Demonetisation a year after


a year after

Life after Demonetisation: Tales from 7 Industrial Towns

Marya ShakilRunjun Sharma & Zeba Warsi | CNNnews18

Published: November 8, 2017

A year on, demonetisation continues to be the fulcrum of socio-political discourse in the country. News18 reporters travel across 7 cities in 3 states — Uttar Pradesh, Punjab and poll-bound Himachal Pradesh — to document the impact a year after Prime Minister Narendra Modi’s historic announcement.

Runjun Sharma and Zeba Warsi meet industrialists, traders, manufactures and workers to understand how demonetisation has changed life and livelihood.

Ludhiana – Last Year’s Wool Stock Remains Unsold

In Punjab, December 2016 was a cold winter. Especially for wool traders of Ludhiana who mostly dealt in hard cash.

Post demonetisation, the wool industry was paralyzed for months — labour shortage and a stalled cash flow forced hundreds of micro and small scale units to temporarily shut shop.

So did Apsley Wool in downtown Ludhiana. “There were no orders, no trade,” recalls Anil Sehgal, the owner. A year on, workers have returned as has the cash, but the factory is plagued with another problem — overproduction.

Last winter’s unsold stock is still lying around. Sehgal complains that demand that was hit after demonetisation, never really picked up. “The purchasing power of consumers has not increased even a year after note ban. The orders are far lesser in comparison to 2015. We have labourers to feed or they will flee back home.” laments Sehgal.

He is one of the many small scale wool businessmen in the city who are finding it difficult to warm up to Goods and Services Tax. Multiple tax slabs and a new 5% and 12% tax on wool has only added to the confusion.

But not everyone is complaining in Ludhiana. Some workers have positive stories to share. 50 years old Mahipal Singh, who has been working in this industry for years, now has a functioning bank account. “Our factory owner may be unhappy because business is slow. But if you talk about labourers like me, we are glad to receive our salaries monthly by cheques. We are able to save some money. Earlier, our daily wages would just disappear in daily expenses,” says Singh.

Moradabad – Brass Business Down By Half

On the National Highway-24, which connects Delhi and Lucknow, the brass city of Moradabad is the biggest industrial town.

In the narrow alleys of the old town’s Katar Shaheed area, every second home belongs to a brass artisan. Locks dangling on many karkhanas, which once used to brim with activity through the day and a better part of night, tell a story of the industry’s steady decline. The last one year has been particularly difficult — both for the artisan and the owners.

85 years old Mobeen Hussain is a national award winning artisan. Defying age, he creates intricate brass decoration with frail hands. But the last one year hasn’t been productive for him. After demonetisation, the demand for his art has crashed drastically.

  • Moradabad brass

    Globally acclaimed as the brass city of India, Moradabad is also known for its skilled labour engaged in the making of modern artistic brass ware, jewellery and brass trophies. (Photo by: IndiaPictures/UIG via Getty Images)

"One moment the President of the country honors us for our skill and then the government forgets you and your craft. Today we can bearly make ends meet," says Hussain.

Once a craft that was handed down generation to generation — a heritage industry that sustained livelihoods of almost 5 lakh families — is now dwindling under the impact of macroeconomic changes.Azam Ansari, a manufacturer and the chairman of Moradabad Brass Karkhanedar Association says, “Rs 20,000 crore business (domestic and international) has seen a 50% fall. If the situation doesn’t improve, the brass city, which has already lost its sheen, may completely die. Many skilled karigars are out of work and pull rickshaws for a living”. Post GST, the cost of raw material has gone up but customers aren’t willing to pay more for the end product, he adds.

Ludhiana – Cycle Component Makers Shut Shops

The first bicycle in India was made in this city in 1920s. And Bhogal Cycles have been pioneers in this business. A giant cycle manufacturer – Bhogal earlier operated by assembling parts which were manufactured by many micro ancillary units. But the workflow has completely changed in the last one year.

Demonetisation killed my business. I don’t understand how this is good for the country if you are killing small trade.

Avtar Singh Bhogal, chairman, Ludhiana Cycle Manufacturer Association, says “Demonetisation led to the slowdown. All those who worked with hard cash started shutting down after November 8 last year. And now, as the system demands organized transactions, more and more micro units are unable to survive.”

Since small manufacturers were struggling, Bhogal decided to not be dependent on them. Today, Bhogal Cycle has automised the entire assembly line. This has led to job losses and many small businesses have become uncompetitive.

“More than 2500 small units have shut down in the last one year — they cannot implement GST. We also cut down on our own labour costs. In a wing where I had 4 men earlier, today one is required,” says Bhogal.

65 years old BR Durga is one of the small scale manufacturers who have shut shop. He chokes while talking about his losses. “I have lost 25kg weight in the last one year. Demonetisation killed my business. I don’t understand how this is good for the country if you are killing small trade,” says Durga.

Jalandhar – Chak De! Moment for Sports Industry

In sharp contrast to Ludhiana’s cycle industry, India’s sports hub Jalandhar is fast adapting to a cashless economy.

All 200 employees in Mukul Varma’s rugby ball manufacturing factory have a bank account. The second generation entrepreneur has gone completely digital post note ban. “All our business transactions are now done through net-banking and e-payments. We don’t have to wait for money to be withdrawn to pay the labour. Workers are getting paid directly in their accounts – they have their own debit cards. Things have become systematic – we can call it cashless,” says Varma.

Workers also seemed happy with the change. Banno, who receives her salary in bank account, says, “People like me could not imagine using debit cards at ATMs.”

Businessmen like Varma saw an opportunity in demonetisation to draw new customers. “We have started selling sports goods directly to end-users through e-commerce websites,” he says.

Things have become systematic – we can call it cashless

Interestingly, even small eating joints in Jalandhar have enthusiastically responded to the digital call. Aarkay Vaishno Dhaba, a popular eating spot in the city, has its own mobile app. “We are proud to follow PM Modi’s vision. Our dhaba is Jalandhar’s very own Digital Dhaba,” says Sunder Singh, manager.

Firozabad – Glass Bangle-Makers Return to Old Means

Glass bangle manufacturers saw months-long slump post demonetisation. Traders say 70% business was lost in the initial months.

A year on, cash is back in Firozabad and so are the workers in factories. Factory owners here say the workers wouldn’t accept payment by cheque. A rupee in hand is better than two in the bank account!

52 years old Madan Ram, a skilled churi karigar works 10 hours a day, melting and moulting glass at 65 degree Celsius. His remuneration at the end of the day is Rs 300. “I don’t have a bank account nor do I know how to write my name. It’s better we get paid in cash’ says Madan.

From bangle factories to the markets – cash is back as the dominant mode of transaction.

At 5pm, in the famous Imam Bara bangle market, silence looms large. Some retailers are sleeping and the others are whining about low turnover this year.

Baddi – Workers Get Employee Benefits

An hour’s drive from Chandigarh is the town of Baddi, the industrial hub of Himachal Pradesh. The state government over the years incentivised investments here by extending tax benefits to manufacturers. All major pharmaceutical companies responded by setting up a base here.

Balwinder Singh, a medium-scale manufacturer of allopathic medicines in Baddi, is concerned more about GST. In fact, he is bitter about GST which has put an end to the tax holiday he enjoyed.

“We were enticed to set up our industry in Baddi only because it was an excite-duty-free zone. But after GST, our tax benefits have been snatched away. We should be compensated,” says Singh.

I don’t understand banking. I have never gone to a bank and I don’t want all that inconvenience.

However, a year after demonetisation, workers are reaping the benefits of an employee provident fund. Some of them now have a medical insurance. Industrialists said they were forced to streamline labour practices. “Our labour now not only gets salary in their accounts but also gets employee benefits. You would think that for someone who earns Rs 6000, he wouldn’t want deductions. But the workers are happy that they are able to save,” says Balwinder Singh.

The younger lot in the labour force is more open and receptive to change. “I like the fact that my money is being saved in provident fund. That can be used in times of crisis. We are also getting medical insurance,” says 24 years old Prakash.

But the older generation is still struggling. 45 years old Sheila Phogat says, “I don’t understand banking. I have never gone to a bank and I don’t want all that inconvenience. I never went to a school and am fine with cash,” she complains.

Varanasi – Saari Industry Losing Its Sheen

In Prime Minister’s own constituency, saari weavers are struggling. Ramzan Ali started weaving saaris at the age of 10. Last season, he says, was the worst he has seen.

The age old batta system – unique to trading Banarasi saari – largely depended on credit. Demonetisation sucked all the cash out of the system, leaving weavers and traders in a lurch.

  • Sari making in Varanasi

    A weaver working in a handloom factory in Varanasi. It is one of the promises of India's Prime Minister, the revival of Handloom Industry and better deals to the weavers in Varanasi.(Photo by Akshay Gupta/Pacific Press/LightRocket via Getty Images)

“After around 8 months, the impact of notebandi started wearing off. But then came GST to make our lives even more difficult,” says Ali.

Businessmen say more than 75,000 weavers are suffering because of the double whammy of demonetisation and GST.

Many handlooms, which were already struggling to survive against powerlooms, have shut down. “Most saaris that you get in Banaras are not woven in power-looms. We anyway were going through difficult periods and the new policy reforms pushed us over the edge,” says Ali.

'People Stood in Queues like Zombies': ATM Guards Recall Demonetisation

Marya ShakilRounak Kumar Gunjan | Rounak_T

Published: November 8, 2017

It was around 8 on a Tuesday evening. There were only two things to look forward to at that time – news from US where votes had been cast to elect the next President and dinner.

His fellow Indians were beginning to call it a day when Prime Minister Narendra Modi suddenly appeared on television screens everywhere and declared that Rs 500 and Rs 1000 currency notes would become “worthless pieces of paper” in less than four hours. Experts gave a name to what that had just struck everyone in India – they called it ‘demonetisation’.

But people had no time for financial nomenclatures. A mad rush to ATMs started that night, one that didn’t end for next several weeks. One section of people saw the frenzy unfold in front of their eyes since that evening. It was the people who manned these cash dispensing machines-turned-fortresses and kept a check on people lined up outside them in endless queues throughout the day - the security guards.

To recall those moments of chaos and to understand how people on the road reacted to cash crunch, News18 took rounds of a few ATMs and conversed with security guards for this first-anniversary special report.

The man who saw it all

Shyam Kumar Singh is having his evening snack while relaxing on a revolving chair. It is a Sunday and the HDFC Bank guard, stationed at an ATM on M.G.Road, Gurgaon has a lot of time on his hands. He offers me a seat on a cemented platform right outside the bank as he recalls all that he saw on and after November 8 last year.

"I remember I was on duty when the announcement was made. There are usually not a lot of people in the evening as the bank closes by 6. I was in-charge of security at the neighbouring Canara bank, one that has an onsite ATM as well. That evening was different," recounts the 60-year-old man while munching on his biscuits. In between he also slips-in the fact that he hails from Gorakhpur “the land of Yogi Adityanath”, with some pride.

“Suddenly there was a swarm of people who had queued-up to withdraw cash. I had no clue why there was such a huge crowd. Later I found out that Rs 500 and Rs 1000 rupee notes had been banned and banks and ATMs were to remain closed the next day. It was not long before the ATM machine ran out of cash that night. I saw people on motorcycles desperately looking for cash. There was chaos,” Singh says.

  • ATM guard

    Rambi, the guard of Central Bank ATM adjacent to Press Club. Recalling demonetisation he says, "journalists helped me manage the crowd."

Singh works for Checkmate Industrial Guards Pvt. Ltd and has been a professional guard since 2005.

“I remember, a couple of days after the announcement, there used to be long queues outside, both the bank and the ATM. Poor and clueless individuals used to come with cash to deposit in the bank where people had no idea how to go about things. Most of them were daily wage labourers who did not have bank accounts. It was tough for them. There was another distinct set of people that I can vividly recall seeing those days.”

Singh talks about domestic helps and office boys. “Their employers used to send them with their cash to be deposited in the bank. These helps received a certain amount of their owner’s money that they would deposit in their own accounts. The commission was mostly Rs 500 for queuing up for hours those people would tell me,” he recollects.

Singh has run out of biscuits as we speak but has a lot many things to say about what he saw and how have things changed in the past year. He continues, “There were the odd arguments among those lined up. But that was bound to happen, considering that almost 60-70 people used to wait from early morning for the bank to open and a similar number would wait outside the ATM,” he says.

I have never felt luckier being an ATM guard. I never had to be in any queue during the entire period. Whenever there was a cash refill, I was the first one who withdrew cash.

The bank guard stationed at one of one of the busiest areas of Gurgaon turns to me and says, “I have been working even before you were born. I have been through the 1975 emergency period. I have also seen those days where we had to be in queue for hours for a kilo of sugar, in front of government stores. Look at us now, everything is normal…Similar was the case with demonetisation. There were problems for a few days and everything is normal now.”

Being an ATM guard during those trying moments was not really a dream job, but it had its own benefits as well. “I have never felt luckier being an ATM guard,” laughs Singh, “I never had to be in any queue during the entire period. Whenever there was a cash refill, I was the first one who withdrew cash.”

Inside the hospital

The next stop was a place that requires money 24*7 and in situations of emergency. The Max Multi Specialty Hospital situated in sector 19, Noida, Uttar Pradesh has an ATM inside its premises, and for this reason perhaps the chaos was far greater here.

Placed right next to the reception, this ATM is manned by the hospital staff, one of who agrees to talk on condition of anonymity. “The fact that this ATM was in a hospital made it imperative for us to somehow make sure that it always had cash. The problem began when apart from people inside the hospital such as care-takers and relatives of patients and our in-house staff, people from outside came in for cash as well. Now you cannot deny them entry especially during this time, can you? We were in constant touch with the third party cash provider to make sure we have a constant supply but again, that was not always possible.”

  • ATM line

    People stand to withdraw currency outside a Punjab National Bank ATM in New Delhi. (Photo by Ramesh Sharma/India Today Group/Getty Images)

He continued, “At that time there weren't as many point of sale (POS) machines for cards. I remember our pharmacy only accepted cash, no card, no Paytm. Therefore there was a greater cause of worry during those times, if the customers did not get cash, how would they buy medicines or how would the treatment continue? Thankfully the announcement was made that we could accept old notes till 11 November,” says the employee.

He went on to talk about a particular day when the cash van did not come. “Our ATM machine was shut for a day because the cash van had not come. It was very chaotic that day. Families of patients had to get cash from ATMs outside and it was understandably tedious for them. There were no fights and arguments at all because I think the people understood that a hospital demands silence. However, those were really scary moments when almost everyone was at their nerves’ ends,” he says.

Amid the flash-lights

My next stop was what is popularly referred to as the heart of New Delhi. Out from the needy quarters of the hospital I went straight to hub of leisure - Connaught Place.

Banwari Lal, a native of Etah in Uttar Pradesh has been working as the guard of Yes Bank ATM in H block, Connaught Place for the last three year. Lal is an employee of Fireball Securitas.

Shouldering a 5-kilo gun while sipping tea, Lal says, “There obviously were problems. I was not on duty that night but resumed charge the next working day. I was surprised to see the number of people coming. All asking the same question repeatedly, cash hai? [does the ATM have cash].”

Lal has a 12-hour-job. He starts at 8 in the morning and transfers charge at 8 pm.

  • NO cash

    Long queues formed outside banks in India since the government's shock decision to withdraw the two largest denomination notes from circulation.(Photo by Sakib Ali/Hindustan Times via Getty Images)

“The main problem was caused by those who had multiple cards. Say a man has two cards, his wife has two and his son has two more. He thus has six cards. Imagine, in a place which has limited cash and a man carries 6 cards, what will those get who have also been waiting in the queue for hours,” says Lal.

“Cash vans were not that frequent those days. Vans used to come every alternate day but because there are quite a few ATMs in this area, problems were few. People used have their morning tea at 7 in the morning and walk down to form a queue in front of the ATM.”

Lal feels that people didn’t show enough compassion for their fellow citizens standing in queues. Everyone was going through a hard time, including guard himself, “I myself had to get my share of cash from the neighbouring ATM.”

When journalists switched roles

Rambi from Madhya Pradesh, who lives in Laxmi Nagar, is enjoying a cool breeze right in front of the Central Bank ATM that he guards. The guard that he mans shares its boundary with the Press Club of India. And being close to the club had its perks.

People used have their morning tea at 7 in the morning and walk down to form a queue in front of the ATM.

“Most of the problems here were averted because of journalists in the club. While I used to be inside the ATM allowing only two cards per person, they used to manage the queue outside and maintain peace. Also, I never faced cash crunch because I used to have lunch in the club itself,” Rambi says smiling.

“I remember once there were two people who had come and were demanding that the gates of the ATM be opened. There was no cash and thus I had pulled the shutters down but they said that they had seen on some internet app that there was cash in this ATM. I pulled up the shutters and asked them to check for themselves and also give me some money if they found anything,” says Rambi laughing at his prank.

Demonetisation produced stories in a measure that probably no other recent event did. Right from fostering digital payments, upscaling cybersecurity and other such macro changes, to affecting day-to-day lives of citizens in unimaginable ways. It has been one year since Prime Minister Modi appeared on the screens, and through these eyewitnesses, we’re still perhaps only scraping the surface of its consequences.

One GST, 5 Slabs: Small Businesses Still Struggling to Make Sense of ‘good and simple tax’

Marya ShakilRunjun Sharma & Zeba Warsi | CNNnews18

Published: November 8, 2017

The idea that was sold as the big tax reform, one that would replace the outdated multiple-tax regime with ‘One Nation, One Tax’, has left more questions than answers for small traders across the country.

As News18 travelled across the country to assess the impact of GST on small and medium businesses, it found cycle manufacturers grappling with multiple GST slabs, met people working in brass industry wondering why yellow-coloured bells were not in the same slab as silver-coloured bells.

The exercise that was started to simplify taxation for India’s industries seems to have tied manufacturers up in knots. So much so, that small-scale businessmen like BR Durga have been pushed to near-bankruptcy. Micro-ancillary units have suffered a massive blow due to their inability to understand GST.

Durga is an owner of one of those micro units that are close to being shut down. He has no orders from larger manufacturers because he cannot afford to hire a chartered accountant to handle GST inclusive bills.

We are unable to grasp what is GST. There is too much confusion.

“We were first hit by demonetisation and before we could recover, the government has imposed this devil-tax on us. We don’t understand government’s intentions. And because of these big changes now we are being forced to spend huge sums, out of our working capital, on hiring CAs,” said Durga.

But some haven’t been able to make sense of this tax reform even after hiring CAs.

“We are unable to grasp what is GST. There is too much confusion. Even our accountants are unable to fully comprehend it. Small manufacturers like me are the worst hit,” says Rajinder Singh Sarhali, a cycle manufacturer in Ludhiana.

The exercise of simplifying the old tax regime has hit small traders the hardest. Take for instance, those in the cycle industry.

Different raw materials that go into manufacturing bicycles have been categorised under different codes. As a result, a manufacturer has to purchase raw materials at different slabs and he sells the finished product at a different GST slab.

  • NO cash

“It would have been far simpler if the government would have categorised one sector under one slab. We have to allocate a lot of our time and resources at calculating our GST on sale and purchase of items under GST,” says Avtar Singh Bhogal, Chairman, Ludhiana Cycle Manufacturer Association.

Just like cycle manufactures, the badminton manufactuers in Jalandhar face a similar difficulty. Their purchase involves multiple slabs of GST and their final product is sold at a different slab. The gap has to be paid to the government every month.

The Badminton string which is made of plastic attracts 18% GST, manufactuer must pay 28% GST to get the racket painted, 18% GST is imposed on badminton frame made of aluminium and finally the complete Badminton Racket is sold at 12% GST at retail shops.

  • NO cash

“We purchase raw materials by paying a higher percentage of GST and we sell at our items in a lower GST slab. This difference is paid to the government. Three months after its introduction there still is no clarity on new taxation among most manufacturers and suppliers,” said Shyam Sundar of JJ Jonax Sports.

Just like their colleagues in Punjab, manufacturers in UP seem equally, if not more, hassled by the new tax regime. According to Azam Ansari, Chairman, Moradabad Karkhanedaar Association, Moradabad’s brass industry is not only facing losses worth crores of rupees but is also losing its world-renowned artisans.

Brass industry has an annual turnover of around Rs 20,000 crore and according to some estimates, business has gone down by as much as 50%, and because of it around 5 lakh artisans working with this industry are feeling the heat of GST.

“The cost of raw material has gone up and the demand for our product has gone down. We only work 2-3 days in a week now,” says Dilshad Hussain, an artisan who resides in Moradabad’s Katarsheed Gali.Manufactures say that customer don’t want to pay the additional GST on products.

Three months after its introduction there still is no clarity on new taxation among most manufacturers and suppliers

And they claim that GST slabs defy logic.

“Why is a small-sized brass pooja bell exempted from GST while a big brass pooja bell comes under 18% GST slab. It becomes difficult to explain this to a customer,” says Munna Ahmad, a worker.

He goes on to add, that what further confuses the customers and manufactures is the fact that a Silver-coloured brass decorative is put under 18% bracket while yellow-coloured brass bell comes under 28% GST slab.

It is this ambiguity of multiple slabs that is confusing the small scale traders.

An Army Veteran Made To Cry in Bank Queue: Meet Nand Lal, A Year After He Became Face of Demonetisation

Marya ShakilRounak Kumar Gunjan | Rounak_T

Published: November 8, 2017

Demonetisation had found its personification last year when the photograph of an old man, breaking down after missing his spot at a bank had gone viral. He had waited in the queue for days to collect his pension.

A year later, the struggles for the man who was once braving bullets in the India-Pakistan war are still the same — hardships intact.

​Nand Lal, the ex-army ‘naik’, earns a monthly pension of Rs 8,000. The widower stays alone in a dingy 10x10 feet room and has a help who looks after him. His daughter resides in Faridabad and visits him once in every six months. She sends him Rs 6,000 every month.

“We have been trying to get him to stay with his daughter but he doesn’t listen,” said the woman who cooks and cleans for Lal.

The 79-year old man pays Rs 2,000 as room-rent. Lal’s landlord hasn’t increased the rent in several years now. “It is only here that he gets to stay, if he looks for a house somewhere else, they won’t keep him,” said Lal’s neighbor who has been staying in the adjacent lane for the last 12 years.

Journalists no longer land up outside Lal’s house, asking him questions, clicking his photographs. “I did not ask anybody to click my photograph. Why did someone photograph me without asking me,” he asked. The anger was palpable.

The man is so irritated at the interference of reporters that he does not mind raising his stick and often shouting: “Everything is fine with me. I have no problems. Stop visiting me.”

Towards the far end of the national capital region, past the last metro station in Gurugram is a place named Bhimnagar — that’s where Lal lives. It wasn’t difficult to find his house. “Fauji na? (the man who was in the army, right?)” is all it took to locate his house.

The match-box of a place where the man puts up at is dark, small and lonely. The surroundings are symbolic of the life this ex-armyman leads. Quiet and unflashy. On having enquired about the man, the neighbours seemed sour about the presence of a media personnel.

Lal’s life was not always this isolated.

The ex-army man owned a place in Bhimnagar, Gurugram where he stayed with his wife. The couple did not have a child and adopted a baby girl. “I made her study and she became an engineer,” he said.

The family later sold their house and moved to Faridabad once their daughter got married. Things went downhill ever since.

  • Nand Lal's house

    Nand Lal's house in Bhimnagar. (Photo: Raunak Kumar Gunjan)

After Lal’s wife passed away, he did not get along well with his extended family and moved back to Bhimnagar, renting the room that he now stays in. But his army training and infused principles have stuck. He refuses to take any help from relatives and goes to a nearby restaurant for dinner on days his help does not show up.

He had to be in queue for three days. He was completely out of cash and I gave him money to take a rickshaw.

— Lal’s neighbour

Circumstances and continuous struggles have made the man not only wary of people around him but life in general. He has ongoing tiffs with his landlord. Lal is also not in good terms with his neighbours.

It was a similar day when he had taken a rickshaw to withdraw money from the nearby bank as he had to pay for his daily chores. “He had to be in queue for three days. He was completely out of cash and I gave him money to take a rickshaw,” said Lal’s neighbour, who is not particularly in good terms with the man but couldn’t see him suffer.

Vehement debates around One Rank One Pension (OROP) have been doing the rounds in the recent past. Lal, however, is not a party to it. Not because he does not need pension, but because he does not own an Aadhaar card. As the Narendra Modi-led government talks about mandating Aadhar for pensions, this man is facing troubles getting an identification proof.

Demonetisation was just another crisis in the life of this 79-year-old. The year following the note-ban has not been any less difficult for Lal, who served the army for two decades. The government claims to have recovered black money and bumped up digital transactions through demonetisation—but for Lal, life poses the same trenches it used to last year.

(More News18 Immersives)