“At 11:29 PM you had 2500 INR in your wallet. At 12.00 AM you had 5 pieces of paper.”
If you follow the Indian news, then you have heard about demonetization- the sudden removal of 1000 and 500 Indian currency (INR) notes, or 76 percent of the currency, from economy. This has had huge impacts, both good and bad. Every Indian has debates the merits and costs of the move. Their only certainty: that the Indian economy will never be the same.
On this blog, Mana provides an on the ground view of developing a social business in India. Because demonetization and the cash replacement process have such huge impacts on everyone in India, we to share the realities of this policy change. And we want to tell you how Mana is helping our partners with this significant transition.
Specific Issue of Cash on the Plantation
Tea estate workers lined up for payment
Before demonetization, the vast majority of workers received their payments directly in cash. Workers typically live far from towns, making access to markets, banks, and ATMs difficult. Historically, markets typically come to the tea estates instead of workers going out to markets. Every payday, community soccer fields transform into pop-up shops selling everything from fresh butchered chicken to mechanical pencils.
Children and fish at the Chota Tingrai Tea Estate Payday Market
Because of the difficulty in accessing financial services and the relative ease in shopping at these payday markets, most workers preferred payment in cash. A few workers have opened bank accounts thanks to previous government programs, but most did not before demonetization.
When PM Modi announced demonetization, all but one tea estate was caught completely unready. Luckily, the management of Chota Tingrai Tea Estate, our main partner, had already asked Mana to implement a financial inclusion project with the workers. We had started informal group discussions with workers about the cash payment system, household budgets, savings clubs, and bank accounts. In January, Mana had planned to start larger group discussions, conduct a census of all tea estate workers regarding current financial services use, and host participatory household budgeting activities.
The Nov 7th announcement advanced our schedule to Nov 8. Subsequent government circulars went further—not only will the notes change, as of December 5, all tea estates will be required to pay their workers through a bank account instead of in cash.
Mana sprang into action. Our social welfare team—Mamon, Mausumi and Joty— led by Avantika conducted a survey of all workers, determined who had bank accounts (~20%), who had ATM cards (0%), who wanted to have a bank account (100% if the bank installed an ATM on the estate), and identified workers who need assistance with updating/replacing the documents needed to open an account. Mana also identified a community representative—a daughter of a worker, but not a Mana or tea estate employee herself— to assist workers with learning how to use the ATM machine and banking in general. This identification became especially fortuitous when the government issued a requirement for such a person two days later.
Mana is assisting bank staff with planning a financial literacy camp for the workers and organizing the installation of an ATM. We are helping Chota Tingrai implement the first few disbursements of direct deposit in manner that is fair, but will not lead to the ATM machine running out of cash. We are also testing existing SMS payment schemes, similar to Africa’s M-Pesa system, as an alternative to using cash at the payday market.
Stay tuned for more updates on this exciting issue.