, as Chomsky puts it: Ten days before his assassination he approved a CIA plan for destruction operations
by U.S. proxy forces against a large oil renery and
storage facilities, a large electric plant, sugar reneries,
railroad bridges, harbour facilities, and underwater demolition of docks and ships. A plot to kill Castro was
initiated on the day of the Kennedy assassination.
So much for liberalism and its deep commitments to
the empire.
Fidel Castro had of course been exposed to Marxist
ideas, but it was the implacable hostility of the U.S. that
convinced him that the anti-imperialist content of nationalism could not be actually realised within the parameters of capitalism and that he must move to
communism for the practical realisation of that antiimperialist project.
FROM NATIONALISM TO COMMUNISM
As it made its transition from anti-imperialist nationalism to communism, Cuba was still a small, poor, beleaguered island-nation. It had all the disadvantages but
none of the compensating endowments of a Russia or a
FRONTLINE .
DECEMBER 23, 2016
China as they embarked upon the historic adventure of

building socialist societies: vast territories, natural resources, old civilizations, well established progressive
cultures, disciplined communist parties with seasoned
cadres, fairly diversied agricultures, at least some significant industrial bases. Cuba had hardly any of it and yet
made the hard choice: Liberation or Death, as a famous
slogan has it.
There is a certain history to it. European ideas of the
revolution presume that a socialist revolution is possible
only after a very high level of industrial development; the
irony of the situation of course is that several Western
societies have achieved those high levels but there has
been no revolution in those societies. Indeed, the more
successful they become in building industrial capitalism,
the more remote they seem to get from revolutionary
politics. Tricontinental revolutions, by contrast, have
been historically based on a wager: that decent, egalitarian, fundamentally good and gracious societies can in
fact be built at relatively low levels of industrial production and material wealth; that it is possible to try to
transform not only the relations and forces of production
as conventionally understood, so as to produce the material conditions essential to the security, well-being and
intellectual development of the people, but also to help
recover those potentialities of human nature that capitalism distorts and destroys and which are essential for the
building of a socialist culture and a humane society.
DIALECTIC OF NATIONALISM AND
INTERNATIONALISM
What all this implies is that the worst crime of imperialism is that it distorts human nature itself, suppressing the
sociality and spontaneous openness to others that is
intrinsic to human nature, and creating, instead, selfcentred and acquisitive individuals that are indifferent to
the well-being of others. Fidel Castro was the great philosopher of this particular understanding of what socialisms and revolutions should be about. This broader
conception can be grasped if we attend to only two aspects of it. At one end of his vision were the basic structures of well-being for Cubans themselves, that is, the
material securities without which moral solidarities with
others are very difficult indeed, that is, provisions for
health, education and nutrition, not to speak of the ability to endure and develop despite the extreme imperialist
violence against the Cuban people collectively. At the
other end was a vision of international solidarities and
obligations. The dialectic of nationalism and internationalism, so to speak. The credit for the achievement of
the goals is of course collective, but his own vision, stated
repeatedly and at copious length, has been decisive for
the making of a collective imagination.
What does that mean, concretely?
Cuba has suffered a nasty blockade since John F.
Kennedy imposed it at the very beginning of the revolutionary period. That blockade is said to have inicted on
the Cuban economy damage estimated at one trillion
dollars. As a result, Cuba is still a very poor, underdevel-
138
AFP
JA NU A R Y 8, 1959: Fidel Castro (centre), surrounded
by members of his leftist guerilla movement, entering

Havana after the victory over the forces of Batista.
oped country. Yet literacy rates and life expectancy in
Cuba are at the level of the most industrialised countries,
quite comparable to Scandinavias. The infant mortality
rate in Cuba has come down to only 4.2 deaths per 1,000
births, far lower than even in the U.S.; and Cuba provides
59 doctors for every ten thousand people as compared
with 26 for ten thousand in the U.S. According to the
United Nations Childrens Fund (UNICEF), Cuba has
the lowest child mortality rate in the Americas and is the
only country in the Americas where child malnutrition
does not exist. According to the World Health Organisation (WHO), Cuba was the rst country to eliminate
mother-to-child transmission of HIV. There are 70,000
doctors for a population of 11 million; yet, health care
delivery costs are around $200 per capita annually,
which compares rather favourably with the roughly
$7,000 in the U.S.. This is quite additional to the fact that
Cuba provides universal primary and timely care for
everyone, and that it devotes over 50 per cent of its
national budget to health.
We could go on providing such statistics. The point,
however, is that there really is a clash of visions of the
good life here: the idea in advanced capitalism of spectacular consumption as the zenith of life for individuals who
are eternally at odds with each other (And, you know,
there is no such thing as society, said Margaret Thatcher,
the late British Prime Minister . ... only complex entities
composed of individuals.) versus the Tricontinental socialist idea of the duty of the whole society to ensure
highest levels of personal security for all, even at a low
level of the development of the forces of production. We
can call that the idea of the national within socialism,
that is, what society owes to the individuals within it.
But then Fidel Castro was also fond of quoting Jose
Marti, the greatest Cuban hero before Fidel Castro himself: Humanity is the Homeland. Socialism is essentially an internationalism. But Fidel Castros was an
internationalism with a twist. It is offered not only to
other socialists (socialist internationalism) but to all
human beings, socialist or not. Philosophically, a radical
humanism: the whole world is the only home, neither
nation nor religion nor any other particularity; only the
universal. Politically, teaching through exemplary conduct; it is by serving the best interests of all the people
that socialism can prove its moral superiority to others.
The New York Times reported in 2009 that [i]n the
50 years since the revolution, Cuba has sent more than
185,000 health professionals on medical missions to at
least 103 countries. Cuban medical and educational
assistance programmes have gone as far as Vanuatu and
East Timor. Cubans, in fact, are invited to aid the Pakistanis, the Saudis, the Hondurans and even European nations that want to deal with the issue of illiteracy. Cuba
had Venezuelan literacy tutors trained in the Yo si Puedo pedagogical method created by the Cuban educator
Leonela Realy. As a result, Cuba helped the Venezuela
government make one and a half million people literate.
The Yo si Puedo programme is found in more than 30
nations, in countries as far apart as Mexico and Australia.
As Joao Pedro Stedile, the legendary leader of MST, the
Brazilian Landless Movement, put it: They have created
preventive, solidarity, and humanitarian medicine which
has sent more than 60,000 doctors to just about all
countries in the world, surpassing all the countries and
international organisations combined. For us they have
sent 14,000 doctors so that 44 million Brazilians could
experience, for the rst time, preventive, quality medical
care.
LEADER AND ICON
But then there is also the issue of laying down ones own
life for the liberation of others. As the British journalist
Richard Gott puts it: Some know of Che Guevaras failed
1965 guerilla mission in the Congo. Few know that in
1963, Cuban troops helped Algeria deect an invasion
threat from Tunisia; or that Cuban doctors served as
battleeld medical personnel in the Vietnam war. In
1973, Fidel dispatched a 1,500-man tank division to ght
alongside Syria against Israel.
In 1975, Cuban soldiers fought U.S.-backed forces
from Zaire and South African armoured divisions to
maintain the integrity of Angola, and later helped bring
about Namibian independence. Cubas successful military engagement against the South African apartheid
regime in the 1987-88 battles of Cuito Cuinavale in
southern Angola helped shape the future of the region.
Just four years later, at his inauguration, Nelson Mandela shook the hands of heads of state but grabbed Fidel in a
bear hug and said in a voice audible to the network
microphones: You made this possible.
The great achievements of the Cuban people, which
include their sacrices, are not reducible to Fidel Castros
own vision. And yet, that vision was at the root of what his
139
comrades and then increasingly larger numbers of his

compatriots began to aspire for themselves, imagining a
better world and then making it possible through their
actions. Fidel Castro, the original leader, also became the
symbol of what others who came after him managed to
achieve collectively.
WORLDWIDE REACTIONS
Worldwide reactions to Fidels death and comments by

leaders of the various countries fully reect the global
alignments of today, the isolation of the U.S. in the
emerging world order, and even the conicting tendencies within U.S. politics. Thus, statements and messages
ensuing from China, Russia and Iran are quite obviously
different in the nuances of the phrasing but almost equally warm in their attitude towards the departed leader.
President Xi Jinping of China, for example, said: Chinese people have lost a close comrade and a sincere
friend.Comrade Castro will live forever. History and
people will remember him. Russian President Vladimir
Putin said: The name of this distinguished statesman is
rightly considered the symbol of an era in modern world
history.Fidel Castro was a sincere and reliable friend of
Russia. On his part, Irans Foreign Minister Javad Zarif
praised Castro as an exemplary gure in the ght against
colonialism and exploitation.and the independenceseeking ght of oppressed nations. Even Greek Prime
Minister Alexis Tsipras was not to be left behind: Goodbye, Comandante. Until the peoples eternal victory.
Words of the highest admiration, solidarity and grief
were of course expected from most Latin American countries and even such far-ung countries as South Africa
and Algeria (which declared eight days of mourning).
Even Canada and France, close U.S. allies, sent messages
of fulsome praise; Justin Trudeau, Canadas liberal
Prime Minister, described Fidel Castro as larger-thanlife leader.legendary revolutionary and orator. Far
more signicant, however, were the contrasting reactions from Barack Obama, the outgoing lame-duck President of the U.S., and Donald Trump, the President-elect
and a Far-Right demagogue. Obamas three-paragraph
statement was the model of diplomatically correct prose,
the conciliatory posture inherent in his resumption of
diplomatic relations between the U.S. and Cuba after half
a century, and the misleading rhetorical nesse so typical
of Obamas mode of expression: During my presidency,
we have worked hard to put the past behind us, pursuing
a future in which the relationship between our two countries is dened not by our differences but by the many
things that we share as neighbours and friendsbonds of
family, culture, commerce, and common humanity.
Friends and neighbours, indeedwith a history of over
600 documented plots devised by U.S. intelligence agencies to assassinate Fidel Castro, the one man they hated
the most!
In sharp contrast to Obamas suave prose designed to
entice Cubas current leadership, Trump was unsurprisingly abusive in his invective: Today, the world marks
the passing of a brutal dictator.Fidel Castros legacy is
FRONTLINE .
DECEMBER 23, 2016
one of ring squads, theft, unimaginable suffering, poverty., etc.

Why such a contrast of attitude and rhetoric between
the outgoing and incoming Presidents of the U.S.? There
has been an enduring rift within the U.S. ruling circlesthe rift between hard power and soft power, so to
speak: the rift between those who still believe in violent
overthrow of the communist government in Cuba and
those who believe that not just fractions of the Cuban
leadership but even large numbers of the Cuban people
can be seduced through the lure of American money and
technology. Obama is now in the twilight days of his
administration and can afford to advocate relative sanity,
defying vast pressure groups in his country. Trump, the
incoming President and a representative of those very
Far Right pressure groups, is understandably more belligerent. How far this belligerence will go, we shall see.
MOST INTRIGUING REACTION
By far the most intriguing reaction, though, came from

President Xi, who went to the extraordinary length of
going personally to the Cuban embassy to sign the Book
of Condolences and write: I believe that under the
strong leadership of Comrade Raul Castro, the Cuban
party, government and people will carry on the will of
Comrade Fidel Castro, turn sorrow into strength and
continue to make new achievements in national construction and the development of socialism.
We know that relations between China and Cuba
have been improving, especially since Fidel Castro
stepped down from all his key posts and Raul, his younger brother and comrade in arms from the beginning,
stepped into his shoes. There has developed a remarkably
positive relationship between the two heads of state. And
we also know that Cuba has embarked upon reforms in
structures of institutional power as well as in the economy that look remarkably similar to what began to happen
in the early days of the Deng reforms in China. In Cuba,
this process in fact began in what has been called the
Special Period, that is, the period immediately following the dissolution of the Soviet Union; a process that
produced a condition in which earnings from tourism
with all the attendant ills, ranging from prostitution to
the black market in currencies and commoditiesnow
exceed earnings from sugar. We have witnessed a much
wider expansion of the market economy and it is difficult
to know how far the opening up will go. We do know that
43 per cent of the national wealth in Chinawith its
system of socialism with Chinese characteristicsis
now owned by the 1 per cent.
Cuban society and economy are in a period of transition. Will China now play the supportive and partially
directive role that the Soviet Union had played in yesteryears, though possibly with quite a different conception
of what socialism really means? It is too early to say.
While Fidel Castro was alive, Cuba under his leadership played a role in the liberation movements around
the world and in global politics that changed the world
for the better. May that unique legacy live forever.
140
C OVER F E A TUR E
Revolutionary legacy
No other Communist leader in the post-Second World War period
had such an internationalist vision as Castro. B Y P R A K A S H K A R A T
FIDEL CASTRO WAS A TOWERING
revolutionary gure of the 20th century. The revolution
he led in the small island of Cuba had an impact over time
which was magnied around the world.
The overthrow of the hated Batista regime led to the
rst socialist revolution in the Western hemisphere. Under Fidels dynamic leadership, Cuba emerged from the
shackles of semi-colonialism and of being a playground
for the maa and the wealthy from the United States. At
the age of 33, Fidel became the leader of the revolutionary government and under his leadership, Cuba
made remarkable strides in creating a socially just society. Castro and his revolutionary government were able to
show what socialism is capable ofabolition of illiteracy,
universal education, a health-care system which compares with the best in the advanced countries, equal
rights for women in all spheres and racial equality in a
country which used to have slave plantation labour.
Cuba had eradicated illiteracy in one year in 1961
through a massive literacy campaign. Since then an educational system was developed which provided free education for all Cuban children from primary to secondary
schooling and in universities. Cuba has also created a

comprehensive health-care system with a network of
primary health centres at the rst level, hospitals at the
second level and specialised institutes at the third level.
Cuba has 6.7 physicians per 1,000 people whereas the
U.S. has 2.4 physicians per 1,000 population.
Cuba developed an extensive public distribution system which delivered cheap food items to the entire population. Cuba became one of the least unequal societies in
the world.
Ninety miles away loomed the U.S., the worlds most
powerful imperialist power. For ve decades, Fidel Castro led Cuba in ghting off various conspiracies to destroy
socialist Cuba. As it was later revealed, the CIA had
organised hundreds of attempts to assassinate him. Fidel
survived 11 U.S. Presidents who tried unsuccessfully to
topple him, starting with the Bay of Pigs invasion in 1961
by President Kennedy. Fidel was the David who challenged the imperialist Goliath and won.
The Cuban revolution became a beacon light for all
revolutionary and progressive movements in Latin
America and inspired the Left advances there. Fidel Cas-
ON E - YE AR - OLD
RAMON ESPINOSA/AP
Eduardo Ribera after

his heart operation at
the William Soler
Childrens Hospital in
Havana on October 7,
2013. Castro and his
revolutionary
government were able
to show what socialism
is capable ofabolition
of illiteracy, universal
education, a healthcare system which
compares with the best
in the advanced
countries, equal rights
for women in all
spheres, and racial
equality.
141
tro along with his close comrade-in-arms Che Guevara

became revolutionary icons for generations of young people. No other Communist leader in the post-Second
World War period had such an internationalist vision as
Fidel. He dispatched the Cuban armed forces to help
Angola and Mozambique ght the depredations of the
counter-revolutionary forces backed by the racist South
African regime.
Little is known in India about the signal contribution
of Fidel and the Cuban revolutionaries to the liberation of
Southern Africa. It was Fidels decision to dispatch Cuban troops to Angola which saved the national liberation
struggle there. In the decisive battle in Cuito Cuinavale in
1988, the Cuban forces defeated the South African army
which had intervened to back the CIA-funded UNITA
forces. This defeat led to the withdrawal of the army of
the South African apartheid regime from Angola. It also
had to withdraw its troops from Namibia, paving the way
for its liberation. Cuito Cuinavale destroyed the myth of
the invincibility of the army of racist South Africa and
hastened the end of the apartheid regime. Nelson Mandela, after the liberation of South Africa, publicly expressed his gratitude to Fidel Castro.
Fidel was a revolutionary who used Marxism creatively. He applied Marxism to the concrete conditions of
an underdeveloped country, drew on its national-cultural resources and pioneered a path to socialism which had
an enormous impact on the Third World.
His was a phenomenal intelligence with an unusual
capacity to absorb and analyse vast amounts of information. Fidel was an extraordinary orator. No other Communist leader could make such powerful and incisive
speeches which could move people to action, to revolutionary heights. His speeches, often ranging up to four
hours, were not just empty rhetoric but lled with political analysis, facts and statistical illustrations which the
people could grasp and understand.
Fidel used to quote Lenin to the effect that it is not
enough to make a revolution, we have to learn to defend
that revolution. For 47 years, Fidel led the defence of the
Cuban revolution against all odds, against an imperialist
power which was bent upon destroying it. The nest hour
in this long defence, for Fidel, was the period from 1991 to
1999the eight yearswhen Cuba was in severe economic difficulties and under siege. The Cuban economy
was crippled after the rupture with the Soviet-led Comecon bloc of countries. It is utilising this difficulty that the
U.S. stepped up the economic warfare against Cuba. The
U.S. Congress adopted laws which aimed to penalise
third countries which had economic and trade ties with
Cuba. Fidel and the Cuban government refused to bow
down to this blackmail. Fidel called upon the people to
make sacrices in order to defend the socialist system. In
this special period, Cuba maintained its universal public distribution system, its free education and health-care
systems, refusing to privatise them or succumb to the
pressure to implant a free-market economy.
Fidel, above all, saw the ght against imperialist
hegemony as a battle of ideas. Describing how the
FRONTLINE .
DECEMBER 23, 2016
Cuban people overcame the imperialist assaults, he said:

However, it was unable to defeat a united people, a
people armed with just ideas, a people endowed with a
great political consciousness because that is most important for us. We have resisted everything and are ready to
continue resisting for as long as need be thanks to the
seeds planted throughout those decades, thanks to the
ideas and the consciousness developed during that time.
INDIA AND FIDEL
In India, Cuba and Fidel have always had a special place

in the hearts of Communists, progressives and democrats. One of the most extensive solidarity campaigns for
Cuba was conducted at a time when the country was in
dire economic difficulties after the collapse of the Soviet
Union. Under the leadership of Harkishan Singh Surjeet,
the then general secretary of the CPI(M), a campaign was
conducted in 1992 to collect wheat to send a shipload to
Cuba. Also collected in this campaign were medicines.
Eventually a ship with 10,000 tonnes of wheat was dispatched in December 1992.
At the function to receive the shipment at the Havana
harbour, in the presence of Surjeet, Castro declared: The
10,105 tonnes of wheat plus medications mean much
more than a symbol, these are 10,105 tonnes of solidarity,
10,105 tonnes of moral support and make us not only
more internationalist, but also more patriotic, more revolutionary and more determined to defend our glorious
cause.
For people of my generation, Fidel was the living
embodiment of revolution. I rst saw him at the World
Youth Festival in Havana in 1978. Twenty thousand
young people had assembled for the international event.
When he appeared unannounced at Lenin Park where
the concluding festivities were being held, there was a
thrill that ran through the assembled participants and a
scramble to shake his hand. Many of those young men
and women, particularly from Latin America, went on to
become leaders and activists of revolutionary movements
and some became government leaders.
Twenty years later, in 1998, I attended a programme
to commemorate the 30th anniversary of Che Guevaras
martyrdom. The speech Fidel made on this occasion at
Santa Clara remains still vivid in my memory. It was a
magisterial survey of the Cuban revolution and the
worldwide struggle against imperialism.
Cuba has survived despite the longest economic
blockade faced by any country in the world. In the face of
unrelenting U.S. hostility, it has maintained its unique
social system and refused to subject itself to the depredations of neoliberal capitalism.
Cuba became the source of inspiration for the Tricontinentalthe people of the three continents of Asia, Africa and Latin Americato strive for national liberation,
sovereignty, social justice and a life free from
exploitation.
This is the revolutionary legacy of Fidel Castro.
Prakash Karat is a Polit Bureau member of the
Communist Party of India (Marxist).
142
C OVER F E A TUR E
A youth icon
ON A MISTY MORNING IN NEW DELHI, THE
versatile artist Vivan Sundaram spoke of 1978 like it was
yesterday. While many have memories of the countrys
rst non-Congress government at the Centre after Independence, Sundaram has more than a couple of reasons
to remember the Summer of 78. Until then, for any
youth festival involving cultural exchange between nations, the ruling party had its favourites. Things changed
with the Janata Party coming to power at the Centre.
Indira Gandhis iron st was gone, and young men from
Communist parties, the Communist Party of India and
the Communist Party of India (Marxist), got tickets to
international fora. Among them was Vivan Sundaram,
arguably as much for his ideology as for his art. In 1978,
when Cuba under President Fidel Castro hosted the
World Youth Festival, Sundaram was part of it. It was an
association that the passage of time has failed to dim.
Recalls Sundaram, My introduction was very brief.
But I clearly recall it was an exceptional world youth
festival. At that time such festivals were organised every
three years, but the one in 1978 was truly remarkable. It
was part of the larger project that the Soviet Union
supported in different parts of the world. At that time, the
Janata Party was in powerMorarji Desai was the Prime
Minister. Normally, the Congress would send its own
youth league members. This time, I was included as a
fellow traveller of the CPI(M). It was an exceptional
experience.
Exceptional in terms of the scale, the warmth and
the generosity of the hosts. And the ability of its leader to
bring on a common platform thousands of delegates
without one person feeling slighted.
Sundaram was clearly thrilled, and maybe even a
little awed, by what he saw. The whole city [Havana]
was taken over by dance and music. There were teachers,
there were artists, theatre practitioners. There were some
25,000 delegates from across the world. In the stadium
where the march-past went on, almost every country of
Africa was present. I discovered Africa with that event. It
was vibrant, it was exceptional. Some of the performances on the streets of Havana went on late into the
evening. We used to have lm screenings, discussions on
world cinema. There was Indian representation, but I
was too excited to remember clearly.
THE HINDU ARCHIVES
Vivan Sundaram recounts his exceptional experience at the

World Youth Festival in Havana in 1978. B Y Z I Y A U S S A L A M
AUG US T 5, 1978: Fidel Castro marching with pioneers

as he arrives to participate in the proclamation of the
Code of Youth at the World Youth Festival.
Were there Hollywood movies too? Ummm. Sundaram deects the question. There was representation
from across the world. From Latin America, France,
Germany, Africa. About Hollywood, I cannot say.
These events in 1978 coincided with Cubas Independence Day celebrations. They start their Independence revelry on the eve of I-Day. The evening before there
was a great sense of participation in the whole affair,
143
AFP/H.O.
H AVA N A , A UG US T 19 7 8 : Castro with his brother Raul

Castro at the World Youth Festival.
informal joy. When the festival got over, Fidel gave his
usual long speech which went on for hours. At its conclusion he said, The rest of the evening you wont forget. He
proved right.
In fact, the celebrations had just begun. We went to
Revolution Park, some 10 km away. It was very attractive.
They had a Ferris wheel, music bands, everything. Every
100 metres or so, there was Cuban rum and paper cups.
People could drink to their hearts content. Fidel himself
arrived in a jeep, waved to the people, the delegates.
There was informal spontaneity.
Interestingly, Castros security was hardly visible.
His protection was hidden. There was not a single person with a gun. There was no image of security.
Memorable though the 1978 World Youth Festival
was, it was not to be Sundaram's lone date with Fidel
Castro's land. His works were exhibited there in the early
1990s when the Lalit Kala Akademi sent them. And in
1997, he went there as part of Havana Biennale. I was
there in the Havana Biennale. It was for the rst time
they invited artists directly, countries were not represented because in the past some of the countries sent the
artists they had invited and also artists whom they wanted to be sent. It was a departure from the past when art
events invited countries only. And the countries chose the
artists. I took my work in a suitcase. I displayed the work
there. It was connected to the SherGil archives. The
Havana Biennale acquired exceptional importance. It
was not like any other celebration of arts. It was so basic,
involved you so much that you felt part of the entire
process. They barely had a hammer or nails. There was
hardly a taxi too. All the artists came with their tools. A
Brazilian artist helped me with my show. The Latin
American countries were well represented. I wont say
they had great understanding of Indian art, but I began
to appreciate their art pretty well. They liked my work
too. The Havana Biennale was for a long time considered
a must to know the art from the rest of the world. There
were artists from Germany and Spain besides Africa and
South America. They were predominantly high-calibre
FRONTLINE .
DECEMBER 23, 2016
artists. I personally got a very good response from fans of

Latin American countries.
It was an appreciation that soon translated into a
durable bond. About a decade after the Havana Biennale,
Sundaram asked these artists to send in their works for
the Mail Art exhibition at Rabindra Bhavan in New
Delhi. The seeds that were sowed in Havana reached
fruition in the sunny climes of New Delhi. Hardly a
surprise that Sundaram, along with SAHMAT, of which
he is among the founding members, could chart a path
like that. After all, from his early days, he was involved in
activism and had initiated the Kasauli Art Centre in the
mid 1970s. The centre had hosted numerous art workshops and theatre productions. Art cutting across international barriers was a familiar course for Sundaram.
The Indian canvas got richer thanks to Sundarams
Havana participation, but how aware was Fidel Castro
himself of Indian arts and cinema?
It is difficult to talk of that but what I can say is that
contrary to some perceptions, he was very effusive in his
hospitality. He always had an informal air about him. He
had a grip over everything. There were critics outside.
Like people who had gone over to Florida, but over there,
it was different. Sitting [at the rally] on May Day, Fidel
often waved to people. Incidentally, I was there in 1997
on May Day. I took part in a procession. There were tens
of thousands of people. Fidel was there too. We walked
for three hours. People were very friendly and receptive
towards him. They were not going through easy times.
They had economic difficulties. I remember I passed
through a chemists shop and I thought I had entered a
19th century chemist. They were preparing medicines
right there. As for Fidel, he organised everything with
great elan. His body language, like that of his people, was
so welcoming. He was effusive, friendly and very interested in different things. He had a nger in every pie.
But did Fidel appreciate high arts? Did he impose any
restrictions on their subjects? Said Sundaram: I cannot
say he appreciated arts, but as an artist one got complete
freedom to do what one wanted. Unless something was
completely anti-Cuban. He did not interfere in any thing.
There was no air of suspicion that hung in the air. It was
very different from where we are now in India. The whole
air is frightening. Back then in Cuba, it was different.
Those people are vibrant, very outgoing and friendly.
Some of our people had to be told not to take their
cordiality amiss.
Could it be that the positive vibes he generated were
partly because Cuba looked at India in the 1970s as a
potentially communist country? Ideologically, the two
countries were on the same page. Well, they were well
informed about India. They knew about the communist
base in Bengal and Kerala. There was a tacit alliance of
sorts at work. One cannot deny that. By the same yardstick, Pakistan, regarded as a U.S. ally, was not represented in either the biennale or the youth festival.
As for Sundaram, the festival of 1978 continues to be
special in 2016. And Fidel Castro? A hands-on leader,
warm and cordial.
144
L ET TE R S
Demonetisation
THE hard-earned money of account

holders is not available to them (Cover
Story, December 9). There is no way out
but to live without cash or make do with
limited cash. The government has made
all citizens cashless poor for some time
to come. Life comes to a standstill without cash. This is big trouble for genuine
taxpayers. The best course is for the government to abolish income tax. The cash
withdrawal limits set are unrealistic and
illogical and are there because there are
not enough new notes; the scheme could
have waited until sufficient quantities of
the required notes were available.
MAHESH KUMAR
NEW DELHI
WHEN India decided to scrap its high

denomination notes, it should have emulated the European Central Bank (ECB)
.Just like India, the European Union is
withdrawing the 500 euro note because
there are concerns it is being used for
illicit activities. In India, the Rs.500 and
Rs.1,000 notes were scrapped hours after the Prime Minister made the announcement.However, the ECB announced
that the production and issuance of 500
euro notes would be stopped by the end
of 2018 and that these notes could be
exchanged for low-value notes for an unlimited period at central banks in Europe. The ECB does not want people to
lose trust in its currency.
India has a long way to go before it can
become cashless; one has to consider
illiteracy, charges for using debit/credit
cards and cheque books, and the risk of
hacking. One cannot go cashless for low-
value transactions.Politics is the reason

behind demonetisation.
strapped for cash, how could a former

Minister indulge in such a splurge?
DEENDAYAL M. LULLA
MUMBAI
J.ANANTHAPADMANABHAN
TIRUCHI, TAMILNADU
IN the war against black money, it is

farmers, the poor and the lower middle
class who have been the major casualties. With 86 per cent of the notes in use
declared illegal and the constant changing of rules on cash withdrawals, sundry
traders and business people lament the
loss of business. The countrys GDP
could fall by up to 2 per cent, says Manmohan Singh. It is baffling how the government is going to dispense wages and
pensionto beneciaries when there are
not enough ATMs and bank branches for
the population. Worse, most people living in rural and semi-urban areas do not
have bank accounts. Before blocking the
use of high denomination notes, the RBI
ought to have been ready with at least
half of the new currency notes needed.
MOST people are convinced that demonetisation has wreaked havoc on Indias
growing economy, especially the rural
economy. The worst hit are poor daily
wagers, small farmers and petty traders.
People are running from pillar to post to
get their hard-earned money back from
the banks. Those in the top echelons of
the RBI, who blindly toed Prime Minister
Modis line, are also responsible for this
chaos. One feels concerned that some
BJP leaders are calling Modi a messiah.
KANGAYAM R. NARASIMHAN
CHENNAI
THE cardinal blunder the government

committed while demonetising high-value currency notes was the introduction of
Rs.2,000 notes, which were not ATM
compatible and which the general public
is treating as untouchables for it is not
able to get change for them. In order to
pacify the opposition parties and wipe the
tears of common people, the government
should allow people use the banned
notes until December 30.If relieved of
tension and the pain of torturous queues
outside banks and ATMs, the entire population will support the governments
drive against black money.The governments talk of long-term benet of the
demonetisation is visionary, but there
should be short-term benets rst.
K.P. RAJAN
MUMBAI
DEMONETISATIONhas literally crippled

the country right from day one. It is clear
that theBJPdispensationtook thisdecisionto deect peoples attention fromits
poor performance record. While the demonetisation is heaping misery on the
common man, one heard the news that
public sector banks wrote off more than
Rs.7,000croreof loans owed predominantly by wilful corporate defaulters. Then
there was the gala wedding in the family
of formerBJPMinisterJanardhanReddy in Bengaluru, the expenses for which
have been estimated at more than
Rs.500crore. When the whole country is
145
N.C. SREEDHARAN
KANNUR, KERALA
INDIAwas in hot water because of the

problems in Jammu and Kashmir. Modi
announced the demonetisation. Immediately, this problem lled newspapers and
social media. Modi thinks that by establishing new currency, Kashmir and the
Kashmiri people have become safe andsound. Demonetisation is equal to the
last straw that broke the camels back.
NABEEL SIDHEEQ A.P.
KOZHIKODE, KERALA
SOME people argue that there should

have been preparation before demonetisation. Even an illiterate man would have
converted his black money to white money if there had been advance notice of
demonetisation. But, banks should have
been prepared. The new Rs.500 note
should have been produced along with
the new Rs.2,000 note. With only Rs.2,000
notes available, people are in need of
change.
KIRANKUMAR N.
CHAMARAJANAGAR, KARNATAKA
THE governments decision to declare

the Rs.500 and Rs.1,000 notes illegal
should be respected as it was taken to
curb corruption and block black money.
However, the government should not
create confusion and panic among the
public. The Supreme Court was right to
warn the government that there would be
severe consequences if the cash crunch
was not resolved soon. The government
should take urgent steps to resolve the
currency crunch.
P. SENTHIL SARAVANA DURAI
MUMBAI
THE Modi governments surgical strike

to wipe out black money is appreciated by
the majority of Indians even though there
are reports of a lot of suffering because
L ET TE R S
of the cash crunch. This is only the beginning of the process to get rid of black
money, and the government still has a
long way to go. There are nasty corporate
companies and individuals who will do
anything to scuttle the process. Well before political hooligans take the upper
hand, it is up to the IT Department and
other regulatory authorities to prove
their worth. This is the chance for Indians
to make their nation better for future
generations.
K.A. SUBRAMANIAN
PALAKKAD, KERALA
THE demonetisation, which has so far

been playing havoc with the economy, is a
bold move. Even though the common
man is facing difficulties, this will only be
temporary and the long-term gains will
be enormous. It will trample the parallel
economy run on black money, help contain ination and help put the economy
back on the track, thereby beneting the
common man. It is distressing that the
Congress, the Left parties and the Trinamool Congress are making a hue and cry
about and opposing a well-thought-out
move of the government that is in the
larger interest of people and the nation.
K.R. SRINIVASAN
SECUNDERABAD, TELANGANA
THE title of the Cover Story made it clear

from the outset that this issue of the
magazine was not going to give a balanced view of the demonetisation. It
failed to acknowledge the common people supporting the move who were willing to stand in queues. Until now, honest
people from the salaried classes had
been considered foolish for not trying to
evade taxes. For the rst time they are
enjoying the fruits of honesty and are
relishing the effect this move will have on
those with unaccounted-for wealth.
RITVIK CHATURVEDI
NEW DELHI
U.S. election
THE article To friends in the U.S. (December 9) rightly warned the citizens of
the U.S. of the impending dangers of a
Donald Trump presidency. It pointed out
the similarities between Indian and
American politics. However, the rise of
right-wing politics is a global phenomenon and not conned to these two nations, and it is no wonder that people
such as Trump and Modi are chosen as
candidates for the highest office in their
respective countries. Both leaders have
only a modicum of respect for democracy
and pluralism. As a result, the attack on
FRONTLINE .
DECEMBER 23, 2016
institutions, the aggressive use of social

media and the attempt to gag the voice of
democracy will be the order of the day.
The article does not end in despair but
with hope. Governments may try to instil
fear in peoples minds, but the extraordinary courage and resilience of the people will restore the ideals on which these
two countries have been built.
P. VIJAYAKUMAR
MADURAI, TAMIL NADU
Equal pay
The article End of wage disparities?
(December 9) was an incisive analysis of
the wage aberrations in the private and
public sector and in government departments . The ongoing exploitation of workers should have been stopped a long time
ago as it is inconsistent with Article 14 of
the Constitution. The Indian wage structure is full of holes, and there are numerous wage boards for different segments
of workers.
The Equal Remuneration Act, 1976,
that states there shall be equal pay for
equal work for both men and women is
practised more in the breach. India being
a labour-intensive economy, wage disparities erode workers' living standards.
The Centre must immediately amend the
Contract Labour (Regulation and Abolition) Act, 1970, in line with the Supreme
Courts landmark judgment upholding
equal pay for equal work. These benets must be transferred to the unorganised sector. The penal provisions for
non-compliance must include the suspension of business processes until the
laws are followed.
B. RAJASEKARAN
BENGALURU
Balochistan
IT was a mistake on the part of the Modi
government to raise the Balochistan issue because Indias locus standi in the
Kashmir issue will look more vulnerable
than the Pakistans hegemony over Balochistan (Balochistan vs Kashmir, December 9). Even if India provides overt
and covert support to Baloch nationalists, there is no guarantee that they will
not take Pakistans side in a critical situation involving India and Pakistan,
which would leave India high and dry.
AYYASSERI RAVEENDRANATH
grave question, Is this a civilised state?

The photograph that appeared on the
opening page of the article was enough
for one to conclude that something
wrong had happened. What shocked people was not the cruel murders of the
eight young men but the statement of the
Chief Minister of Madhya Pradesh that no
inquiry was needed to look into the
deaths. The governments reaction was
undoubtedly a message to the nation that
people the BJP government or the RSS
brand anti-national will be killed.
HAJEE A.H. HATHEEB
NAGORE, TAMIL NADU
ONE has to recall that just nine and half

months ago, a Supreme Court bench said
that a thorough inquiry should be ordered into encounter killings in disturbed areas because [i]t would not be
correct to say that merely because a person was carrying arms in a prohibited
area, he or she becomes an enemy or an
active member of a banned or unlawful
organisation.... Before a person can be
branded as a militant or a terrorist or an
insurgent, there must be the commission or some attempt or semblance of a
violent overt act. But the way agencies of
BJP governments selectively target Adivasis, minorities and others clearly indicates their do-not-care attitude to the
courts verdict.
The Armed Forces Special Powers Act
has been in force since 1958 and is responsible for many fake encounters. The
government must take measures to stop
fake encounters.
BIDYUT KUMAR CHATTERJEE
FARIDABAD, HARYANA
THE Punjab police killed many Sikhs in

fake encounters from 1978 to 1995, but I
found no mention of this in the Cover
Story. Were they not citizens of India and
human beings like the others mentioned
there? Why this discrimination?
BALDEV SINGH
KAPURTHALA, PUNJAB
Literature
I FOUND the translated short story The
saga of Sarosadevi (November 25) very
moving, especially the last paragraph
which showed the pathetic and helpless
condition of Sarosadevis mother.
NARAYANA KRISHNA YAJI
SHIRALI, KARNATAKA
ARANMULA, KERALA
Encounter deaths
THE Cover Story article Rise of the police state(November 25) raised the
146
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VOLUME 33

DECEMBER 10-23, 2016

Narendra Modis surgical

Fidel Castro, who defended

Brakes on the rural economy

Patients, double victims

Where black meets white

Bankless, cashless in rural India

COVER DESIGN: T.S. VIJAYANANDAN; PHOTOGRAPH: ROBERTO SCHMIDT/AFP

DECEMBER 23, 2016 .

DECEMBER 23, 2016

FOR MOST OF NOVEMBER, MILLIONS OF

FRONTLINE . DECEMBER 23, 2016

DECEMBER 23, 2016

society reects a mindset that has only contempt for the

simply impossible that the RBI, which lters talent after

The blundering troika of Modi, his Finance Minister

FRONTLINE . DECEMBER 23, 2016

November, while ICICI Bank had been given Rs.4,500

DAIL Y W A G E R S like Gangamma and Rukmini, seen here

of these banks are obviously enjoying a privileged status

DECEMBER 23, 2016

persons ability to hoard in order to simply tide over

limited only by their imagination. Wealth holders,

The thriving exchange

FRONTLINE . DECEMBER 23, 2016

months of the last amnesty scheme that was touted as a

It became clear by November-end that demonetisation

FI N A N C E M I N I S TE R Arun Jaitley (right) with RBI

signicant portion of the old currency would soon be

Modi, Jaitley and Urjit Patel

DECEMBER 23, 2016

study by Ernst and Young, which

FRONTLINE . DECEMBER 23, 2016

DECEMBER 23, 2016

ment and the Prime Ministers close circles.

According to a senior RSS activist based in Lucknow,

P R I M E M I N I S TE R Narendra Modi addressing the BJPs

FRONTLINE . DECEMBER 23, 2016

civic polls in Maharashtra and Gujarat was also discussed

ister Arun Jaitley, has been asserting that the slowing

Travelling across several districts of Uttar Pradesh, what

A P R O T E S T against demonetisation in the Jan Akrosh

Morcha in Mumbai on November 28.

DECEMBER 23, 2016

OP P O S I T I O N L E A D E RS protesting against demonetisation at Parliament House in New Delhi on November 28.

special schemes and rules, is seen as a manifestation of

of money mentioned in this campaign is in the range of

Indeed, all these ground-level campaigns were built on

FRONTLINE . DECEMBER 23, 2016

IT IS NOT WITHOUT SIGNIFICANCE THAT NONE

E CON OM I C A FFAI R S S E C R E TAR Y Shaktikanta Das

addressing the media on the demonetisation issue in

Article 19(1)(g) of the Constitution guarantees one the

DECEMBER 23, 2016

Article 300A guarantees the right to property. It reads:

The Supreme Court will

FRONTLINE . DECEMBER 23, 2016

DECEMBER 23, 2016

somewhat bizarre promise actually works in terms of

THE G OVE R N M E N TS promise on currency

who operate on the basis of its own legal currency. All

existing notes of Rs.500 and Rs. 1000 value. That would

FRONTLINE . DECEMBER 23, 2016