There’s no money left

‘Sir, cash nahi hai/ I am sorry Sir. The cash has run out’. The uniformed ATM security guard held up his hand as I made my way to what appeared to be the only cash point in Delhi without a 50-person queue. 13 November 2016 is probably not a good day to arrive in India. A few days ago the Prime Minister, in a move aimed to expose ‘black money’ or unaccounted cash in the economy, announced the demonetization of the two largest bank notes – the Rs 500 and Rs 1000. But these days, when 86% of the nation’s currency has been taken out of circulation, I have little cause for complaint, compared to the millions who depend upon cash for their daily existence. It is not just that petty traders, hawkers, small shop keepers, vegetable and fruit sellers and all manner of people working in India’s vast informal economy rely directly on cash transactions, have no access to bank accounts or card payments. All the way up and down the supply chain, the ban on the 500 and 1000 notes has caused chaos. Fruit and vegetables are rotting in wholesalers as retailers are unable to pay for their regular stock. A whole range of services, normally accessible to the poor often by means of informal payments, is no longer available. Most crucially, medical and hospital care is affected. There have already been two cases of families losing newborn babies to urgent illnesses because they were unable to supply medical staff with anything but obsolete currency. Allegedly, it is still possible to use the old notes for some things. This includes the payment of utility bills and cremation or burial services.


A cashpoint queue in New Delhi

The cash drought is particularly interesting to me for three other reasons that illustrate how large scale political decisions work their way right down through society – how the big affects the small. Firstly, it reflects a distinctive form of authoritarianism in the current Indian government which resembles regimes in other parts of the world. Narendra Modi, a member of the right wing Hindu Nationalist party, the BJP, was elected in 2014 as a new ‘strong man’, who would combine Thatcherite deregulation with, allegedly, a no-nonsense approach to the problems of corruption and a 56 inch chest. It is significant that Modi’s reputation was built up during his tenure as Chief Minister of Gujarat. There, alongside the much feted ‘Gujarat model’ of development which claimed credit for an already existing regional growth rate, he mobilised popular support over time through acquiescence in a mass pogrom of Muslims in 2002. Modi, like Putin, Erdogan, the regimes of Bulgaria, Hungary and Poland, the new leaders of the UK government, and now of course Trump, is a populist demagogue. His politics, like those of other right-wing regimes, depends upon large-scale gestures, which essentially mean rapid structural change: the building of dams that lead to the flooding of land, the mass expulsion of ‘foreigners’, or the banning of currency notes. But crucially, these moves are also made with deliberate disregard for the potential effects and implications of such large-scale changes through all sections of society. It is what social scientists might describe as ‘structural violence’ but with will and purpose.

The second area that cash drought in India illuminates is the problem of ‘corruption’. The banning of the 500 and 1000 notes is, according the Indian government, the honouring of an election pledge:– to do something about the huge sums of unreported income circulating in India. One national publication estimates that around 70% of the gold and jewellery market, over 50% of the consumer goods market and around 30% of the property market is unreported (India Today, 21 November 2016). To some extent then we might take Modi at his word. But people’s trust has been shaken by news of the very large sums of money deposited into accounts by industrial supporters of the BJP, and in some regions like West Bengal, the party itself, through the months of September and October, well before the plan was announced. Perhaps most important is Modi’s interpretation of ‘black money’, which presumably also covers the financing of elections in key states such as Uttar Pradesh (UP). It is surely no coincidence that the UP elections – the most important state of Indian demographically and politically – will take place in February and March 2017. It is also significant that the cash hoarding tendencies of the two main parties opposed to the BJP – viz. the Bahujan Samaj Party and the Samajwadi Party are well known. Large sums of money, for example, are delivered in briefcases for a constituency ‘ticket’ and cash is important for the generation of electoral support. Modi has had some regional electoral reverses over the last year and he now struggles to maintain the BJP position in UP.

This tells us less about the form of corruption, than what the idea of corruption has become. Corruption in India, as in most other states around the world, is always popularly associated with its base. The largest and most significant undeclared assets are either held in foreign bank accounts, or are generated within the promise and supply of contracts and services yet to be redeemed. Perhaps the best international example of it revolves around the Panama Papers, in which not just business interests but political leaders (or their families) have held vast sums in offshore havens. The hub for these financial flows is of course the main financial centres of the world – London, New York, Singapore, and Hong Kong. These flows have little to do with hoarding of currency within a particular state. Similarly most of the really large multi-billion scams in India of the last two decades- those which Modi critiqued during his 2014 election campaign- took place through the manipulation of contracts and development programs, not the hoarding of currency. Yet Modi and all other leaders like him know that the technocratic and internationally recognised definitions of ‘corruption’, revolve around mechanisms such as ‘perception indexes’, that look internally within states, focus on popular experiences of the phenomenon and prescribe measures that adjust the regulatory powers of the state. ‘Corruption’, in other words, becomes a mechanism for structural adjustment and so it is apt that leaders like Modi use it as a means of internal political adjustment.

It is not all that surprising that the abiding image of this demonetisation will be a long queue of ordinary men and women outside a bank- people from all walks of life. Just as this queue is varied and every man or woman has their own reason for being there, the very shortage of cash will have unexpected knock-on effects for everyday life in India. In an article published at the term of the millennium, the anthropologist Jonathan Spencer explored the idea of corruption in India, as a phenomenon that itself created all kinds of perverse behaviours. Similarly it is the very informality of India’s economy that makes the currency drought not only particularly dangerous for certain sections of the population, but also prone to move in surprising directions. A man at a tea stall with whom I struck up a conversation smiled wrily as I mentioned my relatively cashless situation. When I produced a couple of Rs100 notes, he pointed out that if I were to attempt to change foreign currency informally, I might find that Rs100 notes were, in today’s market, worth much more than their face value. In the queues themselves, there are many people acting for others. I saw two young men playing cards on the pavement while they waited, each with a small pile of bank cards to withdraw the limited amounts from multiple accounts. No wonder the queues move slowly and the tempers are often raised. The gossip surrounding the note ban fills every tea stall and bus stop. One friend told me that she was offered four 100 rupee notes for one of the old 500s. We agreed that in the present circumstances that was quite a good deal. Most ironically, once in possession of the new 2000 note, because shopkeepers are so keen to hold on to smaller notes as long as possible, it becomes almost impossible to get change for smaller items. This renders the new large notes more or less worthless. Getting to the cash point and being flush with cash can then be almost as dispiriting as no cash at all. Having spent the best part of an hour to get it in my hands, I tried to buy a 100 rupee writing pad with my crisp new Rs2000 note. ‘I am sorry Sir. There is no way I can give you 19 of my 100 rupee notes’, the stationer shrugged. ‘I’m afraid I don’t have any of the new 500s. I could give you 15 hundreds though if you want?’ I was tempted.


The farmer on the right of his propaganda hoarding for Modi’s demonetisation is saying ‘Mera paisa surakshit hai/My money is secure’.

It is not just the complex and often contradictory ideas of corruption that these days of cash denial illustrate though. In a curious way, the note ban also lays out in a new fashion, how far India’s poor rely on the shadow economy, where the morality of how resources are acquired is less important than the supply of clean water, medical care, an electricity supply or safe housing and work. The anti-corruption crusade then, in this instance, becomes a peculiarly middle class preoccupation. Besides the long queues at ATMs and banks are other clusters of men and women – casual labourers now jobless because of the unavailability of cash. These are people among the approximately 233 million in India who do not have bank accounts. And among the hardest hit are those in remote areas: small agriculturalists unable to pay the necessary short-term labour to cut crops- an already heavily indebted rural community piling on further credit until the cashpoints work again.


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