Modi's cashless dream shattered: Indians pick toffee economy over Paytm
I don't know if demonetisation is good or bad. Its effects are far-reaching and we do not know enough at the moment as to what the lasting impact across sectors will be. I recently travelled across four cities, big and small, and my experience is that more than a month after demonetisation there is no change, on the ground, in the way we conduct our financial transactions.
I would have reckoned that for a businessman doing business takes priority at all times. A day lost is money lost. If one thought that everyone would start using Paytm or some other mobile payment app on their smartphones, that isn't the case. My neighbourhood grocer in Dehradun continues to do small cash transactions. I have both the Airtel wallet and Paytm but it hasn't come in use even once.
Pay up or go home
It looks like middle class Indians are willing to weather losses but they will not be shifting to a cashless economy anytime soon. The non-Uber cabbies, auto-drivers and mom-and-pop corner stores are not biting the bullet.
Forget about cashless, sales are down because nobody has change for the 2000 rupee note. The small shopkeeper is not bothered. He's selling less bread, cornflakes and turmeric than before. So be it. No eggs for you until you tender the exact amount.
In Goa, taxi unions have made sure that apps like Uber are kept out. Ola has sneaked into the market somehow but there's no visible presence. You take a ridiculously overpriced cab to Baga beach from Panjim but the taxi driver will expect you to carry cash in 100-rupee notes. If you don't he seems quite content to skip the ride and wait. E-wallet? I ask. The Indian headshake follows. This one's non-affirmative.
What Modi might have underestimated in his zeal to go cashless is that Indians are resistant to change. It's not that Indians don't change but we don't like too much change. Ratan Tata made this blunder with the Nano. He thought if you give an Indian family of four an affordable car, they will stop travelling on scooters and motorcycles. That never happened. Indians continue to transport entire families on two-wheelers, come hail, rain, cold or loo.
The logic that four wheels are more stable than two, that travelling in air-conditioned comfort with a roof to cover you is better than being exposed to the elements, does not work. Just the other day, I saw three men fall off a disbalanced Pulsar motorcycle. They seemed to be enjoying the experience.
Similarly, large numbers of Indians have smartphones, which they use to watch porn. But the same Indian will not download an app or use the e-wallet.
Modis operandi fails
In the small tavernas in Goa, there are no swipe machines. In Bandra, outside a pub called Quench, I want to buy cigarettes. The only way to do this is to buy six packets, which will bring the bill to Rs 700 or so. Even this is not enough. There is frantic consulting between the owners of the shack before the boss lady relents. I have successfully managed to break a 2000 rupee note. It's a first. I break into a war cry of joy.
In Delhi, at a farmhouse party, someone tells me his cocaine dealer arrived at his doorstep with a swipe machine a day after demonetisation. The bill slip said: Aggarwal Sweets. Looks like the drug cartels have embraced the cashless economy. Delhi dominatrices and their pimps had done so a while back.
In Mumbai, a friend I was staying with called for groceries. The delivery boy came with the rice and dal and a bill for 387 rupees. My friend gave him a 2000 rupee note. The delivery boy said lump it. My friend said: Credit? I'll pay you once we're closer to 2000 rupees. The boy went back with the groceries-his owner told him to.
This was not something Modi had bargained for: shopkeepers are saying: Theek hai, we will sell less. We can absorb the losses. Let's see how long you can go without your daily needs. But we won't go cashless.
Meanwhile hapless fatigued Indians have made the bank and ATM queues a part of their lives. It's one more hardship to normalise-along with power cuts, air pollution, seasonal febrile fevers and the fog.
A lot can happen over toffee
I am aware that the poor have been among the worst hit by demonetisation. But as a middle class city-dwelling Indian I've always been in favour of cashless transactions.
You sell a house you will be saddled with a briefcase of cash you don't know what to do with. You sell your land in white, only to find that the buyer has sold it on to somebody else in black at ten times the price. You can do jack with your honest white money. You've been priced out of the market.
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India is a nation of petty corrupt shopkeepers. These guys are the shameless ones who created the toffee economy. The loose change in every transaction would be made up of toffees. You could never offer the toffee back as currency. I thought transferring money using phones was going to end this-this crazy worry that the hardworking middle class has: that at the end of this auto ride this guy is going to keep the forty rupees in change. That this fat man selling pineapple pastries hand-over-fist will give me back ten rupees in orange toffees.
What's happened now is that the confectioner is doling out even more toffees as currency. He will not switch to any other mode of payment. The gift shop owner has arbitrarily changed the yellow stickers on his goods and increased prices. The doctor has upped his private consultation; the tuition teacher the monthly tuition. He doesn't light incense sticks and pray to goddess Lakshmi every day to go cashless.
Think about things from his perspective. He will not pay. He will make you pay for it.
(The writer's House Spirit: Drinking in India was published earlier this year)