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BW Businessworld

Case Study: Where Has All The Money Gone?

“In my experience, poor people are the world's greatest entrepreneurs. Every day, they must innovate in order to survive. They remain poor because they do not have the opportunities to turn their creativity into sustainable income” — Muhammad Yunus, Nobel Peace Prize winner and founder Grameen Bank

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Kannagi Vatsyan's head had been spinning and buzzing with the cries of the village folk of Kaydee (KD). Kannagi ran a health centre here which was accessed by people from the neighbouring four villages as well. She also taught at the medical college in the nearby town.

The more she heard their woes, the more it seemed to her it was never going to end. Her sister Anjana who was a gynaecologist and worked on the outskirts of Chennai, compared this to a disease waiting to blow up. “The proneness for a disease exists, actions of the individual are born out of that proneness, then the breakdown begins gradually, the symptoms building up a brick at a time.”

Kannagi shuddered. Anju was describing many things at the same time and she dreaded the coming days. KD was hit by a drought of cash. No doubt the whole nation was writhing with discomfort, “but I can experience only the shoe that I am wearing, no?” she said blandly to Anjana.

The problem with villages was simply their essential financial impoverishment, the ‘proneness to a disease’ as Anjana called it. That meant their agriculture was not adequate, their cottage industries never took off, people felt no great sense of accomplishment or pride in their crop, hence they did not work harder at it, mused Kannagi.

Illias Rajan, the village school master said, “Or there should have been education to show them the way out of agony through wise choices.” Ok, thought Kannagi, so that is ‘actions born out of that proneness’. They did not work harder, now there was also their weak bones and wheezing and there was no health centre worth talking about. Net net, KD was a blur on the map and was lost to progress.

As a result, banks were not present, even if economic activity was going on in these villages. KD’s bank was 15 km away, and 14 villages depended on this bank. The bank allotted one day for each village, to deposit their old currencies and draw smaller denominations. So, on that one day, everyone at KD, queued up at the bank till 5 p.m., abandoning farm and family. The bank, in turn, was overworked, and shut shop by 4 or 5 p.m.

If the people thought they could draw Rs 3,000 per head, they were shocked to find they could draw just 1,000. Then after some days the Bank declared, “We will give you Rs 2,000”, and the village folk merrily (and mindlessly) took home new pretty magenta notes. But the village petti-kadai (petty/ box shops) that sold very basic needs had no change. Nadar, the petti-kadai owner had, at best, Rs 1,200 in change.

Arumugam, the cattle doctor, was in a quandary. In seven days was his granddaughter’s wedding. He had Rs 40,000 cash to spend on the preparations. In the midst of such hectic activity, he had to return the money to the bank, standing in a queue. And having done that, he stared dumbfounded at the bank manager who told him the bank had no 100s to give him. So, he could not draw any cash!

Arumugam stood there, alone in the resounding silence of his mind. The bank manager was king; but he also felt the manager had become unreasonable, and blamed him for the crisis. Arumugam then went and pawned his wife’s jewels. But that also was fraught with problems. The bank would give him only Rs 9,800 against jewels. It would not go to 10,000.

So four people – his wife, his sister, his brother’s wife and daughter split the amount and each one pawned their jewels with the bank and got
Rs 9,800 each.

Arumugam: We know family jewels are for difficult times, but we were not in difficulty at all.... chi, chi, chi.... We have never done all this. And for my child’s wedding to begin on this note...! And where is the time, sir? Six days to our child’s wedding and we are running here and there… so we cancelled four ceremonies… not a good thing, but what to do! And now, our women have no jewels to wear for their own daughter’s wedding!

Kannagi wondered as she saw the landscape changing right before her. One part of her mind said the villagers are to blame — they had endured disregard for far too long. But then, she too had been taken by surprise by the sudden cash crisis.

Kannagi had been driving to the village as usual on the 9th morning when she heard the ‘D’ word. “I didn't even understand the word! I am a doctor and all my life has been devoted to the village — 18 hours a day goes into keeping these people well. I am not even a fancy doctor to have tweets and smartphones or apps. My niece updates me if there is any flood, tsunami or terror attack and only so that I can go and help. Otherwise, we all just work and work only.

“So, when Nadar mentioned something about demonetisation, I thought it had to do with black money. We all don’t have enough white, so all this black and blue money nonsense does not even touch our radar. So I said ok, this is not about us, we don’t have black money. ”

Next morning, as usual, she took an auto to the pick-up point where the college bus came, a little surprised that the auto driver agreed without a whimper. But at college, everyone was complaining that they could not find change. People usually everyone began the day with Rs 400-500, to pay for the bus, the auto, then canteen, then return journey. Since no one went to the bank on a week day, there was even more confusion and cribbing. Usually they drew Rs 2,000 for the week and all was well.

For the first 2-3 days, no one understood what had happened or what was happening; nor its implication in their life. Everyone in KD village and town had sensed it had to do with currency notes, but to each one it read: This is about them, the city folks with lots of money; not about us.

So, it was Day 4 by the time the enormity of the crisis hit them all. And that day was Saturday, the last working day for banks.

Kannagi reflected on how disconnected they were from reality. Living between the village and the town college, she hardly met people who led a real life. But one thought played back in her head: Even when she was cautioned, she had ignored the call. This is what happened.

Two months ago, her mother had been watching some Tamil channel. When Kannagi returned from work, Amma said, “It seems there are no Rs 100 in the banks!”

Kannagi: Eh? Then, where are they?

Amma: I am telling you. This is what they said on news. There are no 100 rupee notes in the bank.

Kannagi: Amma, I have told you several times, don’t believe all that you hear on news. They need to run the channel, they will say all sorts of things.

And Kannagi had pish-poshed her mother's report. Now, she wondered if that was a precursor to coming events…. !

But Amma had nonetheless sent Nandi, the farm help, to the bank to get her change. When Kannagi returned from college, Amma said, “You laughed at me, now see they have given me 50 rupee notes.”

When Kannagi shared the story with her sister, Anjana had been startled.

Anjana: Really! Amma is the limit! You must distract her from watching TV. It creates all kinds of anxieties. Why is Amma thinking of 100 rupee notes?
and the two sisters went back to their work.

Kannagi, of course, did not fail to admonish mother, “Yenna amma, now you are hoarding! We don’t need so much change!” But Amma made a dancing move of her head and put the cash away.

Kannagi never watched TV or read newspapers. She was at her clinic and her lab from 8 a.m. to 8 p.m. and after going home, she sat to do more research, while Amma sat in the next room and watched TV. Kannagi led a quiet life. And it was this same state of oblivion that had played out on 9th November as well. When stray people talked about ‘old Rs 500 notes’,

Kannagi understood ‘old’ to mean soiled and unclean’.

In the town, Anjana’s patient developed a septic on the 9th and she was busy saving the patient. Both sisters lived thus, with the world being rather irrelevant to them. So that, when Amma was telling Nandi, , the farm help, at breakfast, “So, why are they removing the 500-and 1,000-rupee notes?”, Nandi speculated to her that maybe new notes with a new photo was on its way.

All the talk about cash and no cash was building up and Nandi asked for some money to buy sugar for the daily tea for the farm help. He was sitting with Amma peeling garlic for pickling. In her base voice that was gentle and melodious, she said, “Ey, Nandi, why don’t you also keep an ATM card? All your money will be safe!”

Nandi: Enna, amma, I earn Rs 40 per day, you want me to put Rs 6 or 7 in the bank?

Amma: Adey, buddhu.... Rs 6 per day is Rs 180 per month.

Nandi: Amma, holding on to Rs 6 every day is a challenge. It does not stay. The other day, the Nadar kadai fellow took Rs 3 more for dal saying price has gone up. How will I know if that is so? I need that dal so, I pay. Nadar meanwhile is wearing a nice zari veshti I see. Can’t save money, Amma. Some days the dorai next door asks me to bathe his cattle and I get Rs 10.

Amma: But save more money, use the bank… Kannagi will show you how.

Nandi: And what, am I going to build a house like yours, Amma? The vaidyan charges me enough for my broken knees. Don’t tell me to save.

Kannagi (joining them): Nandi, once you go to the bank and deposit Rs 100, you will feel like a king. Just start.

(Then, breaking into English with her mother) No point talking to this fellow. He has no drive, Amma. One bottle on Sundays takes away Rs 15. That is all the reason he counts his coins. Then again, these banks inhibit them. It looks very officious, very aloof, as if only the educated have a right. But I have told him any number of times to set aside some money every week.

Nandi: You are talking about me, Kannamma, I can understand. (laughing)... that bank is not easy, Amma. Who do I speak to? And he says write here write there.... I can't write! Yenna pannatum? Seri, I will put my thumb mark wherever he says, but to go 15 km to the bank costs me Rs 30 by cart. Money goes as well as time. Leave it, Amma, useless all this.

Kannagi: One correspondent used to come, no? He would come to your door and collect your savings… why did you not take up that?

Nandi: Ayyo, no Amma! He eyes my money and first question he will ask is: ‘Why don’t you repay the loan with this savings?’ Yes, yes, that loan I took for the shed.

The truth was, the village folk at KD were resigned to their state. On the Day 4 of the demonetisation, all reserves of one rupee, two rupee coins were coming to an end. Every piggy bank was broken and cash retrieved. Women who hid tiny bundles of rolled up Rs 10 notes, under mattresses and inside rice tins, had to pull them out. It was a bigger loss for them because this nest egg, which was their very own, built over months of savings and thrift, now fell into the common pool of coins and cash and before you could say ‘demonetisation’, it went to buying this or paying for that.

Two days later, Kannagi was upset to see the amount of absenteeism at the little hospital she ran. Sadashivan explained to Kannagi, “Doctoramma, tomorrow cash is coming to our bank, I need to go by 7 a.m. and stand in the queue. The queue can be one mile long maybe, because after tomorrow, next, our turn for cash will come only after 15 days.”

Kannagi was beginning to see how many deficiencies her people struggled with. There were 14 villages that depended on the one bank there was in the next town. Each village’s turn for cash came every two weeks. This meant KD would need to manage with what it got, for 15 days. (How she wished they had an ATM!) As it is, people came to work after drinking rice gruel, but nobody was complaining to Amma either. The farm help looked impoverished anyway and nothing special differentiated their looks when they had eaten well.

Kannagi knew they would not complain. “Amma, these people are used to suffering. That is what we are cashing in on. Like Nandi, can you and I eat rice kanji and work on the farm? We cannot. And Nandi also knows, that when he goes home in the evening, he will drink one more ollock of rice gruel and go to sleep.”

Kannagi sent Nandi to the petti shop to buy flour and sugar. Nadar shook his head and waved empty hands to Nandi. “I am unable to buy without paisa. Enna pannaradu?’

The tiny village of KD was empty. Amma got angry with all this ‘modern-day pish-posh’ as she called it. “No food in their bellies means no crops can be grown. This is not a game! Send Nandi to the city and buy against credit. Let us make pongal everyday!

Kannagi had to take a patient to the city hospital for a scan. She sent Nandi to her bank in main city with a ‘self’ cheque and carried on to the hospital. The bill came to Rs 8,200. Kannagi presented 16 notes of Rs 500 but the hospital declined, even though hospitals were told to accept old notes. Frustrated and angry, she did what people do naturally: she looked at the lady standing behind her and said, “This is ridiculous! Who can I call and complain?”

Lady: Useless rhetoric, ma! I am also a doctor. I took a patient to Stone Hospital to administer an injection. It was crucial, a scheduled injection which he has to take at fixed times, …. But they refused to take old cash.

Kannagi: This is dereliction of duty! How can they do this!

Lady: I had gone to Stone Hospital after calling up and checking that they will accept old notes. But the billing lady said, “The doctor will take fees in old notes but the pharmacy will not. You please swipe your card. “ It was the Trust money I was using to pay for the treatment of this patient, how can I use my card? And if tomorrow my tax man does a tandav, then who will bail me out?

Kannagi: They are lying. I think they all have black money, which they are trying to launder putting the lives of the uncomplaining poor to risk. Rascals, I will drag their name to mud!

Then, swiping her card to pay for the scan she told the billing clerk, “Shame on you, amma, for being a willing party to this lies. This patient here could have been your mother!

Billing clerk: What can I do, ma? I have to do what I am told.

Kannagi: Are you a buffalo? You don’t reason out, match rule with action? Is this the way? Why do this job if you won’t reason? You may as well go steal from my house!

Nandi had returned after his bank encounter and found a fuming Kannagi. “Leave it, amma, come let us go!”

Nandi had come back with eight notes of the magenta 2,000 and the rest were 100s. He said, “Ava sollita (they declared), no money. But amma, there was another posh manager-type customer, who encashed Rs 50,000 and got so many 100s. How is that?”

It transpired that preferred customers were getting money out of turn and without limit. And Nandi did not approve of that. He said, “Kannamma, why can’t they find the black money? They say a rich business fellow spent Rs 500 crore on his wedding and, here, we are all drinking rice gruel… That poor Nadar, he is not able to buy or sell…. Everybody with card is going to Big Bazar in the town …. again, rich men are eating; poor Nadar also will eat rice gruel.

Kannagi called Anjana. “I am angry, Anju! Daily I see 20 patients from all neighbouring villages. I am supposed to accept Rs 500s but I have to give change of Rs 300 because my consulting fees is Rs 200. How many patients can I return Rs 300 to? And from where? I don’t keep a card machine because nobody keeps money in the bank here. So, I have not been charging at all.

Anjana: Tell them to come next week...?

Kannagi: This is that ‘next week’! Last week, I told them the problem will sort out in a week, you come next week. Can I leave a patient with swollen gums to wait? Three patients sweetly told me they had RuPay cards but it was not helping as the ATMs were dry! I asked Shankari, the school master’s wife, to pay by cheque, but she has no bank account!

Technically Shankari is not poor, but she lives in the next village which too has no bank. Last year, I canvassed so much for the villagers to open the JDY account, but I can’t spend all my time doing that. The thing is, they have no faith in keeping money in the bank, they can’t read English, they don’t trust even the banking correspondents. What to tell you. That Thangamma went and pledged her gold with some bank, has come back with a loan that has been valued at far less than the 24-carat gold she has pledged and has no clue what is written on the ‘paper’ the bank gave her, as it is in English, nor has she asked them questions. This is the problem Anju, it is a vicious cycle!

Then, there is Yamini Selvan – 48 hours before the demonetisation, she took a Rs 2-lakh loan against her land for building a structure. After the announcement, that loan was rubble in her hands because she got them in 500- and 1,000-rupee notes. Then, she stood in a mile-long queue and returned the cash only to be told, the bank has no cash to give her. See the irony. It is her loan, but she cannot access it, but because it has been granted, the interest has begun to accrue! And the bank says she can get only Rs 9,000!

What will become of these people, Anju, I am not able to concentrate on work!

Anjana: Akka, they should all open a bank account…

Kannagi: For what? What they earn is so little, what will they put in the bank? They squirrel away a few hundreds and tie it to the end of a sari and hide it in their almirahs. They won’t open a bank account to save that! I know 18 families opened a JDY account and have a RuPay card. They don’t even know which end of the card to insert, they can’t remember their code, some don’t know the purpose of the card. Some feel their money is with the government!

Anjana remembered Roona, who worked in her house. Anwar, Roona’s husband, drove an auto and in the past 10 days, his earnings had dropped. Earlier Anwar earned Rs 1,500 per day, paid his maalik Rs 500 a day for rent and something else as EMI for some TV or mobile phone he had bought. And yet, saved Rs 500. She had told Anwar to open a bank account, but he never did that, squandering his money away. “Now, daily he earns Rs 200 at best!” said Roona. “My brother bought his auto on bank loan. The debt collectors have been hounding him. We get scared. They are all rough people, goondas. But Allah will provide, we all pray together everyday. That is our hope.”

Anjana could see that Kannagi was right. The poor dealt with the discomfort easily because they were used to hardship.

But Roona had opened an account at the Bank and every month, she had been squirreling away Rs 500. Only she had never entered the Bank! Anjana said to her, “Just ask for help. They are all good people, nobody will dupe you. Go!” And

Anjana stood in the line for four hours and drew Rs 1,000. She was so delighted that it worked! She called Anjana and laughed for a very long time in delight. But that had been the third day after the cash crisis. Today you could stand in the queue all you wanted, but there was no cash.

Here, Kannagi took Anjana’s counsel seriously and tracked down Nachiket Arya of Sahas on Google. She wanted to discuss ways of raising the financial agility of the KD folks. Anju was right, this proneness to suffering was the root cause. She needed to change their approach to savings.

When she reached home, Nandi was leaving for the day. “Village is facing a famine,” he said to her morbidly. “Nadar’s shop is empty. He is not getting credit!”

Kannagi: You people have been too laid back. Why don’t you go fight with the bank, raise dust? Anyway, now eat and go. What will you eat at home?!

Nandi (brightening up): Ragi Kanji, Amma! Best-uh!

To be continued

Click here to read analysis: Madan Sabnavis | Mohit Charnalia | Gopal Naik