Havoc of Cash Crunch

The latest demonetization move is being touted as masterstroke by most of the people in the ruling party. Many eminent economists and top honchos of the corporate world are also showing their rock solid support behind the noble task of removing the scourge of black money from India. Opposition is opposing this move and that is what you can expect from any opposition party, i.e. to oppose every move of the government. I am not an economist to clearly understand the long term implication of this move on our economy. So, to understand this matter, I try to decipher numerous articles written in newspapers. But being a common man who fits somewhere in the middle class bracket, I am confident of having a fair sense of havoc which a cash crunch can play with the day to day life of a common man. This story is based on one such incident.

It was the period of early nineties when ATM cards and online banking were yet to arrive on the scene. So, almost all the transactions of a common man took place in cash. I was working for a pharmaceutical company which was notorious for paying peanuts to its medical representatives. To add insult to injury, the company often used to withhold expense reimbursement on some pretext or the other. Whenever I had to go for an outstation tour, I had to carefully plan for my expenses so that they would fit in with my allowances and salary.

On one such trip, I had been to Hazaribagh from Ranchi. I had to stay at Hazaribagh for two nights to finish my work. I was getting fifty two rupees as outstation allowance and was allowed to charge the bus fare for two seats. If I recall it properly then the bus fare from Ranchi to Hazaribagh was thirty rupees. The hotel; where I used to stay used to charge forty rupees per night for a room. After careful planning, I took the required cash in my pocket and proceeded to Hazaribagh. It was enough to take care of bus fare, hotel stay, food bill and my daily dose of nicotine for two days’ working.

On the morning of the third day, I had just enough money to pay for rickshaw from hotel to the bus stand, bus fare from Hazaribagh to Ranchi, rickshaw fare from Ranchi bus stand to my residence and some extra money to enjoy on 100 g of peanuts during the bus ride.

When I reached the bus stand, there was no bus in sight. There were a few stray persons and numerous stray dogs on the bus stand. When I enquired about the unusual calm at the bus stand, I came to know that since it was the day for Ramanavami celebrations so there would be no buses to go anywhere. I had no other way than to return to my hotel.

But I was not having enough money to pay for hotel stay and other expenses to make my extended stay comfortable. I was a new recruit so I did not have enough confidence to ask for credit from the hotel guy. Nevertheless, I went back to the hotel and told the receptionist about my problem. He told me not to worry and offered to give credit for my extended stay. Being an introvert person, I did not want to take his obligations. So, I was thinking of some other way to come out of that situation.

Suddenly, I recalled that one of my cousin brothers; a distant relative; was living in Hazaribagh. He was working for LIC (Life Insurance of India). He was five years older than me. I thought of taking his help. I waited for the clock to strike ten. The hotel staff told that the LIC office was about two km away from the hotel. In order to save my every penny, I walked up to the LIC office. To my great relief, I spotted my cousin brother sitting on a chair in the office. He recognized me which was evident from his wide smile. After exchanging pleasantries, I mustered up some courage to share my problem with him. He came out of his office and kick-started his scooter. I hopped on the pillion seat and we reached to the hotel. After collecting my luggage, we went to his residence. He was living alone; as he was still a bachelor.

After coming back from his office in the evening, my cousin brother made food for us. He tried his every effort to make my stay comfortable. But I was so worried and depressed because of the cash crunch that I could not sleep through the night.

Next morning, he drove me to the bus stand and gave me hundred rupees. I repaid the money in due course of time but will never forget the immense value of those hundred rupees till my last breadth.

Money is called a necessary evil for no reason. When you have sufficient money, it gives you a confidence. It even gives confidence to your friends and relatives. But when you are running short on money; even your friends and relatives turn away from you. You may not get the prestige at family and social functions if you are poorer than most of your relatives and friends.

At present, many people have become a lot poorer in spite of having cash with them. Contrary to what is being shown on TV or announced by the government, many banks are not giving even the minimum amount of cash to their customers. Practically it is not possible for everybody to sacrifice a whole day’s work just to stand in a queue outside the bank.

It is like 95% income tax which was the top tax rate during Indira Gandhi’s time. Let us assume that I earn one lakh rupees in a month. Out of that, about 33,000 needs to be paid as income tax. All my payments come via online transfer so I cannot evade taxes. Out of the remaining 67,000 the government takes away 86% which translates into 57,000 (approx). This leaves me with just 10,000 rupees. As I am earning one lakh rupees so I am paying 25,000 as house rent. This leaves me in negative. Can anybody tell me how to buy my daily bread with the money I am left with?  Someone will say that you can make online payment. I do pay my telephone bill, electricity bill, house rent and many other expenses online. Yet I need some cash to buy candy for my son. I need some cash to satiate my craving for nicotine, to pay for my haircut, the list can be endless. My wife too needs some cash to pay to the beauty parlour, to the maid. My maid does not want to pay 4% charge to the Paytm.