.jpg?auto=format%2Ccompress&fmt=webp&width=720)
Ashok Pandit, a salesman at Wasim Silk Emporium in Varanasi’s Lallapur area, is busy watching news about the city gearing to greet Prime Minister Narendra Modi, who visited his constituency on Thursday.
It is peak season for Varanasi’s silk weavers. But Pandit’s showroom wears a deserted look, as footfalls have thinned thanks to the currency crunch that has affected the silk weaving sector. Behind the showroom, the manufacturing unit too is deserted and the cranking looms have gone silent. This is true for most weavers in Lallapur, a silk weaving hub in the old temple town.
Looms Gone Silent
Lallapur is home to some of the most skilled Muslim weavers and known for producing the city’s best silk sarees and furnishings. But this season, the looms have gone silent and customers have vanished. The bigger weavers like Wasim Silk Emporium have seen production drop by 50 percent, says Pandit, with demand down by a similar percentage. The existing stock is being sold at significantly cheaper prices as they are desperate for liquid cash to pay weavers. Waseem Silk had an output of 200 silk sarees a month, which is now down by half. Pandit says:
We are unable to withdraw more than Rs 50,000 a week, so we cannot buy raw material and pay labourers. We supply sarees to the rest of India and demand from other big cities is also down by half. But we expect it to return to normal from January if curbs (on cash withdrawals) are removed.
The plight of the smaller weavers, who sub-contract work for the bigger players, is even worse. The deserted shop floors is symbolic of the massive human cost the Modi government expects the poor to bear to fulfill its ambition of making India a cashless economy in one shot. Going by what local businessmen say, it may not be that easy to achieve.
But the worst hit are clearly the weavers. Currently, there are more than 30,000 daily wagers who work as weavers for Rs 300 a day. More than half of them are unemployed now.
No Cash Crunch, But Joblessness
Varanasi’s problem is not inadequate cash, unlike the rest of India. Varanasi, like many other towns and business hubs in Uttar Pradesh, is battling a much bigger crisis of slackening demand and consequent joblessness. Production of the famed Benarasi silk sarees is down by half and weavers have been let off.
The Benarasi handloom silk weaving industry has been in decline with power looms replacing handlooms. The number of handlooms has fallen to 30,000 from 100,000 a couple of years ago.
The number of weavers has plunged to 40,000 in 2015 from over 300,000 a few years ago. The post-demonetisation crisis will force skilled artisans and jobless weavers to abandon their profession and look for other work.
As mentioned before, unlike the rest of the country, Varanasi does not suffer from a shortage of cash of any denomination. Most of the ATMs are flush with cash and banks are liberally disbursing currency notes in denominations of Rs 100 and Rs 50.
Currency Supply not Helping Poor
Be it the prepaid taxi counter at the Lal Bahadur Shastri International Airport in Babatpur or the popular Baati Chokha restaurant, getting change for Rs 2,000 note in Varanasi is a breeze. The police officer manning the pre-paid counter at the airport, however, complains that while banks are issuing Rs 100 notes, demand is very high. Besides, there aren’t too many point of sale (PoS) machines, he says.
But supply of currency notes is not helping the poorest of the poor in the Prime Minister’s constituency. Varanasi’s unemployment crisis is not limited to the silk weaving industry. The city sees a large number of tourist arrivals in the winter months. But the government’s “surgical strike” on Rs 500 and Rs 1,000 notes has hit tourist arrivals (both domestic and foreign) and the local tourism economy is on its knees.
Boatman Forced to Beg in Modi’s Varanasi
Dashaswamedh Ghat, the main ghat where tourists throng every evening to see the magnificient Ganga Aarti, is sparsely populated these days. With tourism down to a trickle, incomes of hotels, restaurants and boatmen have seen a sharp decline.
Pawan Kumar Sahani, a boatman at the Ghat, says his income is down to less than Rs 100 per day from nearly Rs 500 per day earlier. He has now been forced to beg on the ghats and depends on free meals served by the Annapurna Temple.
Survival is not easy, but Sahani believes that the crisis will end in a few days. But when you tell him that the cash crunch will continue and people may have less money on hand to spend on things like travel, his fear is palpable. He says:
But the government has said that notebandi will lead to economic development. Is that true? But if people don’t have money to spend on travel, how will I survive?
Varanasi Residents Questioning Currency Ban
Sahani’s plight brings to mind the famous management story of the chicken and the pig’s commitment to a cause. Whilst producing a ham and egg sandwich, the pig is totally committed to the dish and gets killed for it to be served. But the chicken’s contribution in contrast is not absolute as it only contributes to it by parting with eggs.
In this demonetisation gambit too, the government’s commitment is not absolute. But it expects the populace to pay for it with its very source of livelihood. The poor and illiterate of Varanasi are now beginning to ask if this was the only way to achieve the objectives (which keep changing every now and then) of the government’s demonetization programme. And was it fair on the government’s part to put citizens through so much hardship?
These are questions to which there are possibly no answers at this point. Economists are divided on the extent of demonetisation’s impact on economic growth. Moody’s said in a press release that households and businesses would experience liquidity shortages with the government taking cash out of the system and imposing curbs on fresh withdrawals.
Corporates will see economic activity decline, with lower sales volumes and cash flows, and those directly exposed to retail sales will be most affected.Laura Acres, Group MD, Moody’s Corporate Finance
Digitisation Not as Easy as PM Thinks
However, digitisation may not be as easy as PM Modi envisages. The lure of lotteries may not be sufficient to bring local traders into the digital economy. The owner of Ram Bhandar, a popular sweet shop in Varanasi’s Nadesar area, says that the shop does not accept card payments and does not intend to do so either, even if it means lower business. Literacy levels in Varanasi are low, he says, and it will be very hard for people to migrate to digital payments. Ram Bhandar’s business is down. But the customers are slowly returning with remonetisation and the incentives for switching to digital modes of payment aren’t attractive enough for him.
The government may be stressing that the post-demonetisation woes are nearly over and is pushing for digital transactions. But in PM Modi’s own constituency, the poor continue to suffer, and digital modes of payment may not find too many takers.
(Malini Bhupta is a Mumbai-based senior journalist. she can be reached on Twitter @malinibhupta.)
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)