Money & Finance

Policymaking in the ‘grey zone’

  • Blog Post Date 17 November, 2016
  • Notes from the Field
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Prerna Mukharya, Founder of Outline India – a social enterprise that focuses on data collection, impact assessments and evaluation studies, predominantly working with rural populations in remote areas – discusses the impact of the currency ban on their work.

India is a land of the many but also of the divided. If you are reading this, you are probably not representative of the average Indian who lives outside urbane locales, whose consumption pattern of public utilities is significantly different from what the city dweller deems ‘normal’.

While our aspirations of giving identity to the many has made a dent, via JAM (Jan Dhan bank accounts, Aadhaar cards and Mobiles)1, a significant part of the peri-urban and rural economy still functions on the basic premise of give and take, money stored under mattresses, or sandooks2. We invest in our goats, silver bangles, or tie it up at the corner of our chunni3 .

Wives who are apportioned a certain amount every month for household expenditure, and have little say in decision-making, cut corners and save a hundred (or a few hundreds) every month in the hope of one day sending their girl child to school for a few extra months, or being able to give enough for her dowry. This leaves room for both positive and negative externalities.

In a country such as ours, the grey prevails over the black and the white. Sweeping statements don´t work and neither do sweeping policies; we often need a middle ground and we always need caveats.

At Outline India , we work in the hinterlands with a rural population. Our fieldworkers do good work and are often from the informal economy - individuals with limited educational backgrounds, who may or may not have bank accounts. This facet is not just symptomatic of our work, but that of numerous cottage industries, and shopkeepers that operate out of 4x4 feet spaces. Why this must be discussed is because it represents the majority of our population.

Data from our Facebook walls, Twitter feeds, and to a very large extent from our news channels, as consumed by you and I, are not always reflective of what happens across India. You step out of Delhi and Gurgaon, and drive down 90 minutes outside of the city and what you see, mirrors ground realities.

My field team and researchers, across Bangalore, Chennai, Bihar, and Rajasthan have been living nothing short of a nightmare in the last week. Our work came to a grinding halt in certain parts as taxi drivers stop providing services, and shops resorted to exploitative offers (say, you purchase items worth Rs. 350 in return for a Rs. 500 note). ATMs in places such as Gaya, Bihar mostly remained shut - no questions asked. One of our teams were stranded, for railway booking agents who have (informal) ‘quotas’ under tatkaal4 refused to make bookings. Some of our fieldworkers shared stories of dismay as their siblings working at construction sites and shops, got fired for ‘they were no longer needed’, as we moved towards a ‘cashless’ economy.

We have conducted studies on the concepts of ‘wants’ and ‘needs’ across numerous states in the context of financial literacy, and our findings show that many don´t approach banks as ATMs stay shut for days at a go; even if employers agree to online transactions, they must wait weeks for money to be credited; the nearest bank is an expensive bus ride away; credit in rural areas is quick and easy (even though expensive and often exploitative in nature) vis-à-vis approaching a bank which looks for ‘creditworthy’ candidates; and there is a fear of signing cheques or putting thumbprints onto documents one cannot read. In our field trips to rural areas, hotels refuse to allow you in and taxis decline services, unless you make payments in cash. If you have ever visited a Koderma in Jharkhand or a Kanpur in Uttar Pradesh for work, you would know what a battle it is to get bills and invoices to seek reimbursement from your office.

On a particularly long field assignment, for a 10-day stay for five rooms, the hotel manager made us travel to an ATM 40 kms. away to withdraw cash, or leave the premises. Swiping machines are automatically rendered out-of-service, and kitchens shut early if you mention you are carrying a card.

Nothing that I have said above is news. All of us are aware and yet our exposure to lopsided viewpoints, primes us to start believing certain realities which may be limiting (or biased) in their outlook. We find ourselves preoccupied with discussing the impact on minorities (you and I) - who must take cabs instead of autos when something as sudden as demonetisation hits us; when we take a break from our cash-on-delivery models and migrate to electronic payments.

If about 70% of our population is not online, and the usage patterns of the 30% cannot be considered as financially prudent, how do we propose switching to a plastic economy at the stroke of midnight with a newsflash?

Policy changes overnight do not maintain a complementary relationship with reforms. Measures such as the recent demonetisation follow the classic J curve - they erode wealth at the lower echelons much more than at the top.

Our problems sing a tune of the past. We live in a country where a significant proportion of the populace does not know its age (based on my experience on the ground, I would place this at about 30% or higher, in rural and peri-urban India). When you ask a respondent their date of birth, you are met with smiles, laughter, scratching of the head, a hazy or a completely arbitrary number.

India must embrace its greys, and find solutions that are not knee jerk.


  1. JAM is an abbreviation for Jan Dhan, Aadhaar, and Mobile. Pradhan Mantri Jan dhan Yojana (PMJDY) is the Indian government’s flagship financial inclusion scheme. It envisages universal access to banking facilities with at least one basic banking account for every household; financial literacy, access to credit insurance and pension facility. Aadhaar or Unique Identification number (UID) is a 12-digit individual identification number issued by the Unique Identification Authority of India (UIDAI) on behalf of the Government of India. It captures the biometric identity – ten finger prints, iris and photograph – of every resident, and serves as a proof of identity and address anywhere in India. 
  2. Sandook is Hindi for chest, trunk, or box.
  3. Chunni is a long scarf.
  4. Tatkaal tickets are meant for last-minute or immediate plans.
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