India’s note ban: what Modi can really achieve
The Indian prime minister’s demonetisation of 500 and 1,000 rupee notes has come in for heavy criticism – but if he succeeds, a lasting legacy beckons
Across the road from Mumbai’s Dharavi, one of the world’s biggest slums, Altaf Sheikh is braving the afternoon blaze and the stench of garbage that hangs over the sprawling mangrove dump where many of the city’s sewers drain, diligently separating the copper from the tangle of wires he has bought this morning.
For this back-breaking work, he used to make 700-800 rupees a day by selling back the copper to a trader in Dharavi, barely enough to support his family and survive in India’s most expensive city. These days he isn’t even hitting half of that.
Two months ago, Indian Prime Minister Narendra Modi announced the withdrawal of Rs500 and Rs1,000 banknotes as he declared war on “black money”, as unaccounted wealth is called in India.
These high-denomination notes, he said, needed to be flushed out of the system to end the country’s endemic corruption and widespread counterfeiting, which aids terrorism. But as these notes constitute 86 per cent of the cash in circulation and a fraction of the new notes needed to replace them were printed, the disruption has been painful, causing widespread inconvenience and paralysing large segments of India’s mostly cash-driven economy.
Sheikh’s world has been turned upside down. “I’ve never had it this bad. The traders are saying they can’t pay as they don’t have enough money and are demanding hefty discounts. I have a bank account but they are refusing to pay by cheque. And even if they do, I’ll have to skip a day’s work to get that money out of the bank,” says Sheikh, alluding to the long queues at banks and ATMs.
