note demonetisation

How four families have survived two weeks of demonetisation

There has been a dip in both incomes and spending.

Single mother: No medicines in Mumbai

On the night that demonetisation was announced, Shabana Sayyed’s daughter had fallen ill. A single mother with two other children to care for, Sayyed checked her wallet to see if she could afford medicines for her girl’s headache and fever.

“All I had was Rs 300 in useable currency,” said Sayyed, 35, a domestic worker from a dense slum near Bandra railway station in Mumbai. “The rest was Rs 6,000 in Rs 500 and Rs 1,000 notes, and no one gave me change for it.”

Sayyed puts in a 12-hour day working in six different homes, earning Rs 20,000 a month. Her cramped 80 sq ft room in the slum costs Rs 5,000 a month in rent, and with daily household expenses of Rs 400-Rs 500, savings are rare.

Shabana Sayyed's home. Photo credit: Aarefa Johari.
Shabana Sayyed's home. Photo credit: Aarefa Johari.

With demonetisation, Sayyed’s family has been forced to cut costs across the board to make sure their limited cash resources don’t get exhausted faster than the banks can exchange money.

“Last week it took me four hours of waiting in line to get my old notes exchanged,” said Sayyed. “And because no one had change for a Rs 2,000 note, I had to buy ration on credit for six whole days.”

Vegetables and foodgrains, says Sayyed, have grown more expensive in the past 10 days, because of the impact of demonetisation on wholesalers and retailers. “It is hard enough to buy bhaji and dal, so we have been forced to give up our regular meat,” she said.

While younger mothers in her slum were struggling to buy milk for their children, Sayyed had to walk to work – more than 3 km one way – because she didn’t want to waste precious cash on autorickshaws. “Still, I haven’t been able to get medicines for my daughter.”

How it adds up

  • Income before demonetisation: Rs 20,000.
  • Income now: Her next monthly salary is due in the first week of December.
  • Cash exchanged: Rs 6,000 in three trips to the bank.
  • Cash deposited: None. Does not have a bank account.
  • Expenditure before demonetisation: Rs 6,000 monthly rent, Rs 400-Rs 500 daily .expenses
  • Expenditure now: Cutting back on essentials. Made Rs 300 last for the first three days.

Hairstylist in Patna: Living precariously

Prime Minister Narendra Modi’s decision to do away with Rs 500 and Rs 1,000 notes has not been good for Guddu Sharma’s family. Sharma, 24, lives with his wife and two sons near Patna’s Boring Road, and runs a men’s salon about 30 minutes away. Since the prime minister’s announcement, he said, earnings have fallen. His salon, which charges Rs 40 for a haircut, used to make anywhere between Rs 1,000 to Rs 1,200 on the weekend. But now, he said, that has fallen to Rs 500. Regular customers – the ones who used to show up every week – have stayed away. If they do drop by, they are asking if they can pay later.

Looking at where he lived, it seemed that the salon generated just enough to support Sharma and his family. While Boring Road is one of the principal commercial streets in Patna, his home is located down a narrow lane that points north, up towards the Ganges.

Guddu Sharma, near his home in Patna.
Guddu Sharma, near his home in Patna.

How is he coping with this liquidity crunch? Not by going cashless. In part because he doesn’t have a bank account. “I tried to open one but they wanted too many proofs of identity,” Sharma said. “I have applied for a Aadhaar card and will try again later.” Instead, his family is cutting back on expenditure. “We did not buy new stock for the salon. And we did not pay our house rent this month.”

Such deferred expenses, he said, have reduced his monthly expenditure by Rs 12,000. Even with that, he has had to make other cuts – even on essentials like food. “We are buying less,” Sharma said. “If we earlier bought vegetables for Rs 40, we are now spending only Rs 20. We used to buy a bora [sack] of rice at a time. But, right now, we are buying 3 kilos, 4 kilos at a time. That works out more costly as well.”

It is a tenuous time. Even as incomes fall, food prices are starting to rise. Between November 8 – when Modi made his announcement – and now, says Aruna Devi, who lives in the hut to the right, the price of wheat has climbed from Rs 22 to Rs 28 a kilo.

How it adds up

  • Income before demonetisation: Rs 1,200 per weekend.
  • Income now: Rs 500 over the last weekend.
  • Cash exchanged: None. Had spent all savings during the festival of Chhath.
  • Cash deposited: None. Does not have a bank account.
  • Expenditure before demonetisation: Rs 12,000 on house rent and salon provisions.  
  • Expenditure now: Deferred both rent and provisions. Cutting back on essentials.  

Farmer in Tamil Nadu: Wilting crops

After ten days of daily visits to the cooperative bank, R Vedagiri was finally able to return home with some money in hand last week. But the single Rs 2,000 note was not adequate for this farmer from Royalpattu village, 40 km from Chennai.

It has been three weeks since Vedagiri’s single acre of land had been tilled and paddy seedlings had been sown. But he still has to receive more than Rs 15,000 from the cooperative ban, of the Rs 20,000 to which he is entitled every ten months.

“The cooperative bank cannot lend us money now, so for the whole of last week, our crop has been standing without pesticides,” said Vedagiri. Several times last week, Vedagiri and the other farmers of Royalpattu were turned away by bank employees. New currency notes have been slow to reach most rural cooperative banks across India.

While sowing the crop, Vedagiri had employed 20 labourers. But he has been unable to pay any of them since he had not still received the rest of the money from the cooperative society. “I feel so ashamed passing by them each time,” said Vedagiri. “Every time they ask me for their money, I have to give them the same excuse. They too need money to eat.”

Most times, after the crop is harvested, Vedagiri makes a profit of Rs. 20,000. To make ends meet, he also works on one of neighbour’s field once in a while, earning Rs 200 a day. But with little money coming from the cooperative bank, Vedagiri does not know how he will get through this cropping season without incurring a loss. “Neither the cooperative society nor moneylenders are taking our jewellery and giving us loans,” he said. “Also, it has hardly been raining this season. I am worried that our crops will soon start turning yellow.”

With hardly any savings in the bank, and with a weekly expenditure of Rs 2,000, Vedagiri is worried. “My only consolation is that my daughter is studying engineering for free, being the first graduate of our family,” he said.

How it adds up

  • Income before demonetisation: Rs. 2,000-Rs 3,000 a week, Rs 20,000 after harvest.
  • Income now: Rs 2,000.
  • Cash exchanged: None. Restrictions on exchange of notes at rural co-operative banks.
  • Cash deposited : None.
  • Expenditure before demonetisation: Rs 2,000 a week.
  • Expenditure after demonetisation: Rs 1,500.

Shopkeeper in Delhi: Drop in sales

On Sunday afternoon, 75-year-old Lal Chand Jain settled into a chair at his garment shop in Old Delhi’s Chandni Chowk. Heaving a sigh of relief, he said, “Finally, things have settled down.”

The Jains, who hail from Dehradun in Uttarakhand, have been in the garment trade for three generations. The shop is managed by the septuagenarian and his two sons Manoj and Yogesh.

“We accepted old notes for a good few days even after the announcement but now we have stopped that,” said Jain. Once they stopped taking old notes, they had to turn away a lot of customers who came with Rs 500 and Rs 1,000 notes.

“The cash in the drawer soon dropped down to zero,” he said. “In a few days, we landed in a situation in which we also had to refuse customers who came with the new Rs 2000 notes as we had no change. Sales dropped severely.”

But the cash situation has since eased up. Fishing out a healthy bundle of Rs 100 notes from the drawer to give change to a customer, Jain said, “For once, we all were scared as the announcement was made days after the winter wear collection had arrived. However, the problem was temporary.”

He added: “It is a very good step that the government has taken. Those who sleep with black money stashed within their mattresses will have a hard time.”

Asked about the family’s expenses, Jain pointed towards his son Manoj who was caught up in an argument with a customer who wanted to buy four sweaters but only in exchange for old denominations. Manoj finally gave up.

“For home, we procured everything on credit, from vegetables to milk and grocery,” said Manoj. “It was not a problem for us, or any of the Old Delhi-based business families I assume, as most of them are known to the traders and vendors. We are settled here for over 70 years now.”

Asked if they had to cut down on anything on their shopping list, Jain said that the family leads a simple life and only spends their money on essentials. His list of essentials, however, includes fruit and milk, which he considers necessary for a healthy diet. “I do not remember any instance except for my grandchildren complaining once or twice about having to cut down on their expenses on fast food,” Jain said.

Jain did not want to give numbers for either his income or expenditure.

Reported by Aarefa Johari in Mumbai, M Rajshekhar in Patna, Vinita Govindarajan in Royalpattu village in Tamil Nadu, and Abhishek Dey in Delhi.

We welcome your comments at letters@scroll.in.
Sponsored Content BY 

Behind the garb of wealth and success, white collar criminals are hiding in plain sight

Understanding the forces that motivate leaders to become fraudsters.

Most con artists are very easy to like; the ones that belong to the corporate society, even more so. The Jordan Belforts of the world are confident, sharp and can smooth-talk their way into convincing people to bend at their will. For years, Harshad Mehta, a practiced con-artist, employed all-of-the-above to earn the sobriquet “big bull” on Dalaal Street. In 1992, the stockbroker used the pump and dump technique, explained later, to falsely inflate the Sensex from 1,194 points to 4,467. It was only after the scam that journalist Sucheta Dalal, acting on a tip-off, broke the story exposing how he fraudulently dipped into the banking system to finance a boom that manipulated the stock market.

Play

In her book ‘The confidence game’, Maria Konnikova observes that con artists are expert storytellers - “When a story is plausible, we often assume it’s true.” Harshad Mehta’s story was an endearing rags-to-riches tale in which an insurance agent turned stockbroker flourished based on his skill and knowledge of the market. For years, he gave hope to marketmen that they too could one day live in a 15,000 sq.ft. posh apartment with a swimming pool in upmarket Worli.

One such marketman was Ketan Parekh who took over Dalaal Street after the arrest of Harshad Mehta. Ketan Parekh kept a low profile and broke character only to celebrate milestones such as reaching Rs. 100 crore in net worth, for which he threw a lavish bash with a star-studded guest-list to show off his wealth and connections. Ketan Parekh, a trainee in Harshad Mehta’s company, used the same infamous pump-and-dump scheme to make his riches. In that, he first used false bank documents to buy high stakes in shares that would inflate the stock prices of certain companies. The rise in stock prices lured in other institutional investors, further increasing the price of the stock. Once the price was high, Ketan dumped these stocks making huge profits and causing the stock market to take a tumble since it was propped up on misleading share prices. Ketan Parekh was later implicated in the 2001 securities scam and is serving a 14-years SEBI ban. The tactics employed by Harshad Mehta and Ketan Parekh were similar, in that they found a loophole in the system and took advantage of it to accumulate an obscene amount of wealth.

Play

Call it greed, addiction or smarts, the 1992 and 2001 Securities Scams, for the first time, revealed the magnitude of white collar crimes in India. To fill the gaps exposed through these scams, the Securities Laws Act 1995 widened SEBI’s jurisdiction and allowed it to regulate depositories, FIIs, venture capital funds and credit-rating agencies. SEBI further received greater autonomy to penalise capital market violations with a fine of Rs 10 lakhs.

Despite an empowered regulatory body, the next white-collar crime struck India’s capital market with a massive blow. In a confession letter, Ramalinga Raju, ex-chairman of Satyam Computers convicted of criminal conspiracy and financial fraud, disclosed that Satyam’s balance sheets were cooked up to show an excess of revenues amounting to Rs. 7,000 crore. This accounting fraud allowed the chairman to keep the share prices of the company high. The deception, once revealed to unsuspecting board members and shareholders, made the company’s stock prices crash, with the investors losing as much as Rs. 14,000 crores. The crash of India’s fourth largest software services company is often likened to the bankruptcy of Enron - both companies achieved dizzying heights but collapsed to the ground taking their shareholders with them. Ramalinga Raju wrote in his letter “it was like riding a tiger, not knowing how to get off without being eaten”, implying that even after the realisation of consequences of the crime, it was impossible for him to rectify it.

It is theorised that white-collar crimes like these are highly rationalised. The motivation for the crime can be linked to the strain theory developed by Robert K Merton who stated that society puts pressure on individuals to achieve socially accepted goals (the importance of money, social status etc.). Not having the means to achieve those goals leads individuals to commit crimes.

Take the case of the executive who spent nine years in McKinsey as managing director and thereafter on the corporate and non-profit boards of Goldman Sachs, Procter & Gamble, American Airlines, and Harvard Business School. Rajat Gupta was a figure of success. Furthermore, his commitment to philanthropy added an additional layer of credibility to his image. He created the American India Foundation which brought in millions of dollars in philanthropic contributions from NRIs to development programs across the country. Rajat Gupta’s descent started during the investigation on Raj Rajaratnam, a Sri-Lankan hedge fund manager accused of insider trading. Convicted for leaking confidential information about Warren Buffet’s sizeable investment plans for Goldman Sachs to Raj Rajaratnam, Rajat Gupta was found guilty of conspiracy and three counts of securities fraud. Safe to say, Mr. Gupta’s philanthropic work did not sway the jury.

Play

The people discussed above have one thing in common - each one of them was well respected and celebrated for their industry prowess and social standing, but got sucked down a path of non-violent crime. The question remains - Why are individuals at successful positions willing to risk it all? The book Why They Do It: Inside the mind of the White-Collar Criminal based on a research by Eugene Soltes reveals a startling insight. Soltes spoke to fifty white collar criminals to understand their motivations behind the crimes. Like most of us, Soltes expected the workings of a calculated and greedy mind behind the crimes, something that could separate them from regular people. However, the results were surprisingly unnerving. According to the research, most of the executives who committed crimes made decisions the way we all do–on the basis of their intuitions and gut feelings. They often didn’t realise the consequences of their action and got caught in the flow of making more money.

Play

The arena of white collar crimes is full of commanding players with large and complex personalities. Billions, starring Damien Lewis and Paul Giamatti, captures the undercurrents of Wall Street and delivers a high-octane ‘ruthless attorney vs wealthy kingpin’ drama. The show looks at the fine line between success and fraud in the stock market. Bobby Axelrod, the hedge fund kingpin, skilfully walks on this fine line like a tightrope walker, making it difficult for Chuck Rhoades, a US attorney, to build a case against him.

If financial drama is your thing, then block your weekend for Billions. You can catch it on Hotstar Premium, a platform that offers a wide collection of popular and Emmy-winning shows such as Game of Thrones, Modern Family and This Is Us, in addition to live sports coverage, and movies. To subscribe, click here.

This article was produced by the Scroll marketing team on behalf of Hotstar and not by the Scroll editorial team.