From wholesalers to daily-wage earners, demonetisation has hurt all Indians who use cash

Standing on the busy pavement opposite Mumbai Central railway station, Sandeep Yadav had his eyes fixed on every taxi stopping by. Whenever he saw a cab piled with luggage, he rushed towards it – along with at least three other hamali workers – almost begging to be chosen as the coolie.

“We are around 10-15 hamali workers living on this pavement, and usually there is enough work for all of us,” said 19-year-old Yadav, who ferries luggage from taxis to local trains for Rs 50 per 60 kg. “I normally earn Rs 400 or 500 a day, but today I’ve barely made Rs 40 in half a day. It has been like this for almost four days.”

Yadav’s daily income has reduced to a trickle ever since the central government’s demonetisation of Rs 500 and Rs 1,000 notes came into effect on November 9. Even though banks have been open for the past three days for citizens to exchange old notes with a face value of Rs 4,000 for new currency, the shortage of notes has severely hit all cash-based businesses in the country.

While daily wage labourers have predictably been hit the hardest, the impact of the sudden demonetisation of 86% of India’s circulated currency has been felt at almost all levels of the supply chain of small businesses.

The food chain

Yadav’s dramatically reduced income, for example, is directly linked to a section of the leather goods industry in Mumbai. Every day, traders selling purses and other leather accessories transport goods from wholesale markets in South Mumbai to their retail stores in the northern suburbs. They are the main clients for load carriers like Yadav, who have no identity cards or bank accounts but survive on the peripheries of the leather goods business.

“Normally each trader needs at least four or five large sacks to be put in the train, but in the last few days, they are also bringing just one or two sacks,” said Yadav.

In the country’s financial capital, leather is just one of the myriad industries struggling without adequate cash in circulation. With consumers saving every Rs 100 note for their basic needs, all non-essential items – from clothes and masalas to auto parts and alcohol – have dropped off their consumption lists.

A small liquor shop in South Mumbai, for instance, has made almost no sales in three days, except to some addicts. “Even they have shifted from their regular branded drinks to cheaper, desi alcohol,” said a salesman from the shop. “We have almost no customers now, and have no idea when things will get back to normal.”

Grocery store owner Ajit Kumar has the same thought on his mind all day, even though the items he sells are much more essential. “People are buying things like rice, dal, wheat and sugar because they have to, but there are no takers for masalas, soaps and other goods,” said Kumar. “We could probably sell more if we accepted the old Rs 500 notes, but even the wholesalers we buy from are not accepting the old notes.”

The dearth of consumers in retail stores in turn affects suppliers higher up in the chain.

Vishal Motwani, an intermediary dealer in spare auto parts, has not done even 10% of his usual business since November 9. “Retailers are not earning themselves, so they find it difficult to buy wholesale from me,” said Motwani. “And wholesalers above me may sometimes accept cheques, but that doesn’t help because honestly, more than 70% of the market runs on cash even at the wholesale level.”

‘We are eating less, even the children’

As businesses flail, some employers are helping their daily-wage labourers get by through stop gap measures. Grocer Ajit Kumar, for instance, plans to pay his four daily-wage delivery boys at the end of the month this time, but for now, he is giving each of them a small amount per day for their meals.

For other labourers earning daily wages, food has become the biggest casualty. “The men of my house are barely getting work these days, so we are all eating less, even the children,” said Archana Shaikh, the teen-aged daughter of a hamali worker in Mumbai.

Down the road from Shaikh, 60-year-old cobbler Navabai Bamne sits on the pavement waiting for customers, while trying to ignore the high fever she developed on Thursday. “Because of the fever I can’t go stand in any long bank line to get money, and my son is too worthless to bother helping me,” said Bamne, a widow. “We buy our ration once a week, but this week we won’t be able to. So I’ve barely eaten in three days trying to conserve the food left at home.”

Elsewhere in the city, coconut vendor Mohammed Aziz couldn’t help noticing the irony of the situation: the poor may be suffering the most, but the moneyed classes were not exempt from food problems either. Aziz’s nariyal pani stall is right opposite a local bank, and for the past three days, a long queue of citizens has been waiting under the sun, staring at his tempting tender coconuts.

“Here I am, waiting for some customers so I can earn my day’s meal, and there they are, unable to quench their thirst because they don’t have small change,” he said.