These days, it’s hard to escape notebandi, as the scrapping of 86% of India’s currency, by value, on the night of November 8 has come to be called colloquially. You can see physical evidence in fraying patience and tempers, as the queues wind on, as they will beyond December 30 deadline for normalisation because April is the earliest, IndiaSpend is predicting, for remonetisation to be completed. I believe the idea was right, the haste and implementation disastrous, like deploying a tank to stop a thief with a stick, alright, perhaps a knife.
The government’s confetti-like orders governing notebandi – I lost count after 50 (order 52 directed banks to preserve CCTV footage between November 8 and December 30, 2016) – are now beyond funny. My colleagues at IndiaSpend have documented Prime Minister Narendra Modi’s changing narrative behind the move, from targeting black money to terrorism to going cashless.
This is where we stand today: India is being put through one of the greatest upheavals in its financial history so 1.32 billion people can learn to use less cash. This, too, is a laudable ambition but hardly one that justifies the steamrolling of daily life, vast privation and even death. The odd story about a cashless village, golawalas accepting payments by a digital wallet like PayTm and the 400% to 1,000% jump in digital transactions declared by the government after November 8 are drops in – or, at best – a drizzle over, the vast ocean that is India.
In simple terms, there are two cogs in the great wheel of transformation that the government desires – banking and connectivity. The first has seen much progress. As on December 7, nearly 260 million households had a bank account, which means almost every Indian household has – in theory – banking access. To be sure, 23% of those accounts have no money in them, and many have obviously been used to launder money recently, but the banking base is essentially in place.
However, the government’s great cashless – or “less-cash”, to use the latest clarification – ambition is not going to materialise any time soon for three reasons, all linked to the mobile phone: Indians simply do not have (a) enough cellphones, (b) enough cellphones connected to the internet, and (c) enough internet.
Without enough cellphones and nationwide internet access, no amount of government incentives, training or coercion will work.
Let’s backtrack. In January 2016, we heard that India crossed the 1-billion-cellphone-subscriber mark. Soon after, we heard that India had became the world’s second-largest cellphone market, overtaking the USA. These are significant milestones; to put this growth in perspective, consider that there were less than 29 million phone subscribers in 2000.
India’s telecommunications transformation has indeed been one of the most dramatic the world has seen, but it has also generated breathless hyperbole. In the context of notebandi, the strength of this technological base is quite misleading. The one-billion-cellphone figure refers to SIM cards – the little computers that link a cellphone to a network – and hides millions of duplicate or inactive connections. The relevant figure is “unique mobile subscribers” – at the end of January 2016, there were no more than 616 million. India is still the world’s second-largest mobile market, but this also means that in January 2016, there were still 704 million Indians without a cellphone.
Of the 616 million who owned a cellphone in January 2016, 342 million (only 13% were in rural areas) had internet access, a prerequisite for moving to a cashless or less-cash economy. But most banking applications on a mobile phone require not just an internet connection but a smartphone, which only 154 million Indians have.
So, we are left with 154 million Indians who are, in theory, equipped for the new less-cash economy: if we consider 13% of these being from rural areas – the same proportion as those with internet access – no more than 20 million Indians in rural areas are technically prepared for the big leap. In addition, in 2015, very few of those in rural India who are theoretically prepared to use the cellphone as their access to the retail superhighway did so: Abouthalf of rural smartphone use is for entertainment (movie clips, music videos, and, well, porn). Retail uses include online shopping (1%) and online ticketing (0.4%).
Some of these data and my extrapolations are estimates, but you get the general idea. It is not my case that Indians should continue their addiction to cash. It is that India is manifestly unprepared for Modi’s great leap forward. In the past week, we’ve read of devastating effects nationwide, including itinerant workers without work, entire industrial towns struggling to pay workers and stay afloat, workers forced to cut back on food. My colleagues at IndiaSpend have travelled across five states and found a common theme: Even those with cellphones and bank accounts are not just reeling from the shock but explaining why going cashless is not, currently, an option.
In Maharashtra, there was no internet access where onion farmer Deepak Patil worked. In Madhya Pradesh, flower farmer Keshu Patel – he has written off the year after losing 70% of his business – said he and his family could not afford a smartphone and shared a basic cellphone. In Goa, about half the women selling fish said they did not even have a phone. Change will come, rural India will, someday, live the cellphone revolution that is predicted, but it isn’t here today and will not come tomorrow.
For me, the trauma and haste of notebandi was encapsulated by the picture above (in the Hindustan Times), of frail, retired soldier Nand Lal, 78, who broke down after three days of standing in line outside his bank in Gurgaon. “ Humko apna paisa kyon nahi dete?” he asked bank officials, as he wept. “Pehle tayyari kyon nahi ki?” Why don’t you give me my money? Why didn’t you prepare in advance?
India wasn’t prepared on November 8. It is isn’t prepared now.
Samar Halarnkar is editor, IndiaSpend.org, a data-driven, public-interest journalism non-profit.