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Demonetisation Through Gender Perspective

In addition to financial fallout, there's a huge human cost to demonetisation that the government is completely overlooking

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The sudden decision of Prime Minister Narendra Modi to invalidate higher denomination notes of Rs 1,000 and Rs 500 comprising 86 per cent of Indian currency in circulation has unleashed a reign of chaos and financial anarchy on 1.25 billion people of India.

The stringent limits on cash withdrawals, long queues outside banks and non-functioning ATMs indicated not only the government's unpreparedness to handle the situation, but perhaps thoughtlessness as to short and long term consequences of the act.

Contrary to the much-hyped argument of the government that demonetisation is for flushing out black money, the reality is that cash component is actually a miniscule part of the total black wealth. Unaccounted cash is turned into other forms of unaccounted wealth by investment into real estate, bullions, foreign currencies, hundis, foreign accounts etc. Currency component is estimated to be just about 6% of the total black wealth. Much of this unaccounted currency will get back into the parallel economy eventually through money-laundering. There are rackets buying old notes at a discount, selling gold and foreign currency illegally. Withdrawing higher denomination currency is not going to make any major impact on the black economy as it doesn't address the genesis of the problem of generation of black money. Without structural changes, institutional and tax policy reforms, it's not possible to hit out at the root causes that generates black wealth and operates as a parallel economy.

There's a huge human cost to demonetisation that the government is completely overlooking. With almost 80 people dead, the severe cash crunch has adversely affected the small and medium business and daily lives of people. Rather than the rich, demonetisation has impacted the poor and the marginalized sections of the society, including majority of women.

Demonetisation amplifies the inherent discrimination against women in Indian society. Majority of women in India do not have easy and equal access to resources, education and paid employment. In terms of financial inclusion, they lag far behind compared to the women in developed nations. If a family has one account, it's usually in the name of the head of the family, which inevitably would be a man. It's the men who control the financial resources within a family. The housewives all across India save surreptitiously from household expenditure that gives her a sense of security and empowerment. Though the government has made a provision for such women by providing income tax relief of deposits upto 2.5 lacs, it is going to be ineffectual in practice as most of the women, especially in rural areas do not have access to banks.

According to UNDP report released in December 2015, 80 per cent of women in India do not have bank accounts. Lack of easy access to banks, especially in the rural areas; and lack of banking literacy, ie, awareness and unfamiliarity with banking procedures will increase dependence on male members of the family that will eventually lead to lack of control on paltry financial resources for a large number of women. Being deprived of household savings is going to severely impact a large number of physically and emotionally abused women. Cash provided a safety net for such women, not just financial but also a sense of emotional security.

Demonetization also majorly hits employment prospects of women in the informal sector that accounts for nearly 45 per cent of India's GDP, but provides almost 80 per cent of employment. Informal sector functions primarily on cash transactions. Most of the women work force is absorbed in the informal sector due to lack of formal education or skill. One of the immediate consequences of cash crunch or economic slowdown is job retrenchment. In such a situation, it's the women who are going to suffer the most. Whether it's employment, health or education, women are going to suffer. In a cash crunch economy resources are prioritized and women are the first to be negatively impacted.

Another section of Indian population facing tremendous hardships due to demonetisation are the third gender, but their travails have largely been ignored. The main source of income for the transgenders is toli-badhai, i.e. getting money from households celebrating functions like weddings and childbirth. As this is not sufficient, many of the transgenders are forced to resort to sex work for survival. Now they would be deprived of that too, due to cash crunch. This applies to regular sex workers as well. However much it might hurt the morality of the society, we cannot just wish away a problem and let them starve to death.

The government might say that demonetisation is good in the long run, but I would like to cite Dr Manmohan Singh, who quoted the famous economist John Keynes in his speech in parliament: "In the long run we are all dead."

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Demonetisation banking rupee women gender equality

Sharmistha Mukherjee

Sharmistha Mukherjee is the Chief Spokesperson and Incharge Communication, Delhi Pradesh Congress Committee

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