WSS Statement on Demonetization

Wake up Call – There is no light at the end of demonetisation tunnel

Razia of Aligarh died on December 4. On the night of November 20 when she was rushed to the district hospital in a critical condition she told media persons that she took the extreme step after failing to exchange her old 500 rupee notes for days together “out of total helplessness as her four children had not eaten any thing for three days”.

The toll brought about by demonetization has now crossed 100. This includes old people unable to bear the strain of standing in queues, people denied treatment at hospitals, students unable to pay their fees – situations created due to demonetization and lack of available currency.

The sudden withdrawal of 86.4 per cent of the currency value in circulation without any preparedness and efforts to replace it with notes of lower denominations for daily transactions has resulted in unprecedented and continuing collapse of people’s earnings, purchasing power and economic chaos.

With the beginning of a new month, even the salaried middle class has been pushed into a critical position with no cash in hand.

The Hidden Agenda

Black money is generated by the present economic system. When he became Prime Minister, Modi had promised that he would bring back the black money piled in foreign accounts and deposit Rs 15 lakhs in the account of every Indian within a hundred days. Expectedly there is no effort on this front but he went on protecting corporate black money holders and even encouraging them to accumulate wealth by channelling their illegal money as FDI flows into India through the Mauritius route. It is officially recognized that most of the black money generated by the ruling regime is in Swiss banks and other tax havens and is double the size of our national income. Lion’s share of the remaining 20% is held in the form of real estate, land, gold, company shares, etc. by corporate billionaires like Ambani and Adani. While demonetization claims at cleansing the system of black money and corruption, Ministry of Finance has made it clear just about 6 per cent of the country’s unaccounted wealth is in currency notes.

In a stated bid to capture this tip of the iceberg Modi has made common people pay with their life and livelihood.

Contrary to Sanghi propaganda, it is not as if all this tumult is a sacrifice for a bigger cause. The aim of this move is to promote corporate capital. By this masterstroke, except the corporate elite and plastic money holders, all Indians including middle classes, small businessmen, the working class and lower and marginal sections of the peasantry, who need currency notes for their survival are badly hit. Small vendors, shopkeepers and hawkers are all losing business to those with card machines. Small shopkeepers have already downed their shutters and will be joined by intermediate and small capitalists, and that process will only accelerate the appropriations by the corporate class leading to a greater concentration of wealth..

Corporate houses will also gain from lowering of interest rates. In March 2015, India’s 10 most indebted corporate groups were holding Rs 7.3 lakh crores in bank debt. A drop in interest rates by a single percentage point would benefit these companies with Rs 7,300 crores this year alone. While crores of people cannot access their own money, banks and corporates will be utilising it in their own interests.

Banks which had lakhs of crores of none performing assets are now flush with ordinary people’s money. They are restricting withdrawals of ordinary people’s hard earned money and issuing mega loans to the large corporations. Little wonder that corporate criminals are flush with praise of Modi.

Instead of supplying the badly needed small denomination notes, the advance printing of Rs 2000 notes has been to appease corporate billionaires. Modi has also dared to freeze the hard-earned money of the peasants and common people in the cooperative banks, agricultural credit societies, housing societies and so on declaring them as having a high possibility for parking black money. In the process he stopped the flow of cash to agriculture at the start of sowing season. Half hearted attempts to allow seed purchase using old notes were also thought of two weeks down the line. In the first twety days the Banks serviced urban need for cash and supplied a bare Rs 350 per head to rural India.

By the end of November more than 11 out of the 14 lakh crores in old notes have come back into the system with another month to go for depositing old notes and it is clear that those with unaccounted stashes of cash have found ways to force them on their employees and farmers. Robust business continues in old currency notes that are likely to reach the banks before the month ends. Demonetisation has in fact fuelled black income generation. Discovery of new 2000 Rupee notes in almost every raid is a pointer to this. From the threat of charging 200% penalty on tax the Government came down to charging tax at the rate of 50% from defaulters.

That the ruling regime is in an unholy alliance with corporate billionaires and that this draconian move had their sanction is clear given the non-official members of the board of the RBI. They include Sudhir Mankad, who was the ex-chief secretary of Gujarat during 2005-2007 during Modi’s tenure, Natarajan Chandrasekaran, the MD & CEO of Tata Consultancy Services, Bharat Narotam Doshi the chairman of Mahindra & Mahindra and Nachiket Mor, Country Director for Bill and Melinda Gates Foundation. Thus the corporate giants were privy to the entire plan for at least one month before the Board of Governers of RBI met and recommended it though it was sprung as a surprise to people at large.

It has also been revealed that the BJP knew all about this move – and the state units of the party were frenziedly buying up land since some time before November 8. In West Bengal alone, the state party unit deposited Rs 3 crore in 500 and 1000 rupee denominations in the morning of November 8, hours before the PM’s announcement.

The Effect

In a country where 95 % of all transactions are done in cash, the catastrophic outcome of this cash squeeze has been a total devastation of all productive activities including agriculture, small scale industry, construction, retail trade, traditional rural employment and so on. Since 90% of the workforce in India or 440 million workers are engaged in the informal sector – and 96 % of female employment is in this sector – where most transactions are cash based, this move has been disastrous leading to numerous and arbitrary dismissal of workers, job cuts, denial of wages, payment of wages in invalid 500-1000 rupee notes, etc. Bereft of employment daily labourers and informal workers, have also lost their meagre savings. These workers are on the brink of starvation as they buy their rations on a daily or weekly basis.

While banks exchanged old notes for new till November 24, making the trip to a bank involved seeking permission from the employer, and often the loss of day’s wages. In villages, daily-wage workers are out of work or are not being paid on time as sowing is adversely affected. The women are often the last priority for employers, so they are suffering more. This may have a long-term impact on women. After November 24, with the declaration that old notes could only be exchanged at RBI counters, the situation has become even more precarious for working people, especially those living in remote areas where the news of demonetization and its implications had reached much later. There are countless reports of women and men living in conflict zones like Bastar being harassed by authorities who claim that they are trying to exchange not their own hard-earned money but money given to them by ‘insurgents’ and Maoists.

With the demonetization of Rs 500 and Rs 1000 notes, temporary jobs, especially in labour intensive sectors like garments, textile, leather and jewellery, have taken a hit. About 4 lakh people, comprising mostly daily wage workers, have either lost their job or snubbed work temporarily due to lack of payment, and the number is expected to keep going up. A fifth of the almost 32 million people employed in the textile and garment sector (who are paid wages either daily or weekly) have been hit. While some of them have already lost their jobs, many are apprehensive of such a fate. A majority of garment industry workers, especially in hubs like Tirupur, do not have a savings bank account as 70 per cent of them are migrant workers from the north and north eastern parts of the country. Similarly, 20-25 per cent of the roughly 2.5 lakh workers in the leather industry have been adversely affected as they are daily wage workers. The industry has been hit particularly hard as 90 per cent of the units are small and medium enterprises. In the jewellery sector, 15-20 per cent of workers, who are paid daily, too, have been affected. Tens of thousands of workers in the tea and jute industries, who are paid wages in cash are also hit hard by the currency crunch. The fate of 44 million construction workers who earn an honest wage from real estate sector that operates with cash cannot even be imagined. The spiralling effect of all this is not hard to understand.

Especially Women

The women are often the last priority for employers, the last to be hired and the first to be fired, so they are suffering more. This may have a long-term impact on women.

An estimated 80 per cent of women in India are outside the banking system. Across the country, crores of women have long been in the habit of saving little sums of money at home in cash. Women often put aside money without the knowledge of their husbands, building a nest egg for themselves and their children, and a safety net against emergencies. For those who are victims of abuse, it is a much needed safety net. This is no ‘black money’, but money earned through a great deal of hard work and sacrifice. This entire savings of women, a substantial part of which naturally was in 500 and 1000 rupee notes, suddenly became ‘invalid tender’ by the arrogant announcement of the prime minister. It not just left them with a cash crunch and a whole lot of useless notes, but may also have laid bare their secret saving strategies. Thus, the security of women and children and also a source of some self-confidence and self esteem in an oppressively patriarchal society, has been put in peril.

A step, purportedly aimed at combating the menace of black money, gave rise to a new breed of racketeers who leaped at the opportunity to ‘buy’ 500 and 1000 rupee notes off helpless women, people living in far flung villages outside easy reach of banks, tribal populations in remote rural areas, and others, at a steep discount!

As he demonetised the higher value currency Modi played on poor people’s emotions saying that now the rich would spend sleepless nights.

Very soon his tune changed and Modi exhorted Indians to bear the hardship for fifty days. This hardship applied only to common citizens because during this period mining baron Janardhan Reddy celebrated his daughter’s wedding, with a vulgar display of indisputably ill-gotten wealth – it was a Rs 500 crore do – and BJP bigwigs joined in the merrymaking. As the transport business reduces to a trickle, the transport Minister Gadkari transported thousands of guests for his daughter’s wedding by chartered flights. Congress leaders like Adur Prakash are joining the BJP in equal measure in such wedding revelries.

Though the Government claims that Janardan Reddy had no black money, the suicide note of the driver of the KAS officer who was forced to help in converting Rs 100 crore states otherwise.

Modi Government has lost no opportunity to brand people as criminals working for black money hoarders. Threats were issued to investigate Jan Dhan accounts if they showed a deposit of more than 50,000 rupees. Indelible ink was used to mark people who had exchanged a paltry sum of Rs 2000 that would not last most families for even a week by portraying that they were queuing up for their masters.

Only 20 per cent of the population is acquainted with “plastic money” or credit and debit cards, mobile and internet banking or other electronic money transfer facilities. The number of ATMs in the country is far from sufficient and they are distributed in a lop-sided manner biased heavily towards 13 states and metropolitan cities where more than half lie. While Russia has 184 ATMs per lakh population, India has only 18. How are villagers with persisting illiteracy, ignorance of internet, erratic power supply going to use plastic money? It should not be forgotten that the benefits of plastic money will be derived more by finance companies regardless of who pays their charges. When India is far behind the required infrastructure for a cashless economy, withdrawing bulk of the cash in use is nothing short of deliberate penalization of the masses, especially women. In fact the stress on cashless economy is no more than a ploy to cover up the ill managed demonetization.

A dismal future

The promise of a bright future for the have-nots of today has no more meaning than the electoral promises of Modi. The reality will be a spiralling depression because the government simply does not have the capacity to remonetize the system for months to come. Modi’s appeal to spare him for 50 days is just a means of postponing people’s anger. The sleepless nights of black money hoarders are not evident and they continue as before because raids by tax authorities do not just uncover old notes but bundles of new 2000 rupee notes. Lay offs, sleepless nights and endless wait for cash to buy food, medicines and other essentials are the changed reality of the masses.

It is not as if the workforce rendered useless will settle back to a normal life when adequate notes are printed. They will be pauperized and indebted in the coming months.

Those with the agenda to help the corporates have shown little understanding of the interlinkages in the economy. Their plans will also remain pipe dreams. Lack of demand is already manifest in the automobile industry that has curtailed production to half the working days and reduced the number of shifts.

Modi and his coterie are mouthing that there is Indians are supporting his move. The reality is otherwise. He is coercing the dissent by calling dissenters as being pro-black economy. Compliance is being forced – on 9th Decemeber the Institute of Chartered Accountants has issued a notification which says ” members are advised not to share /write any negative personal views by way of an article or interview on any platform regarding demonetisation ” In the past also government officials have warned dissenting voices in this matter.

WSS unequivocally condemns the Modi government’s demonetization drive as a brutal and massive corporate assault on the people which has affected the most vulnerable section of society. We appeal to women and the working people in general to resist this corporate onslaught and expose the true intentions of this far-right, anti-people, anti-women regime. We demand:

1) A white paper by the government on assessment of activities that have come to a standstill and the number of people adversely affected and on its actual plan vis-à-vis bringing the economy on track.

2) Urgent measures to tide over the cash crunch and special measures to alleviate the sufferings of the workers and farmers brought about by demonetisation by way of expeditious implementation of Food Security Act, enhanced allocation for MNREGA and employment guarantee for urban workers.

3) Retrieval of actual bank money from abroad and penalization of offenders.

4) No waiver on tax to make black money white

5) Fulfillment of electoral promise to deposit Rs 15 lakh in every account

6) Stop the call for ‘cashless economy’ and expeditiously print notes of smaller denominations.

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