“There Are No Brick-and-Mortar Banks in a Radius of Even Ten Kilometres”: Renana Jhabvala on Demonetisation and the Rural Economy

30 November 2016
Courtesy Renana Jhabvala

On 24 November 2016, a little over two weeks after Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, the finance ministry declared that the exchange of old notes at bank counters would stop as of midnight that night. The revision in the deadline—one of at least 21 fresh notifications by the government since the initial announcement on 8 November—was intended to “encourage and facilitate” people to “to open new bank accounts" and “deposit their old notes in their bank accounts.” Since the initial announcement on 8 November, demonetisation has also come to be seen as a step towards India’s transformation into a cashless economy. But, according to the government’s own estimate, 40 percent of Indians don’t use formal banking services. Some commentators perceive demonetisation to be an alarming step by the government in its push towards disbursing state subsidies and welfare via cash transfers into bank accounts. 

Renana Jhabvala is the national coordinator of the Self-Employed Women’s Association (SEWA), a trade union of over 2 million women working in the informal sector in India. Jhabvala has collaborated with the government on several experiments aimed at financial inclusion. She has also been a criticof how women and the poor are often excluded from the formal banking system in India. Jhabvala is one of the few supporters, outside of the government and thinkers on the economic right, of cash transfers as a state-welfare measure. On 19 November, in an interview with Manas Roshan, an independent journalist, Jhabvala discussed how demonetisation has affected the informal economy, why the “last mile” continues to pose a problem for rural banking, and how SEWA’s studies in Delhi and Madhya Pradesh revealed positive responses to cash transfers.

Manas Roshan: Has this demonetisation move affected the people that SEWA works with, many of whom are poor and make their transactions using cash?

Renana Jhabvala: Obviously, this has affected every single person in the country. In a way, it’s all-India mobilisation right down to the grassroots. In the rural areas, where we have finance cooperatives, small agricultural loans are going out right now to buy seeds and fertilisers. I was just talking to some women who came from Bihar and they were saying that agriculture is being disrupted. So the women are quite tense about that. Beyond that, women are standing in lines, working days are disrupted, small trade is disrupted. Our [SEWA’s] street traders are selling hardly 30 percent of what they were [before demonetisation]. Some of them are very upset, especially [those who have] weddings, [or are experiencing] illness.

MR: In some instances, wages, too, have not been paid.

Manas Roshan  is an independent journalist based in Delhi.

Keywords: poverty women Cash demonetisation Rural Economy Banking SEWA
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