There's nothing to beat cash

Geetanjali Krishna explains how earnings of local vendors dropped to almost zero in the first week of demonetisation.

Last week, when I bought some fruit from a local vendor, he didn’t have change for the Rs 2,000 note I gave him. Just as he was running around to nearby vendors asking for change, another customer also handed him a Rs 2,000 for six bananas. The vendor flatly refused. The customer noticed a faded sign on his cart which said “Paytm Accepted Here”. “I can pay you through Paytm,” he offered. The vendor snorted: “The early days of notebandi forced me to adopt Paytm”. “Within months, when it was back to business in cash, I stopped accepting e-wallet payments altogether.”

Like others in the street vending business, his earnings too had dropped to almost zero in the first week of demonetisation. Like other street vendors, he too found he had no money to buy from the wholesale market. “Many of my rich customers offered me bags of cash, asking that in return I gave them a fixed amount of fruit every week for a year,” he recounted. “But the lines to change notes in the banks dissuaded me.” 

Instead, he went through a period of extreme pennilessness as the demand for fruit took a nosedive at a time when people were more concerned with buying the basics. Initially, he was resistant to the idea of e-wallets because in his line of work, it was all about having cash in hand rather than deposits in the bank. “I was forced to adopt this payment method for the sake of somehow keeping my family afloat,” he said. “So for some time, the payments I made to the wholesaler and accepted from my customers were all electronic.”

What made him return to the old system of cash payments, I asked. “Demonetisation jogged my faith in banks,” he said. In his view, among his peers in the vending business, those who had cash in hand, survived demonetisation better than those who have money in their banks. “At least they had some notes to trade,” he said. “I had just deposited my week’s earnings in my account when notebandi was announced — and the crowds outside the bank next morning made me wonder if it would collapse and take my money with it.”

Cash, he declared as he put my fruit in a bag, was definitely back in the market. “As a fruit vendor, when I see the demand for expensive exotic fruit like black cherries and California grapes go up, I can tell that my customers have black money to spare,” he said. “People rarely splurge on fancy fruit otherwise.” Although his daily expenditure in the wholesale mandi has gone up, so have his profits. 

“Memories of the first two weeks after demonetisation when I could barely make ends meet let alone pay my room rent, still linger — luckily my landlord was understanding, else I’d have been on the road!” he said. So the first step he took after his business stabilised was to spend his savings on a shanty in Sangam Vihar. “It’s small, but it is security against any future economic shocks like notebandi,” he said. He is also stashing away a contingency fund in small notes. As he put it: “The government can say what it likes, but there’s really nothing to beat cash.”