The Prime Minister might have banned high value currency of Rs. 500 and Rs. 1,000 to catch the black money hoarders, but it is the common man that has been the worst hit. Harsimran Julka, reports from the bazaars of New Delhi

Tomorrow will mark a week since the demonetisation of Rs. 500 and Rs.1, 000 was first announced in a special address by the Prime Minister, but the serpentine lines at the ATMs are yet to die down. What is being termed as a ‘financial tsunami’ in the Indian economy is hitting the masses the most. Take for example, the vegetable vendors, most of whom do not have bank accounts, let alone a Paytm or Freecharge e-wallet. “The vegetables I bought from the wholesale market are still unsold. Either people don’t have change, or they are showing up with notes of Rs. 500 and Rs. 1, 000,” a frustrated vendor tells us. “I have to feed my family and I only have Rs. 3,000 as savings.”

There are similar distressed voices everywhere, piles of vegetables lie unsold, save for one lone man and his diminished stock. He explains that he has been procuring only small amounts for sale because the market situation is dismal. Wholesale markets run solely on cash trading for food commodities and thus have been badly hit. So does transportation.

We came across a milk shop run by National Dairy Development Board (NDDB), Mother Dairy, that had absolutely no stocks left. “The government has allowed Mother Dairy to accept cash of Rs 500 and Rs 1000. Our stock gets sold within 7–10 minutes within arrival each day. This is like Diwali for us,” the proprietor says. “People have been dumping their spare cash in buying dairy products and milk,” he explains. The adjacent Safal mart, which sells vegetables and packaged cereals is also barren. People are dumping cash to buy anything they can grab a hold of here. Mother Dairy does accept Paytm, however only two-four per cent people pay out of e-wallet.

There is an auto part market that is also lying vacant, but people have other things on their mind there. Like the south Delhi real-estate businessman who has just bought a building in the tony market for Rs. 38 crore. “About Rs. 2 crore has already been paid as an advance. A majority of the Rs. 38 crore is lying at his home,” gossips an auto-parts dealer. They have nothing better to do as not a single customer has arrived for hours.

Unable to contain our curiosity, we ask the gossiping men about the authenticity of their claims. “The whole bazaar knows it. The person is now admitted in a hospital because of a cardiac arrest,” they say.

One person also claims that he has about Rs. 19 lakh in cash and is now depositing in the names of distant family members. “Despite that, I am happy with the PM’s decision as everything will become cleaner. I am now going to install a swipe machine and accept only billed transactions,” he says proudly.

The weddings that were scheduled this week have been having problems. The venues, caterers, even the tent house, refused to accept cheques. Since the government has capped daily limits of withdrawals at Rs. 2000 via ATM and Rs. 10.000 by cheques, the families had no choice but to reschedule.

Some have even been reworked. Like that of an acquaintance, where both families had cash, that too only in high value currency, totaling over 20 lakhs. The wedding has now been simplified and will take place in a temple, with no accompanying lunch or dinner reception. People who traveled to India this month, just to get married next month are panicking.

When a friend took his fiancée for gold shopping, he was shocked to see all the major jewellers of Chandini Chowk {Delhi’s trading hub} shut. The jewellers had sold millions of dollars in cash worth of gold after PM Modi’s announcement on November 8th. Some shops were raided by the sales tax departments and it scared others too.

Jewellers were given a warning of not accepting cash and asking for the pan card of customers for gold shopping over Rs 2 lakh. None of them had complied. Some gold shops in the capital were open till 4 am on November 8th and November 9th, and so were electronic shops which saw brisk sales—all in cash.

We tried to check in at the Tata Croma Electronics store. The manager told us that Croma immediately stopped taking any cash for orders, unless it was in lower denomination. “Many customers are arriving with hordes of cash. They want to dump their black money in our store by buying expensive LEDs and speaker systems,” the store owner tells me. “All are being returned,” he clarifies.

There is a small salon owner idling next door and is distressed that business is slow. “People don’t have cash for vegetables, why will they come for a haircut?” he asks. “We are not sad. It’s just a few days of pain to clean the system,” his partner retorts.

One can imagine if these small shop owners and vendors don’t get their business and liquidity back in a few days, life will be tough for them.

The wholesale traders in India’s small cities are a worried lot. “I have people who come from small districts such as Gonda and Basti who rely completely on cash. I am being forced to give them credit due to the long standing relationship,” says a hassled trader.

Despite this, the black market trading of cash has already begun started in small towns across India. “I am enabling my servants to take about two lakh rupees in their bank accounts from my customers who have huge cash. I will take a cut of 10,000 and Rs 10,000 will go to the servant,” says the trader who is now looking at innocuous ways to convert black money to white. A colleague tells me about his distant uncle who has about Rs 60 lakh of cash. “He owns a small paints factory and is distributing it amongst his workers. He will circle it back,” he says.

So is there any immediate positive effect of this financial tsunami?

Retail showrooms, medicine shops and even liquor stores who wanted a minimum transaction of Rs 100 or 200 for a swipe are now accepting even Rs 40 for a swipe. Madhur Deora, CFO, Paytm says downloads have increased drastically. The employee targets will automatically be achieved by December. The company now aims to have 20 lakh merchants on board from the 7 lakh pre-demonetization. Many of Paytm’s new merchants include, vegetable vendors, electricians, ice cream sellers and even some sex workers.

But what are India’s rich doing with their cash?

“We just deposited about Rs 50 lakh in bank yesterday and paid our workers via cheques. The cash was lying with us since the Diwali sale. Modi timed his operation well,” says a Delhi based fashion designer who wishes to remain anonymous. “We will accept whatever penalty the tax department will impose,” she says.

The current penalty right now is at 65 per cent.

Finally, we brave a visit around banks. Obviously there are huge cues, but we observe that the queues outside nationalized banks are longer. While the rich have ready cash or are exchanging Rs 300 for a Rs 500, the poor and middle class are being forced to queue in order to withdraw cash for rations and daily needs. Most don’t use credit or debit cards and are therefore ill equipped to deal with the crisis.

Travellers are hit too.

At home, the cook says her son is stranded in a West Bengal village. He has debit cards, but the ATMs have suddenly run dry and the cash vans are yet to get there. Since her son is not carrying a cheque book, he is simply stranded. “Even the railway counter is refusing a Rs 500 note,” she says.

“How are you managing?”

“I have Rs 4,000, all in notes of Rs 100,” she says, her eyes twinkling in her wrinkled face.

“Can I borrow Rs 100? A short term loan?”
“Not this month,” she laughs.

Check out more of Julka’s work here