Letter to Modi from rural India: Scrapping Rs 500/1,000 notes is a bad idea

Dear PM Modi,

I am really glad you want to be seen as energetically tackling black money. I am glad that the government wants to do something about it. Your sudden decision making Rs 500 and 1,000 rupees notes illegal - was what your election promises were known to be - "bold", "decisive", "strong", and now may I add, "bigly".

At the time the decision was announced, I was in a villager’s home in Nagaland. The road that leads to this village, Khonoma, is broken, sunk in parts and always being repaired (meaning never repaired successfully). Mountain villages are always open to the vagaries of nature.

Sometimes it is a landslide, sometimes a mudslide that coats everything and hardens overnight, or the only road caving in, and trees blocking the single path that goes up to a village.

Mother nature is always watching, giving, always close, but never controllable. This time, two days ago, she bared her teeth: a cyclone warning came to the Northeastern region. Villages were lashed with rain. An impenetrable, irrevocable chill fell on everyone. Good firewood was soaked; good constructions in progress were halted.

And then, we heard that 500 and 1,000 rupee notes will no longer be legal tender. The villager turned to me, and perhaps like the rest of India, asked what he was going to do. Would his money be worthless? How much trouble would changing currency amount to? What about his little stack of money saved over years?

To me, this is what happened. The villagers hesitated to take Rs 500 notes for meals and accommodation, but relented on the basis of goodwill. The cab driver, to whom I owed about Rs 50,000, was harder to convince and refused to take 1,000 rupee notes.

Let’s juxtapose the urban and the rural here; the villager who will relent on goodwill, and the city girl who has online power only in the metropolis.

In Delhi and other metropolitan cities, we can order grocery online, pay for cabs with apps, tap our feet with marked impatience if 4G is slow, and never even have to go to an ATM for actual bills of money. Some of urban India can actually afford to not know what a bill of money looks like.

For the rest of India, especially our villages, the cash economy is the bulwark of the economy. Villagers buy vegetables and seeds with small notes, construction material with big notes, and so on.

It would be amazing to stand outside a homestay, connect to 3G or any kind of G, make a Paytm transfer to a villager’s account if you’ve bought her basket, stayed in her house, or eaten food from her kitchen.

But here is the thing: not only is there barely any mobile internet coverage in large parts of India, there are very few ATMs. Bank branches exist, but they are not always in close proximity to where people stay. A bank branch means a longer hike down a broken road, a longer ford on a river that can swell any time.

Cash means trust, hope, assurance. A soiled note can mean years of saving up. A new note given by an urban traveller signals the beginning of acceptance of what the villager is providing.

PM Modi, when we talk about black money in terms of huge hoards of cash in pillows and mattresses, I surely hope you don’t mean to tarnish savings of small income groups who can’t go to banks or rely on cash for day-to-day survival.

Getting back to the events of the day. The cab drivers didn’t want to take Rs 1,000 notes. While travelling in heartland India, where debit cards, credit cards and online swipes do not exist, one carries cash. But because carrying more than, say, Rs 1,00,000 is cumbersome and unsafe, one makes a mental map of ATMs that can be used.

In many places in small towns, ATMs run out of cash by 8pm. In my experience in Jharkhand, not only were ATMs out of cash, no one knew when it would be re-stocked.

Here, we were on a mountain, getting back to a capital city, with evidently useless bills of money, and all ATMs shut.

My own vulnerabilities of being a woman traveller aside, this was an impossible situation. Haggling ensued. We asked the drivers to please accept the bills, and to keep the change, because Rs 100 notes were precious for them.

At the airport, there was no question of haggling or trying to pursue sellers to take crisp new notes that had suddenly become old. All over Dimapur Airport hung signs that no coffee shop would take an old note.

But an airport is an urban echo chamber. Even if it may be a couple of miles down from an infrastructurally impoverished village, swipe machines will work. Life, and coffee, is online, and can be updated instantly on Facebook.

Mr Modi, here is my point. It’s great that you want India to be mostly cashless, even if this means some apps and middle men will do better than others. But let’s not forget the importance of cash for rural economies and the urban poor.

For instance, maids and domestic staff, for whom the matter of Rs 2,000 notes coming late in the month means an upset of the entire household. Cash economies are not always black economies.

It is great that you want black money to be weeded out by introducing new notes. The new notes undoubtedly will give sleepless nights and cricks in the neck to the dishonest who do have stacks of black notes in their pillow.

The new notes don’t look too bad, and evidently have new features which are hard to copy. Some WhatsApp warriors will have us believe they have chips encoded in them, and will go so far as to claim that they have fingerprint scanners (why not even front facing cameras!).

But black money is not just about stocks of bills, but flows in black market activities, so please let us not stop this war with the advent of new bills.

Finally, as we race towards the idea of becoming digital, green, skilled, swachh and cashless, let us keep in mind the needs of the poor and disadvantaged who don’t have the infrastructural support needed to go cashless.

The dream of a better India is an important dream, but it should be at the pace the poorest can take in.

With regards from Nagaland,

A city person who lives on her debit card.

Also read: Banning Rs 500/1,000 notes won't help recover black money