A lot has already been said by people of different locations, age groups, understandings, religions & economic structure on demonetization. There was no use of me writing more on this issue.Some friends wished to know my view on this subject which made me write this.
from today’s newspaper
First of all i wish to say that i too am a normal human being like any other Indian who was a bit more or a bit less impacted by this move of our government.
Secondly, being from the Chikan-kari industry i’ll wish to stick to my arena and will provide insight related to this trade only which i think no one has till now. It took me such a long time to write here was only because i wished to get the full report before writing about this. It became like a moral responsibility for me to open all pages and analyse before posting anything here.
8:00p.m. 8th November, The notice reached just some people. It started spreading like wildfire till midnight. Then too, till then just 30% knew about it. Many were passing it off as a gimmick or a joke.But people became aware after reading the morning papers on 9th November. Still 10%-15% had no idea. Till writing this i understand that people in remotest part or people of non-socio circles which amount to 2500 – 3000 are still not aware of this move.
Rest about this demonitization can be read on https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation so i wish to take you back to my subject – Chikan & Demonetization.
As you all are aware that Chikan-kari is a small scale industry which falls in the un-organised sector mainly because the people involved in this are from the ill-literate to low literacy category. The low literate category is by large (but not mainly) the trader or manufacturer who either does not know to keep the accounts or does not wish to fall in the tax net.
All from my industry, like all other citizens, were in a state of shock till 9th November as to where they will put in their accumulated (and / or unaccounted) wealth and in a state of confusion till the end of the month as many were doing brisk business by accepting old currency.
Those who had lots of cash started clearing all their dues including due (some also gave advance 2-3 months’ salaries) wages to their staff & artisans. They also cleared pending bills of their creditors / suppliers Till Date in old currency on ‘Take It or Leave It’ basis.
God knows how these wealthy suppliers (of thread & cloth) managed the payments received from these manufacturers but the artisan was really taken aback by this move because already note exchange was not very easy in rural area banks due to cash crunch and settling this received payment made them go in hibernate mode of wait & watch till November end.
Come December, Lucknow, like any other place, started hoarding the new currency received by fair or unfair means from the bank. Everyone had all their money back but were fascinated by the new notes so much that they did not wish to part with it by giving / spending. Also that the new denomination of Rs.2,000 was not very easy to spend at small outlets due to shortage of smaller denomination notes.
SBI Chairman had to plead people to start spending to normalize the effect
Outside orders were not coming in and Chikan had to survive on just the local retailers where almost 90% – 95% of sales were coming from digital means. Sale was good as it was the mid of the wedding season, Lucknow was abuzz with tourists attending these marriages. This sale was going directly into the retailers’ accounts. Retailers were giving payments to the wholesalers / manufacturers by cheque. So we can say that almost regular business was going on and Chikan industry had no impact of demonetization.
Here comes in the plight of the artisan as well as problem for Chikan-kari.
It won’t be wrong to post here that this all (demonetization) opened up the records of the artisan, or better corrected, the middle men, who were understood to be a downtrodden part in Chikan-kari trade were making a lot of money without any bank accounts, without any tax and its not just being said here without relevance and proof.
A decent manufacturer pays out almost 1-2 lakhs per middlemen per week (or max per fortnight) and there are at least 5-8 middlemen who work for this manufacturer. So this manufacturer needs around 5-8 lakhs as a minimum each month to keep the business running. But the government gave a limit of 24,000 per month to be withdrawn from an account in cash. There was no limit for cheque / digital payment. So the option of giving the artisan by cheque was the only option with manufacturers.
Here its interesting that first the artisan had not opened a bank account due to religious belief and unknowingness of operating of an account and second that even if he has an account, he deposits it in his account, it clears in 20-25 days because all banking staff in Lucknow is busy with the rush in the bank leaving no time to attend clearings. And even though this was not enough, he’ll have to pay for his needs in his village by digital / banking transaction. This makes it not wrong to say that Chikan production stopped for almost these 2 months.
The problem with the Indian population is that we want everything for free. Its just the 1.25 crore people in India above the income limit who pay tax out of which many are in the salaried section where it becomes a compulsion to pay tax. Is it not a cruel joke?
Now the real test for the artisan will be to keep accounts, though this won’t be easy but he’ll be bound to pay tax and contribute to nation’s progress which he was evading till now.This lash on the middlemen / artisan is being welcomed by manufacturers. It was because of this missing link that many nation loving, tax paying manufacturers were manipulating with their account books and therefore stacking unaccounted wealth & not contributing to nation building by evading proper / full tax.
Whatever was the outcome, the end has become to be very happy. Artisans have opened their accounts now and they have started understanding how to transact digitally.
krishna chikan 