Rural areas struggle without cash transactions, weddings in trouble

Much of India's rural economy is powered by cash transactions with few people having bank accounts or operating one even if they have an account.

By: Reuters | Dudko | Updated: November 17, 2016 2:44 pm
demonetisation, demonetisaion news, cash, india cash, cashless economy, india news. atm withdrawal, atm money, atm limit, withdrawal limits People are worried they would not have the cash to cover the large expenses associated with an Indian wedding. (Source: Pixabay)

In the dusty village of Dudko, farmers and villagers are desperate for new currency notes after the Indian government banned 500 and 1,000 rupee notes last week in an effort to flush black money out of the economy. Residents of the sleepy village, 75 kms southwest of the capital Delhi, say they are struggling to pay for basic goods like food and fuel in the absence of an effective banking and exchange system.

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Much of India’s rural economy is powered by cash transactions with few people having bank accounts or operating one even if they have an account. Villagers, mostly women, swarmed around the gates of Dudko’s only bank branch on Friday to exchange old and defunct currency notes for new 2,000 rupee notes or the old 100 rupee notes still in circulation. They began to lose patience after being told the new notes had not arrived.

“If someone’s child falls sick, they are not even going to the doctor because they do not have the money to pay to the doctor, it is a big problem,” Booty Bai, a widow, said as she jostled with other customers to enter the bank. Bank officials said they were only taking deposits of old currency notes and did not have fresh notes to offer.

Sunita, whose daughter is getting married in five days, worried she would not have the cash to cover the large expenses associated with an Indian wedding. “My daughter’s wedding is on the 16th of this month and we are really worried about how to arrange the money for such a big occasion. Bank officials are saying that they will give the money on Monday, how will we make our purchases?” she said.

The currency move, announced last Tuesday by Prime Minister Narendra Modi, aims to bring billions of rupees worth of unaccounted wealth into the mainstream economy and curb corruption. Critics have warned that ordinary people who do not have access to the banking system will be hardest hit, and that Modi risks upsetting his ruling party’s support base of small traders and businessmen who largely deal in cash.

Despite the problems in Dudko, there was strong support for Modi’s move to target black marketers and hoarders. “This is a very good move by the government but our concern is how long will the current problem last?,” said village elder Prahalad Singh.

India’s “black economy,” a term widely used to describe transactions that take place outside formal channels, amounted to around 20 percent of gross domestic product, according to investment firm Ambit. New bills of 500 and 2,000 rupees have been introduced from November 10 but it would take two to three weeks to replace the old notes, Finance Minister Arun Jaitley has said.

Chand Singh, a former village chief, said the shortage of new notes was a small price to pay for the expected longterm benefits to the economy. “This will put a lid on black marketeering,” he said.

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  1. A
    Nov 12, 2016 at 10:57 pm
    . People in queues should give priority to oldage and more needy. Today everybody has a smartphone.... Still they are not thinking smarter way of using other medium of transaction. like open an account on payTm , ... Use their debit cards to pay everything from milk to vegetables. Encourage vendors to open paytm accounts as jio is here ... Smartphone is here.
  2. B
    Nov 12, 2016 at 6:42 pm
    These people should sms their problem to Jaitley ji, he will himself deliver the money at their door steps. They need not worry at all. If they don't inform Jaitley ji how will he know their problem.
  3. D
    Nov 12, 2016 at 1:38 pm
    Government knows the impact. It is inconvenience to common man for next 1-2 weeks but after that...coomn people will praise the Modi government efforts..
  4. R
    Nov 12, 2016 at 7:36 am
    Shortage of notes replacing the demonetised notes is the fear in everybody's mind. All the good will of people on this good scheme will evaporate, if common man can not transact his basic needs. Onus to provide cash for daily needs is on Government and RBI, who were privy to this decision. Action, not, urance is needed.
  5. M
    Nov 12, 2016 at 8:08 am
    Total chaos and for this we will only blame government and RBI. Government knows that ATM immediately can't handle new 500 and 2000 notes then why not printed sufficient 100 notes so people can suffer less.
  6. M
    Nov 12, 2016 at 8:57 am
    Is an Modi mother his wife get theirs Rs 2000 without standing in queues?
  7. M
    Nov 12, 2016 at 8:29 am
    Expense in wedding is a social evil. Encourage people to pay by cheques, court merraige etc. lt;br/gt;Many families have been ruined by these customs. Even before 8th November 2016
  8. V
    Vihari Naidu
    Nov 12, 2016 at 10:48 am
    Did government even calculate the impact on common man. Even Md bin Tughlaq had good intentions but the implementation was an utter disaster.
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