Misery in rural India: The government should listen to its own bureaucrats

If the government thought media was exaggerating the prevailing “cash chaos” and focusing excessively on urban India, its own officers’ report has confirmed that the situation is far worse in rural India. A team of 81 Central bureaucrats sent on November 18 to assess the ground-level impact of demonetization in rural India has pointed to a loss of jobs in farms and factories. Among those badly hit are tiny, small and medium enterprises where cash payments used to be the norm. Handlooms have suffered as cloth sales have declined. In the absence of currency notes of smaller denominations farm produce prices have dipped. The non-operation of cooperative banks has added to farmers’ worries during Rabi sowing.

The uneven spread of bank branches and ATMs has deprived villagers and daily wagers of whatever limited currency relief that has been rushed to tide over the situation. It is a known fact that rural and semi-urban bank branches cater to more customers than the urban branches do. A geographically large state like Rajasthan has fewer bank branches than Delhi. Given the limited reach of banking, much of rural India relies on cash deals. Media reports say actual or rumors of scarcity have led to the hoarding of 100-rupee note, while the inadequate availability of the new 500-note has also contributed to financial dislocation. Even where the 2000-note is available, it is of limited use since the lower denomination currency needed for change is unavailable.

The net effect is hiring has slowed and reports of retrenchment stand confirmed. Though people in rural India often show greater patience in moments of crisis, their capacity to bear pain is lower than those in urban India. For them it is not just inconvenience, it is a loss of livelihood. Maybe the government should put the national rural job guarantee scheme to greater use, particularly in areas where survival is already at the marginal level. This is callousness foretold. A regime that prides itself on knowing the country and its needs better has been found wanting. Its incompetence and arrogance are spelling misery in rural India.