note demonetisation

Kashmir's frequent internet bans prompt shops to still accept demonetised currency

But a shortage of change has made life difficult for residents and businesses.

On Saturday, street vendors in Srinagar lined up at their usual spots to sell low-cost goods. At one stall on Hari Singh High Street, a buyer who had picked up two jackets for Rs 600 sheepishly asked the vendor if he would accept his old Rs 500 notes. Much to his delight, the stall owner not only accepted the demonetised currency but waived Rs 100 off the purchase as he did not have change.

Prime Minister Narendra Modi’s announcement of the withdrawal of high-denomination currency notes on Tuesday night may have inconvenienced many across the country, but it does not seem to have had such an impact in Kashmir. Many businesses – fruit and vegetable vendors, small and medium shops, and restaurants – are still accepting the old notes.

Cash is the preferred mode of payment in the Valley as most business establishments do not have other options such as point of sale devices for digital payments. For those that do, the frequent internet bans make this option unreliable.

At a departmental store in Srinagar’s Zainakote area, shoppers paid for their purchases with the illegal currency. The owner of the store, who did not want to be identified, said many businesses were still accepting these notes as point of sale terminals remained defunct because of the ban on mobile internet imposed in the last few months as a result of the unrest in the Valley.

“Out POS [terminal] was updated to mobile SIM-based technology and has been useless since the internet was banned,” he said. “We will accept the illegal tender till the new Rs 500 notes are widely in circulation.”

Short on change

But while demonetised notes are still being accepted in the Valley, a shortage of change has prompted people to exchange their old currency. However, the lower denomination notes are in short supply at most banks, which are giving out Rs 2,000 notes in exchange.

This change crunch has impacted many small businesses. At the flea market in Srinagar, jackets went for Rs 300, mufflers and scarves for Rs 50, and low-quality shirts and pants for as low as Rs 10. At one stall, a buyer tried to buy a scarf worth Rs 50 with a Rs 2,000 note, only to be told by the vendor that he did not have change even for Rs 500.

Turned away by the chemist for lack of change, Abdul Samad waited at a bank to get a single Rs 1,000 note exchanged so he could buy his medicines.

In the outskirts of the city, petrol pumps short on Rs 100 notes made customers buy fuel for the full amount of the demonetised notes.

Some stores offered credit to customers to tide over the shortage of change. The departmental store owner in Srinagar said customers “were saving Rs 100 notes” and paying with the demonetised notes, as a result of which there was a shortage of change. “We offer credit to those whose bills are less than Rs 100,” he said.

Umar Bhat, a resident of Pulwama town in South Kashmir, said, “We didn’t face much trouble as we took credit from known shopkeepers.”

He added that with businesses still accepting the old notes and most households in the habit of stocking essentials, leaving only small purchases to be made, the demonetisation move had not been such a big problem in the Valley.

However, Rayees Rehman, a resident of Hadigam village in South Kashmir’s Kulgam district, said shopkeepers were turning away customers if they had to shell out large amounts of change and were only entertaining those making purchases worth Rs 300-Rs 400.

Peer Azhar, a resident of Kupwara in North Kashmir, said shops had suddenly stopped accepting the old notes as they could not provide change.

Mixed response

Kashmir’s response to the demonetisation of Rs 500 and Rs 1,000 notes is mixed. While many claimed to be unaffected because the old notes are still being accepted, others are queueing up at banks to get their money exchanged.

On Thursday, a day after the notes were withdrawn, banks here saw a huge rush of customers. The crowds were missing on Friday, a day that makes people apprehensive of trouble, but an even bigger rush was back on Saturday.

Those waiting in line complained that they already had the four-month-long shutdown to deal with and this was an additional burden.

But there were many who welcomed the government’s move. Mohammad Rafiq, a shopkeeper from Srinagar, said he believed this was a positive step towards eradicating black money. Kulgam resident Rayees Rehman said there was “a positive perception towards Modi following this [demonetisation]”.

“People are welcoming it... they think Modi is actually doing something and there are expectations of good,” he said. “But at the same time, there are uncertainties. People don’t know how long this will take and if they will have to face problems in the near future.”

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