On Demonetization and Its Impact on Bangalore’s Waste pickers and Recyclers

Shreyas Sreenath

Important as are the standard measures of a community…its measure of value is by far the most important of them all. The measures of weight, extension, or volume enter only into particular transactions…but the measure of value is all pervading…the conservation of the contractual basis of society then becomes tantamount to the conservation of an invariable measure of value.

—B.R. Ambedkar, The Problem of the Rupee: Its Origin and Its Solution (1923)

1. Three cases*

After much haggling with godown operators, Jalil managed to get the money that was owned to him on the morning of November 8^th. It was just after the Dasara and Deepavali season, when payments are often delayed by people who need large sums of money to cover festival expenses. Now that he had finally retrieved the money, all in fresh 500 and 1000 rupee notes, he visited the local shopkeeper at 9:00pm to get smaller denominations to cover household expenses, as well as pay the wages he owed to the waste pickers working at his waste collection center.

“The shopkeeper folded his hands,” Jalil remarked, “and after I asked him what the matter was, he told me to look at the TV screen. 500 and 1000 notes banned.” The shopkeeper was of course referring to the Prime Minister’s decision to surreptitiously demonetize Indian rupee notes of the highest denominations, a move that sought to target undeclared cash stocks and which rendered 86% of India’s money supply invalid overnight.

Jalil was suddenly left without any change, and for the next few days, his business was interrupted as he spent his time standing in bank lines. “I felt as if I was standing in line with someone else’s money,” he remarked. He could only exchange 2000 rupees, and that too once. Scrap dealers like Jalil often do not have bank accounts. This is because the majority of their transactions occur frequently, in cash, and with other parties who form the most financially excluded segments of urban India.

Demand drafts, checks, cards, unified payment interfaces, and digital wallets—modes of payment that India’s elite and middle classes are ferociously deploying until demonetization woes tide over—have little relevance in Bangalore’s recycling trade, a vocation that, with much irony, cleans up after urban bouts of conspicuous consumption. Here, hard cash, held not by faceless institutions but by people one knows and deals with regularly, still remains the most reliable way to conduct business. In their daily operations, recyclers are not only faced with changing prices, types, and qualities of plastic, paper, cloth, and metal, but also changing circumstances.

To illustrate the kind of contingencies that scrap dealers are confronted with daily, let us take the example of how a scrap dealer would approach a sack of HDPE (high-density polyethylene) plastic. Not only can the asking price for the sack suddenly fluctuate, but it may also contain mixed waste and impurities, be seized by officials asking for a bribe during transport, or stored in a location that becomes a target of arson or eviction. Or perhaps the waste picker who sorted through it may suddenly fall ill and require emergency funds. When managing all of these matters, cash remains both the most concrete and the most liquid mode of payment in a recycler’s arsenal—concrete because it is easily retrievable and seldom fails as a store of value, liquid because of its near universal application.

But this was much more the case before the government’s decision on November 8^th. That evening, hard currency not only lost much of its liquidity but also its concrete character, becoming phantasmal slips of paper that threatened, rather than facilitated, the exchange of value.

Indeed, laid out on the floor of Fatima and Rafiq’s public housing apartment in Nayandahalli, the new 2000-rupee note appears menacing. Fatima sorts through scrap materials at a godown and Rafiq collects old plastic, cloth, and metal from houses, exchanging them for new buckets, pots, and pans. Examining the new note, Fatima says, “it doesn’t even feel like money, it has a strange color and texture. If there was some satisfaction in holding the old currency, this one feels like those fake notes that my children play with.” The new note is the first in the history of independent India to carry Devanagari numerals. It also is the first to promote the Prime Minister’s flagship “Swachh Bharat Abhiyan” (Clean India Mission) program.

A family member takes out his cell phone to ‘scan’ the new note—rumor has it that a new mobile application called ‘Modi ke note’ (Modi’s note) allows the Prime Minister to ‘speak’ through the new notes, warning potential black money hoarders. The app buffers, stalls, and freezes, and there is much discussion about whether it is ‘fake’ or ‘asli’ (real). Pausing to change the subject, Rafiq declares, “anyway, this note is just for show, no one wants to take it and give back change.”

Of course, rumors about such mobile apps and the implantation of ‘nano GPS chips’ in the new bills are unfounded. But when thrown into circumstances of financial uncertainty, such flights of fancy find wide public appeal and seamlessly merge with more plausible fears, anxieties, and uncertainties. Fatima, who is pregnant, was forced to stand in line for hours to have the bank run out of cash and then received a 2000 rupee note that she could not break. “The ration store wasn’t able to give us change so we had to have a feast at a restaurant just so we could get smaller denominations.” She explains how the godown where she works can only stay open a few days a week:

“a buyer came with a few thousand worth of old notes and we had to refuse him. But, some other godowns are accepting old notes at reduced value. We sorters and waste pickers are giving each other loans in smaller denominations and getting paid in IOU slips. Our pickers only bring back 50, 100, or 200 rupees worth of scrap, just enough to cover daily expenses. Normally they would move 500 rupees worth of material daily.”

If hoarders of the old notes are quickly dispensing with their stock, Bangalore’s recyclers are forced to hoard the city’s scrap material. Rafiq exclaims:

“I saw with my own eyes a sack of old notes dumped near Attiguppe, a boy got away with stealing some of the money. But the police caught the rest of the fellows trying to dig into the sack. The police themselves made away with the sack and the incident wasn’t reported in one newspaper. [Meanwhile] I face huge rotation problems. Both the houses and the owner [of the factory] give me old notes because they claim it’s all they have. Even if they give me the new notes, where will I find change? It’s not so bad when a household is exchanging old scrap for new material. In these instances, we transact only a few rupees. But at all other times I face huge inconveniences and losses.”

A shortage of cash not only blocks the movement of material but turns scrap into a desperate stock of emergency funds. Rafiq proceeds to open the doors of three adjacent rooms that he has filled in the last few days with old pots, pans, buckets, electrical spare parts, and metal. “I just took apart this washing machine yesterday,” he says, pointing to the corner, “it is my son’s birthday tomorrow, and I hope to sell all of this to my godown and get whatever cash I can. I’ll receive a low price but at least the notes will be valid.”

The national mission to purify the economy has pushed Rafiq to fill his family’s rooms with the city’s scrap. But, if the after-shocks of this economic cleansing are left to rot, the debris may spill over into the city streets.

2. Conclusion

By now, there have been many exposes, critiques, and defenses written about the demonetization decision. Even as each position differs on its emphasis, all agree that this move has had differentiated effects on Indian society—it is beyond doubt that the suffering has had class, caste, and gendered dimensions. Another undisputed fact is that the majority of undeclared wealth is not held in cash, but in domestic and foreign assets. Nuanced perspectives have pointed out that undeclared assets, commonly termed as ‘black money’, are generated rather than possessed, and it is the process, rather than the temporary stocks produced by it, that should be targeted (Vaidyanathan 2016, Sen 2016a). Others have noted how earlier, tamer demonetizations, such as that undertaken by Morarji Desai’s government in 1978, were largely ineffective in curbing the accumulation of black money, even as they didn’t cause the economic havoc we see today (Bhattacharya 2016).

But what is often under-emphasized is how all monetary decisions, not just this one, are simultaneously decisions to reallocate social power and value. Much public effort has been expended in framing the seizure of ‘black money’ as a moral and ethical project. Ultimately, this framing is limiting, even as it holds important implications for how we perceive what in reality is mainly a political and economic issue. Namely, the issue of how to convert undeclared assets into taxable income for the government treasury. Moreover, it occludes asking certain critical social questions. Who should bear the brunt of the fight against an ambiguous specter called ‘black money’? And can all undeclared assets be tainted uniformly ‘black’ in a country where the richest 1% possess 58.4% of the wealth (Chakravarty 2016), 40% of the population remain unbanked (Kumari 2016), and 43% of bank accounts remain dormant (2015)?

It is imperative that people interrogate these difficult questions in a democracy where informal activities contribute up to 45% of the GDP and employ close to 80% of the population (Sen 2016b). If they remain unasked, we risk mistaking the people that clean our cities and villages with those that sully it.

*all names used in the first section are pseudonyms. I would like to thank Kabir Arora and Nalini Shekar at Hasiru Dala, for their support with this report. I also thank the waste workers who participated in the interviews for their time and insights, as well as the Wenner-Gren Foundation for their continuing research support.

Works Cited

“In India bank account penetration surges, but 43% dormant.” The Indian Express, November 10,  2015. http://indianexpress.com/article/india/india-news-india/in-india-bank-account-penetration-surges-but-43-dormant/.

Ambedkar, B. R. 1923. The Problem of the Rupee: its origin and its solution. London: P. S. King & Son.

Bhattacharya, Ananya. 2016. “A brief history of India pulling bank notes from circulation.” Quartz India November 8, 2016. http://qz.com/831674/rupee-currency-demonetization-a-brief-history-of-india-pulling-bank-notes-from-circulation/.

Chakravarty, Manas. 2016. “The richest 1% of Indians now own 58.4% of wealth.” LiveMint, November 24, 2016. http://www.livemint.com/Money/MML9OZRwaACyEhLzUNImnO/The-richest-1-of-Indians-now-own-584-of-wealth.html.

Kumari, Chethan. 2016. “40% of India is unbanked & hurting the most; Exchange Of Currency Permitted Only Once Till RBI Review.” Times of India, November 12, 2016. http://timesofindia.indiatimes.com/business/india-business/40-of-India-is-unbanked-hurting-the-most-Exchange-Of-Currency-Permitted-Only-Once-Till-RBI-Review/articleshow/55392031.cms.

Sen, Jahnavi. 2016a. “Decision to Demonetise Currency Shows They Don’t Understand Capitalism: Prabhat Patnaik.” The Wire, November 12, 2016. http://www.thehindu.com/opinion/columns/Take-note-the-fault-lies-in-the-system/article16689336.ece.

Sen, Pronab. 2016b. “Modi’s Demonetization Move May Have Permanently Damaged India’s Informal Sector.” The Wire, November 16, 2016. http://thewire.in/80564/modis-demonetisation-move-may-have-permanently-damaged-indias-informal-sector/.

Vaidyanathan, A. . 2016. “Take note, the fault lies in the system.” The Hindu, November 24, 2016. http://www.thehindu.com/opinion/columns/Take-note-the-fault-lies-in-the-system/article16689336.ece.