Demonetisation has left unorganised sector in UP's Saharanpur traumatised but local BJP leaders are in denial

Devyani Nighoskar | Mar 6, 2019 | 9 min read


Rajbala was two months pregnant when demonitisation hit the country. The 30-year-old labourer from Kumharheda village in western Uttar Pradesh’s Saharanpur district had been working on farms for a daily wage. Work was already scarce, but after November 8, 2016, it became impossible to find any.

As Rajbala and her husband struggled to make ends meet, complications arose in her pregnancy. With hardly any cash, medicines became unaffordable. She, however, got lucky, as the couple’s landlord loaned them some money. But she’s in the minority; not everyone in this dusty industrial town has found relief in the middle of adversity.

Fifteen kilometres away from Rajbala’s village, at Hasanpur Chungi, a labour hub in Saharanpur town, Shameen (42) recalls his fate during notebandi, when I meet him at 11 am.

He had been standing there since 7 am with a dozen of other labourers, waiting and hoping to get some work for the day.

“I was unable to find work for six months after demonitisation. I couldn’t pay my daughter’s exam fees, so she couldn’t take them and failed,” he says, narrating how his illiteracy was taken advantage of and he was paid with old currency notes after demonitisation.

“Yeh to roz ka hai (this is an everyday affair),” says Isham Singh about their daily wait and hunt for work, wrapped in a heavy shawl to keep himself warm from the morning’s biting cold. “We get work for only about 15 days in a month. My wife and I have been unable to even get a loan. Nobody thinks of the poor,” he laments.


The ‘demon’ in demonetization, and a taxing GST

Indeed, Prime Minister Narendra Modi was not thinking of the poor when he put demonitisation into action overnight. The decision to supposedly spiral out black money from the Indian economy also spiralled unemployment. The worst affected was, perhaps, the unorganised sector, which is still trying to grapple with the consequences of something that hit them more than two years ago.

According to a report by the Indian Labour Market and the National Sample Survey Office, 90% of the employment in the agriculture sector and 70% of the employment in non-agriculture sector falls under the unorganised sector. This is especially true in the Saharanpur constituency.

The road to the town is paved with lush green farms, followed by small-scale industries and the town’s pride the wood handicraft industry. In a micro-economy like this, where the working capital constitutes of cash and the low literacy levels make digitisation unfeasible, demonitisation has reduced liquidity. Even if the government’s intentions were genuine, its implementation was haphazard. Wages were reduced and delayed, labour workforce was dropped, and havoc was wrecked in the lives of these labourers, who hardly have any savings, let alone bank accounts.

GST was the final nail in the coffin — it not just brought about inflation, but also disrupted the already slow recovery of most industries that support labourers’ livelihoods.

To understand the impact of these two major decisions on labourers’ lives, I travelled to Saharanpur’s industrial area that employs many semi-skilled labourers.

Joginder Kumar, a welder who works on a contractual basis but was a daily-wager during demonitisation, says, “Our contractor was not paid, so we weren’t either. There was no ration at home. I could not pay my children’s school fees and had to take a loan to make ends meet.”

Gaurav Malhotra, senior manager at RC Paper Machines, adds, “We were low on liquidity, which affected our productivity. Our payments did not come through, so even we were unable to support our labour.  It became a vicious cycle. I heard that a lot of industries that do have black cash deposited some in their labourers’ accounts … I don’t think it was a well thought out move by the government.”


When town’s pride became a curse

Similar sentiments prevail in Khata Kheri, the area in Saharanpur buzzing with wood-carving workshops. Few know that this town is also called the wood carving city of India, with exports across the world. But demonisation and GST crippled the business.

“Earlier, we gave a tax of 14.5%. After GST, it shot up to 28%; though it has been brought down to 18% now, it’s still too much. Thus, sales have reduced and profit margins are low, as customers refuse to buy high-priced items. Demonitisation brought in a lot of instability in the business; that resulted in our skilled craftsmen running away to do better-paying work,” says Muntiyaz Malik, the owner of Prince Handicrafts.

Reports suggest that business of this industry dipped to 20%. One of the reasons could also be, perhaps, because woodwork is a collector’s item — a desire, not necessarily a need. Although today, the industry is moving towards digitisation, which was one of the motives of demonetisation, it requires financial literacy and tech savviness that cannot be forced on an underprivileged sector overnight. This, coupled with the Internet ban brought about by communal discord, put the Muslim-dominated industry at risk. And though recovery is in motion now, it’s no thanks to the government.


A ripple effect on India’s economy

The impact these policies had on the small town and rural India had a ripple effect on the country’s economy and society. Sharing her insight on the same, Dr Vibhuti Patel, an economist and a professor at Tata Institute of Social Sciences, says, “The informal sector was certainly the worst-hit. Most people in the unorganised sector are not financially included, especially women hawkers, domestic workers, etc. They saved their Rs 500 and Rs 1,000 currency notes, stashed under beds, due to lack of bank accounts; hence, they suffered the most during demonetisation. Similarly, tribals in inaccessible areas were unable to change their currency in time. Small-scale and agricultural industries, which are the biggest employers of unorganised labour, do not operate on plastic money. They buy their raw materials and pay wages in cash. Their labourers failed to get their daily wages. Demonetisation disrupted the operations of several such industries, thus slowing down the overall growth of the economy by 2%-3%.”


The farce of employment

The hopelessness is evident on the faces of people I meet, who had immense faith in the current government that most of them voted for. It promised them “Achhe din”, yet delivered the opposite.

A lot of government schemes that are present on paper have failed to translate into reality.

Gauri Shankar (52) and his son, Sandeep Kumar (27), from Behrampura village, work as labourers in farms and support a family of 10. The son has an MA degree, and yet, he has been unable to find a job. Both were hopeful when they were guaranteed employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), but the father-son duo tells me that it helped them to have employment for less than a month in June 2016 — according to the data on the MGNREGA website, Sandeep was provided employment for 14 days, which earned him Rs 2,450.

Most other labourers at labour hubs have similar things to say about other schemes. Ajay Kumar, a youth waiting at Vishwakarma Chowk, another labour hub in Saharanpur, feels that the entire system — right from the gram panchayat to Parliament — is corrupt. “I earn Rs 300 a day, and sometimes work is as low as four days in a month. How can a family survive with such meagre amounts? Also, the schemes and money never reach us. They are eaten up at various levels of bureaucracy.”

Not everyone agrees with him though. Although most labourers who voted for BJP are disappointed with the rising unemployment as a result of demonetisation and GST, some do assert that the party has helped them.

Monu Saini (22) is happy with loan waivers and subsidies, while Nitin Kumar feels that citizens don’t have a better alternative with respect to politicians and parties. Meanwhile, Pyarelal Majis, a contractor and BJP karyakarta, who I met at Hasanpur Chungi, confidently agrees that demonetisation was important to get rid of the black money from the country. However, he does add, “The poor did not have any black money. Then, why did they have to suffer?”

Majis goes on to say that BJP has provided the poor with gas subsidies, built bathrooms, and opened zero balance bank accounts. To this, a labourer retorts, “But what’s the point of bank accounts if we don’t have money?”


Election issues

BJP MLA from Gangoh Saharanpur, Pradeep Kumar, on the other hand, vehemently refutes the existence of this mountain of problems. “I don’t see any such issues in the informal sector. They have been blown out of proportion. After demonetisation, Modi-ji asked for 50 days to deal with the situation, and he did, effectively. That said, increasing employment in the constituency is something we will be working on in tandem with the existing national employment schemes.”

However, Hamza Masood of Congress, an active face in student politics of Saharanpur, is quick to call demonetisation one of the biggest tragedies of Independent India. “In Saharanpur, the unorganised sector is the biggest driver of economy; demonetisation and GST crushed it. India resides in villages and small towns, and BJP has completely destroyed those lives.”

Speaking on behalf of his uncle, Imran Masood, a member of the Lok Sabha and a Congress leader from Saharanpur, Hamza adds, “As part of our campaigns, we will be raising issues demonetisation created, while also focusing on solutions, such as creating employment opportunities and providing a basic income to farmers among others.”  

UP has seen different state governments in the last 15 years and while each one has remarkable achievements in one sector or the other, the overall condition of the state remains dismal. As far as Saharanpur is concerned, demonetisation and GST walked all over its economy.

Though unemployment is not the only deciding factor in this caste-based politicised state, it is perhaps the biggest one. Rs 3,488 crore has been set aside for the implementation of the National Rural Employment Guarantee scheme for this year; but, as elections near, the town’s people are divided. Some will give BJP another chance, some will vote for “anyone other than BJP”. But most of them have no hope left. As Isham Singh puts it: “Majdoor ka doosra naam majboori hai (Helplessness is synonymous with labourer).”

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