note demonetisation

Ground report: In Bihar, murmurs of protest break the sullen silence against demonetisation

Patience is running thin in Banka, a small town near Bhagalpur. Come December 31, these murmurs could become roars if cash supply does not improve.

A month after Prime Minister Narendra Modi announced the scrapping of Rs 500 and Rs 1,000 notes on November 8, the mood in Banka is sullen.

Business in this trading town, about 50 kilometres to the south of Bhagalpur in central Bihar, is down.

Muhammad Saina, a young man in his early 20s, who minds a middling mobile phone shop in the town used to sell five to 10 phones in a day. Now, he said, it is one or two phones a day.

Traders in myriad other businesses, from garment-sellers to fishmongers, had similar experiences to narrate about the impact of cash crunch, or notebandi, when the government invalidated 86% of the currency in circulation.

“There is no business,” said a Muslim businessman who did not want to be identified. “We are not able to pay the rent for our shops. We are living off our savings.”

Further down the road, Krishna Kumar, who runs a cloth store called Rangoli, echoed the same sentiment of lost business. “Things were particularly bad in November,” he said. “They have improved a bit but are still below the usual level.”

Despite these losses over the past month, like the rest of India, Banka has stayed calm.

A calm nation?

Banka was the last stop before returning to Patna in this reporter’s travels from North Bihar to South Bihar, to get a sense of how notebandi was impacting the structures of everyday life.

The journey had started with Raxaul, on the India-Nepal border, on November 18, exactly 10 days after notebandi was announced. Heading south, stopping at Bettiah, Gopalganj and Darbhanga and Gaya before reaching Bhagalpur, the common finding along the road was predictable.

As in other parts of the country, economic activity had fallen steeply in every town – be it Raxaul, Bettiah, Patna or elsewhere. In each of them, cash was in short supply, people were struggling to find work. Farm prices had collapsed in parts of the state. In other places, vegetables were being rerouted to bigger markets where there was still some purchasing power. Migrants had returned from the towns where they had been working.

Given this litany of hurt, what was less easy to understand was the popular reaction. As in the rest of India, despite grave difficulties, people had stayed calm. In the weeks gone by, several hypotheses had been advanced to explain this. Did people support notebandi despite difficulties? Did they think, as some people in a village near Gaya said, that notebandi would result in lower inflation and reduce inequality?

In that village, support for notebandi had stemmed from anger about greater inequity over land ownership. One zamindar owned 1,200 acres – which he had stopped giving out to his fellow villagers for sharecropping. The result? Every household in the village eked out a living by either working as labour in Gaya or migrating outside Bihar to work in brick kilns even as the land in their village lay fallow.

That explanation, interesting as it was, did not explain the calm in Bihar’s towns and cities.

Stifled dissent

Banka district has about 20 lakh people. The town, also called Banka, is about 12% Muslim.

Some of the Muslim traders were angry about notebandi. “Soch bahut achchhii hai lekin kaamyaabi kaise milegi woh nahin sochaa,” said a businessman who did not want to be identified. It is a good idea but the government has not thought through its implementation.

This poor planning, they said, had pushed them back by 10 years: “We’ve been pushed much further back than where we started from.”

If they were so angry, why were they not speaking out? The traders had several answers. The first was closely linked to their desire to not be identified. The local discourse had worsened, they said: “If you oppose it, you get called anti-national.”

They were also, said the traders, struggling to understand what was going on: “We are trying a lot, but are unable to understand.”

The media, they added, was not helping. “I watch eight news channels every day,” said one of them. “One says 35% of ATMs are working. Another says 100% of ATMs are working. We are watching them all and trying to understand which is speaking the truth by comparing what they say to our local situation.”

At the same time, they said, Banka was not seeing any local leader pick up the issue of demonetisation.

This echoed what Banso Devi (pictured above), a widow in Riga, a village abutting Banka, had said the previous day. In her village, people had not found work since the start of notebandi. Widowed last year, she said, she had been subsisting on “namak-roti”, salt and roti, in the absence of work.

Why was she silent? “Where do we go to protest?” she asked. “Who is shouting slogans so that we can go and follow them?”

Local politics

The reason why the Muslims did not want to share their names was clear shortly after the conversation with the traders ended. Kumar Gaurav, a local farmer and Bharatiya Janata Party member with a saffron mark on his forehead, standing nearby, stopped this reporter. “You should also ask me what I think of notebandi,” he said.

He was in favour of both notebandi and less cash. The first, he said, had ended corruption. Crime would come down, he added, once people started carrying less cash around.

He also challenged what the traders had said about a cash crunch. “Anyone who tells you that banks are not letting people withdraw Rs 24,000 a week, is lying,” he said. “I withdrew Rs 24,000 in one week – in two transactions of Rs 10,000 and Rs 14,000.”

Krishna Kumar. Photo: M Rajshekhar
Krishna Kumar. Photo: M Rajshekhar

Later in the day, cloth merchant Kumar was dismissive about local political parties. “Do not listen to what the Congress or BJP leaders tell you,” he said. “The Congress will say people are not even getting Rs 500. The BJP will say people are getting Rs 24,000. They get the cash. They have the government’s support.”

After 50 days?

Kumar’s shop stuck to the default template for a cloth shop in India.

Bolts of fabric stood stacked along narrow shelves running along its walls. Mattresses ran the length of the shop. It was here that he and his customers sat while his salesmen rolled cloth out for inspection.

He was in favour of notebandi. Modi’s announcement, he said, was not about black money or cashless economy. Most black money is in gold and land, not cash, he said. And India is not ready for a cashless scenario.

Instead, Kumar said, the main aim was to expand tax collection. With notebandi, even small businesses will put their money into banks, as a result of which they will enter the formal sector. After that, he said, they will have to either pay income tax or the proposed banking transaction tax.

This is something he welcomed: “I do all my transactions by cheque. And I pay my taxes.” As a result, he said, he struggled to compete with traders who did all their business in cash. “They sell a metre of suiting cloth for Rs 190 a metre,” he said. “After paying my taxes, I have to price that at Rs 200 a metre.”

He was the first person in all these days to suggest that notebandi was essentially an attack on India’s informal economy.

In these travels, people expressed hopes that notebandi will solve a spectrum of problems – ranging from land redistribution to crime to competition from rivals in the informal economy.

That said, Kumar was losing his patience as well. His anger was not as much about the fall in his business transactions as it was about the difficulty of accessing cash from his own bank accounts. Banks have to pay Rs 24,000, he said, but are only paying Rs 5,000. “We have decided to be patient for 50 days,” he said. “But if the pace of improvement does not pick up even after 50 days, people will lose all patience.”

News reports about people being caught with large stashes of new currency notes was further exacerbating his anger.

What kind of an improvement did he want? From the 51st day, he said, “We should be able to get at least 50% of our requirement from the banks.”

Other traders earlier had also alluded to the government’s claims of normalcy by the 50th day: “If things stay the same even after the 50th day, people will come out on the streets.”

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Some of the worst decisions made in history

From the boardroom to the battlefield, bad decisions have been a recipe for disaster

On New Year’s Day, 1962, Dick Rowe, the official talent scout for Decca Records, went to office, little realising that this was to become one of the most notorious days in music history. He and producer Mike Smith had to audition bands and decide if any were good enough to be signed on to the record label. At 11:00 am, either Rowe or Smith, history is not sure who, listened a group of 4 boys who had driven for over 10 hours through a snowstorm from Liverpool, play 15 songs. After a long day spent listening to other bands, the Rowe-Smith duo signed on a local group that would be more cost effective. The band they rejected went on to become one of the greatest acts in musical history – The Beatles. However, in 1962, they were allegedly dismissed with the statement “Guitar groups are on the way out”.

Source: Wikimedia Commons
Source: Wikimedia Commons

Decca’s decision is a classic example of deciding based on biases and poor information. History is full of examples of poor decisions that have had far reaching and often disastrous consequences.

In the world of business, where decisions are usually made after much analysis, bad decisions have wiped out successful giants. Take the example of Kodak – a company that made a devastating wrong decision despite overwhelming evidence to the contrary. Everyone knows that Kodak couldn’t survive as digital photography replaced film. What is so ironic that Alanis Morissette could have sung about it, is that the digital camera was first invented by an engineer at Kodak as early as 1975. In 1981, an extensive study commissioned by Kodak showed that digital was likely to replace Kodak’s film camera business in about 10 years. Astonishingly, Kodak did not use this time to capitalise on their invention of digital cameras – rather they focused on making their film cameras even better. In 1996, they released a combined camera – the Advantix, which let users preview their shots digitally to decide which ones to print. Quite understandably, no one wanted to spend on printing when they could view, store and share photos digitally. The Advantix failed, but the company’s unwillingness to shift focus to digital technology continued. Kodak went from a 90% market share in US camera sales in 1976 to less than 10% in 2012, when it filed for bankruptcy. It sold off many of its biggest businesses and patents and is now a shell of its former self.

Source: Wikimedia Commons
Source: Wikimedia Commons

Few military blunders are as monumental as Napoleon’s decision to invade Russia. The military genius had conquered most of modern day Europe. However, Britain remained out of his grasp and so, he imposed a trade blockade against the island nation. But the Russia’s Czar Alexander I refused to comply due to its effect on Russian trade. To teach the Russians a lesson, Napolean assembled his Grand Armée – one of the largest forces to ever march on war. Estimates put it between 450,000 to 680,000 soldiers. Napoleon had been so successful because his army could live off the land i.e. forage and scavenge extensively to survive. This was successful in agriculture-rich and densely populated central Europe. The vast, barren lands of Russia were a different story altogether. The Russian army kept retreating further and further inland burning crops, cities and other resources in their wake to keep these from falling into French hands. A game of cat and mouse ensued with the French losing soldiers to disease, starvation and exhaustion. The first standoff between armies was the bloody Battle of Borodino which resulted in almost 70,000 casualties. Seven days later Napoleon marched into a Moscow that was a mere shell, burned and stripped of any supplies. No Russian delegation came to formally surrender. Faced with no provisions, diminished troops and a Russian force that refused to play by the rules, Napolean began the long retreat, back to France. His miseries hadn’t ended - his troops were attacked by fresh Russian forces and had to deal with the onset of an early winter. According to some, only 22,000 French troops made it back to France after the disastrous campaign.

Source: Wikimedia Commons
Source: Wikimedia Commons

When it comes to sports, few long time Indian cricket fans can remember the AustralAsia Cup final of 1986 without wincing. The stakes were extremely high – Pakistan had never won a major cricket tournament, the atmosphere at the Sharjah stadium was electric, the India-Pakistan rivalry at its height. Pakistan had one wicket in hand, with four runs required off one ball. And then the unthinkable happened – Chetan Sharma decided to bowl a Yorker. This is an extremely difficult ball to bowl, many of the best bowlers shy away from it especially in high pressure situations. A badly timed Yorker can morph into a full toss ball that can be easily played by the batsman. For Sharma who was then just 18 years old, this was an ambitious plan that went wrong. The ball emerged as a low full toss which Miandad smashed for a six, taking Pakistan to victory. Almost 30 years later, this ball is still the first thing Chetan Sharma is asked about when anyone meets him.

So, what leads to bad decisions? While these examples show the role of personal biases, inertia, imperfect information and overconfidence, bad advice can also lead to bad decisions. One of the worst things you can do when making an important decision is to make it on instinct or merely on someone’s suggestion, without arming yourself with the right information. That’s why Aegon Life puts the power in your hands, so you have all you need when choosing something as important as life insurance. The Aegon Life portal has enough information to help someone unfamiliar with insurance become an expert. So empower yourself with information today and avoid decisions based on bad advice. For more information on the iDecide campaign, see here.


This article was produced on behalf of Aegon Life by the marketing team and not by the editorial staff.