Varanasi’s MSMEs pummeled by Demonetisation

(© Jorge Royan / http://www.royan.com.ar, via Wikimedia Commons)

The Prime Minister’s move to demonetise currency notes has hit those at the bottom of the industrial food chain the hardest

Anurag Bohra Delhi

Of late 62 year old Nazrul Peeli’s days have been rather dank and depressing. Jobless for the last fifteen days he had been struggling to make ends meet. The proverbial last straw came when he was trying to jostle through the crowd gathered in front of Bank of Baroda. Like many others Nazrul had gathered to get his hands on whatever cash was available. As he approached the branch, he was stopped by a security guard who told him that he could not proceed any further. Something inside him broke at hearing this. Unable to control his temper he angrily exclaimed, “How long will I have to wait for getting my own money? I have been cashless and jobless for the past 15 days. Approximately, 28,000 weavers are account holders in this bank. First, came the excuse of the unavailability of cash, and now there is so much rush from morning to evening that it’s almost impossible to withdraw your [own] money.” Being the only bread earner of a family of 12 including women and children, Nazrul has a fatalistic attitude towards life. He blames his own destiny for his miseries. There are many like Nazrul who are facing extreme hardships ever since Prime Minister Narendra Modi announced the demonetisation policy.

The currency ban has adversely affected the common man in Varanasi. Varanasi is the Prime Minister’s parliamentary constituency. As a result the thousands of Micro, Small & Medium Enterprises (MSMEs), that are the main source of the cities economy, have sustained huge losses. The hundreds and thousands of artisans, weavers and craftsmen that these outfits employ have been left without incomes or work. Handlooms and powerlooms have been gathering cobwebs ever since work was halted due to the cash crisis. This veritable cottage industry is on the verge of extinction due to a lack of cash.

This is a alarming scenario considering that this time of the year sees a surge in demand for saris and apparel of all sorts due to the upcoming wedding season.

The decision to launch new currency notes with Rs.2000 denominations has negatively impacted the weavers. According to local newspapers in Varanasi, about 75,000 weavers are on the verge of starvation. The lack of demand has impacted the ability of local businessmen to employ these weavers. Also, the majority of people who are standing in snaking queues in front of ATMs and banks are weavers.

The inability of the banks in the city to match supply with demand has left workers reeling and finding it next to impossible to meet their daily expenses. As the wages in the weaving industry are criminally low, the weavers are already crippled with debt and with the unavailability of money are unable to repay money borrowed from vendors and relatives. Many weavers don’t have bank accounts and have been saddled with a wad of old notes, with nowhere to turn they are either exchanging them at lower rates, or have no money at all. This is turning into a nightmarish scenario for the economically backward classes of Varanasi.

The local opposition and activists in Varanasi have firmly resisted against demonetisation calling it “worse than emergency”. On Tuesday, Congressmen organized a sit-in protest at Varanasi’s “Maidagin-Chauraha” calling the decision on demonetization a “Tughlaqi Farmaan”. The protest was led by Varanasi-Pindra (a Tehsil or sub-district in Varanasi) MLA Ajay Rai. “The demonetisation policy proves that the decision has been undertaken for certain elite beneficiaries at the cost of the common man’s sufferings. The middle-class, especially the women and children, elderly, youth and labors and farmers are the worst sufferers of this draconian move. The nation is in a state of chaos and turmoil while the Prime Minister feels proud and is in awe with self-praising and flatterers,” said Rai. The protesters condemned the 54 lives lost as an outcome of the center’s demonetization initiative. The local Congress leaders ensured to donate Rs.20 lakhs to families and aids of the deceased.

At the peak of the campaigning for the 2014 general elections, Narendra Modi promised job creation for the artisans, craftsmen and weavers. Modi had emphasized the need for skill development and entrepreneurship among the weavers for making Varanasi an economic hub. In his pre-election interviews Modi assured of business summits in the city on the lines of “Vibrant-Gujarat” for promoting small and medium enterprises in order to attract FDI (Foreign Direct Investment) inflows. The main objective was to target the weaver’s community i.e. 70 percent of the city’s workforce, out of which 90 percent are Muslims. Narendra Modi had wisely projected him as a progressive leader while contesting from Varanasi constituency in 2014. It gave a ray of hope to weavers and an assurance to free-thinkers about his liberal policy with regard to India’s “unity in diversity”. The problems faced by Varanasi’s MSMEs and weavers could have a treacherous effect on the voter’s perception ahead of the 2017 and 2019 assembly and general elections respectively for non-compliance of party manifestos. If the demonetization process at Varanasi’s banks and ATMs is not completed within 50 days, it would lead to countrywide protests by labor unions and MSME owners. The wrath of the media and opposition has already commenced retaliation that has questioned the credibility of NDA’s policies granting tax waivers to bad-loan defaulters while exercising control over the personal finances of general public.