The reporting by the press during the two to three months that followed the demonetisation of Rs 500 and Rs 1,000 currency notes in November 2016 showed what the Indian media was capable of. Newspapers, magazines, TV channels and online publications of all languages sent their reporters to the field to make sense of what was happening to people’s lives as 86% of the currency in circulation was withdrawn overnight. Reports came came from diverse settings, were rich in detail and the reporters let the people speak.

One common thread was of the extreme pain and hardship in many dimensions , which the government in New Delhi first did not wish to hear and then refused to acknowledge. The government said at the time that if at all there were difficulties, they would be transient; that once cash came back to the system, once people and firms embraced digital forms of transaction, things would go back to normal – and even become better.

Has that happened?

Dismal picture has been running the series “Revisiting Demonetisation”, which is somewhat special in that journalists have gone back to the same towns and places that they had covered right after the note ban was announced and in some cases, have even tracked down the very people they met 10 months ago. I do not think any other media house has done this kind of revisiting of demonetisation as yet.

Usually, anniversaries are when reporters set out to tell us what is happening one year, five years or 10 years after a major event. Here, has used the data from the Annual Report 2016-’17 of the Reserve Bank of India, published in August, as an occasion to revisit demonetisation. Now that we know that 99% of the demonetised currency has come into the banking system and that therefore hardly any black money has become “worthless”, as promised, what have been the after-effects on the economy and people?’s stories from the informal sector in Delhi’s Mayapuri area, textile units in Ludhiana, from a major flower market in Chennai and from Dhasa, Maharashtra’s “first” cashless village, do not paint a pretty picture.

First, things have not returned to normal in any of these places. Reporters tell us that in all these areas, small-scale units and informal enterprises are now operating at a lower capacity than they did before November 2016. Ten months later, the impact of Demonetisation 2016 is still being felt.

Second, many workers in the small-scale sector who found themselves out of work after the note ban and returned to their villages have since come back to the towns and cities, only to find that their jobs are no longer available or where they are, wages are lower. Those who stayed back in the cities say that even today, work is much less than before.

Third, in some places, small-scale units have permanently shut down – they could not take the squeeze in late 2016.

All of this is consistent with what the macro economic statistics tell us – that the Indian economy is in the midst of a major slowdown. This slowdown may have started before demonetisation, but demonetisation seems to have worsened it, perhaps manifold.

A couple of the reports (see here and here) also tell us that the introduction of the Goods and Services Tax without adequate preparation has complicated matters, and made a fragile economic situation worse. (There is also an interesting first person account by the owner of a chain of branded apparel firms who had written on the challenges a month after demonetisation and then looked at things 10 months later.)

There are some new findings to be reported as well. In Ludhiana, for instance, the organisation or work has changed – women who have returned looking for jobs find that men have been employed in their place. In Chennai, what was suspected at the time is now being confirmed. The self-employed who worked with low margins had to borrow money from informal sources to survive those difficult days. Their debt increased and they are yet to clear their loans.

The most intriguing of findings is that by and large, even those most adversely affected by demonetisation continue to support the measure. There are the occasional bursts of anger, but as one interviewee in Ludhiana (worker in a textile unit) said: “He [the Prime Minister] has promised to get back all the black money. Let’s wait and see.”

This was the larger view in late 2016 and this continues to hold now as well.

Questions remain

This support among people who were hurt the most in the absence of any concrete gains and in the presence of continued hardship remains one big puzzle that is yet to be understood. One wishes that one or two of the “Revisiting Demonetisation” stories had gone into this a little more, may be even made this the focus.

Why are people still not angry though the short-term pain has stretched into a medium-term suffering? Is concern about black money and corruption so strong that people are willing to give any attempt to deal with it – even if it causes widespread suffering – a chance? Are they willing to see appearances and flashy (as well as costly) actions as good policy? Is image all that counts?

A sufficient amount of time has lapsed since demonetisation for reporters to don the garb of social investigators to answer these questions. It is time for journalism to go beyond documenting the hardship and start probing other questions.

Rich as the “Revisiting Demonetisation” series otherwise is, there are some questions that call for greater investigation:

  • Has the use and generation of black money come down after the purging of cash? Is the informal sector beginning to show signs of formalisation? The piece by the owner of the branded apparel chain offers interesting insights even while being critical of demonetisation: tax compliance, he suggests, may have improved. It would have been good to have a wider set of such insights. (A separate story, on the Surat textile business after GST, touches on the subject of black money generation today.)
  • Another question to ask is about the spread of digital transactions, the government’s new metric for measuring the success of demonetisation. It is to be expected that the projection of “cashless” villages such as the one in Dhasa in Maharashtra’s Thane district would turn out to be publicity stunts. But how far has the digital habit penetrated society? The macro statistics tell us that the volume and value of digital transactions have come down from the peaks of December and January, but they are still far above what they were before demonetisation. This seems to be the case at all income levels. So how is this being reflected in spending habits on the ground? How much of this is due to involuntary compulsion (a continued relative shortage of cash)?

These are some questions that call for more reports from the field. The first anniversary of demonetisation is about eight weeks away. Maybe that could be the occasion for another series that asks some specific questions.

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