Economic Emergency – Notes From Sargana: Zaheeb Ajmal


Nothing remained normal after November 8. Prime Minister Narendra Modi announced that evening that Rs. 500 and Rs. 1000 currency notes were to be ‘demonetised’ at the stroke of midnight (full announcement here: Not only were the high denomination notes held by people rendered worthless, but stringent limits were imposed on cash withdrawals. People were given time until December 30 to exchange their existing, now worthless, currency notes for newly-minted ones.

As everywhere else in the country, the announcement sent shockwaves across Sargana. People went into a tizzy to exchange their old high-denomination currency notes for new ones. Not only that, the limits on cash withdrawals meant that people began to worry about requisitioning cash for daily usage.

Long queues appeared in front of banks and Any Time Machines (ATMs) as soon as they reopened from November 10 onwards. Sargana was serviced by two ATMs located within the village. Another ATM was operational about three kilometres away, while the next nearest ATMs were located approximately 15 kilometres away in the market town. These ATMs were linked with such nationalised banks as Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank and State Bank of India. On any typical day, it was common for banks and ATMs in Sargana’s vicinity to fall short of the cash requested by customers. As you can imagine, the situation worsened considerably after the financial rationing introduced on November 8.

The cash shortages induced by demonetisation has directly impacted agriculture. I spoke with Bhagat Rishi, who cultivates 20 kathas (0.4 acres) of land. He just harvested his paddy and was preparing to sow the maize crop when the demonetisation bombshell hit him. Bhagat Rishi stood in a queue for two hours to withdraw INR 2000: he then had to choose between purchasing food for his family or buying seeds for sowing. Bhagat needed 4 kgs of corn seeds to sow on his plot, available in the local market for approximately INR 250 per kilo. Purchasing the seeds would leave him with too little cash in hand with which to buy food, whereas purchasing food would mean a delay in sowing, which was not ideal either. Bhagat Rishi found it ironical that he was being prevented from using his own money by the government.

Budhhadev Mehta tells me a similar story. He had yet to harvest his paddy crop when demonetisation was imposed on the country. Buddhadev hired labourers to harvest the crop, but had no cash in hand to pay them with. The labourers refused to work until he could assure them that he would pay them in cash, to withdraw which he had to wait for several days. As a result, the harvest was delayed and a part of the crop was damaged. Buddhadev had to go back and stand in one of the many the serpentine queues that dot Sargana’s landscape these days in order to withdraw cash with which to purchase seeds. All the hours he spent waiting in the queue were hours lost to cultivation, which feeds not only his family but the rest of the country.

Sargana’s market wears a gloomy look. Moinuddin Alam, a vegetable vendor tells me that his daily earnings have halved. Where he would typically earn INR 1000 per day [he earns INR 30,000 per month] prior to the demonetisation drive, he now earns approximately INR 500 per day. Mahendra Yadav, a mason who hires his services locally, says that his customers are simply not able to pay him because they have no cash. He worked for a householder for nine days, but his customer expressed his inability to pay him because he had been unable to withdraw cash: the one thing demonetisation has dome is to make Mahendra a creditor to his own customer! Mahendra’s son also works as a mason. His customer was able to pay him for only 1.5 days of the four days that he worked. The incomes father and son earn from their labours are what supports their family: demonetisation has compelled them to cut down on their already frugal diets.

Many people in Sargana are employed in farms, factories and construction sites outside the village. Some of them are now trickling back in, hit gradually but surely by demonetisation. Migrant workers deposit the monies they earn into their own or their relatives’ bank accounts. Cashiers in many banks insist that people depositing the demonetised currencies bring their passbooks as evidence that they are indeed operators of the account in which the currency is being deposited. However, the itinerant workers do not always carry their passbooks around with them when they travel, preferring to leave these with their spouses or parents at home in the village when they are away. Such workers are now unable to deposit the demonetised currency notes they hold. One such worker is Jabbar who was unable to deposit cash in his father’s account, as a result of which the latter had to borrow from his neighbours. But Jabbar considers himself lucky since his contractor has agreed to provision him with food grains while the situation remains grim. Other workers are not so luck: indeed, their situation is worsened by contractors’ insistence after November 8 of paying workers in high-denomination currency notes.

Kumod Rishi works as a farm labourer in Punjab’s Patiala district. His employer had paid him his wages in high-denomination currency notes when the demonetisation law was announced. No one was willing to accept the cash he held. For a few days, he borrowed from shopkeepers and other grocers, but even they could not be expected to indefinitely lend him food. Eventually, he gave up his work and came back to Sargana. Although a good Samaritan helped him in Patiala station by exchanging a couple of the demonetised notes he held (at no charge, Kumod emphasised), Kumod is shaken by the experience of being cashless in a place where he has few connections.

This is not to say that demonetisation has no takers in Sargana. Indeed, many people do support it, despite the inconvenience it has caused them and people around them. Puneet Srivastav, who runs a welding outlet and owns about 4 acres of land which he cultivates by hiring labour, believes the inconvenience is temporary and should be endured in order to root out corruption. Udyanand Yadav, who operates a tiny unit where he mends bicycles, tells me his business has not been affected at all by the demonetisation and that he hopes the government will be able to achieve its objective. Kirtanand Rishi, a modest agriculturalist who cultivates his land by hiring local farm labour, opines that demonetisation will help the government mop up ill-gotten wealth from the rich and redistribute among the poor. he is willing to withstand the difficulties it entails.

Without doubt, Sargana is witnessing a new normal, where the scarcity of cash is now being accepted as part of life. But the poor have been worst hit and are bearing a disproportionate share of the inconvenience.

Note: With Input from Ankur, Ludhiana.

(This article was written by Zaheeb Ajmal, Research Fellow, Centre for Equity Studies originally in Hindi and adapted by Dr. Indrajit Roy.The study is part of a broader research on labour migration, economic growth and political democracy, funded by the Economic and Social Research Council of the UK. The research is hosted at the University of Oxford. Dr. Indrajit Roy is Principal Investigator.More information about the research on

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