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Demonetization impact: How Jugaad Economy Again Came To Rescue for Some

The demonetization announcement by the PM has definitely created a lot of stress in common people and a few businesses as well, which thrives in cash transaction. These include our next door grocery shop, the pan wallah, fish shop and so on. So how are people coping with the same and how has it impacted human behavior? To find out the same I dug up the last 7-8 days news reports to see & analyze various reactions from different sections of society.

Interestingly the vibrant Jugaad economy seems to have got a new life under this immensely stressful environment wise. Anyway, it is said, that biggest challenges brings in biggest innovations as well!

Let’s peek into a few based on the sequence as reported in news:

  1. 8th night(Day of announcement)

1)      At Crawford market & Zaveri Bazar in Mumbai, people were selling 500 & 1000 Re notes at 20% or more discounts. There were cases reported of 1000 Re note going for 300 in legal tender

2)      People buying large cartons of cigarettes from pan vendor accepting 500/1000 denominations. Not sure whether their spouses were so happy about it!

3)      People throng Jeweler shops to convert cash into gold. The ask rate for gold in meantime went to 20% to 30% more in grey market. Spouses may have got into some happy surprises if some of it makes it way to ornaments!

4)      Petrol pumps sees huge queue with people uploading petrol and offloading cash!

  1. 9th (Day1: Bank closed)

1)      People with black cash make a rush for hawala traders to park their money in foreign currency. No intelligent guesses here, that the exchange rates were 20%-30% more the usual hawala rates

2)      Empty malls, but long queues at chemist shop & government hospitals to make last best use of cash in the informal market

3)      20% rise in air ticket sales as people starts buying tickets in cash with the hope of cancelling them later. Some even bought weeks/ months in advance. Think of what jugaad can do when we all know well, that organizations keeps asking its employees to book tickets in advance to minimize cost but have always found it difficult to implement!

4)      Some smarter people starts buying wait listed first AC train tickets in cash at railway counters. Again the hope is that post 1% or the small cancellation charge; the entire amount will get converted to legal tender post cancellation. The rail & Air authorities took a day’s time to understand the trend and put in some rules for cancellation!

  1. 10th (Day 2, Banks opens, ATM closed)

1)      People deposits 500/ 1000 notes with their known next door kirana shops to open a credit line for their daily groceries. Good for kirana shop as well as they get assured business (no exchange/ return allowed)

2)      Some people really lost it!!! Sweeper finds 52000 dumped in 500/1000 denominations

3)      People queue up at municipal corporation offices to pay their property taxes dues. In some cases they were paying off dues for years which till that date the municipal authorities have failed to recover!

4)      Surely the government messed up the implementation of the rules. People made up 2/3 rounds of different bank branches showing a big thumb to the 4000 limit the GOI had placed for one time exchange in cash

  1. 11th (Day 3)

1)      Dead Jan Dhan accounts flushed with money as middlemen/ agents/ black cash holders starts depositing in less than 50,000 cash of 500/1000 Re notes at rural bank branches in various accounts. The actual account holders got a good commission though!

2)      Payments of civic bills, utilities bills in cash shores up. 217 crore deposited to various Mumbai civic authorities in 1 day

  1. 12th (Day 4)

1)      Candidates in various upcoming elections starts bribing the ruling councilors in gold bars of 100/200g to woo them

  1. 13th (Day 5)

1)      People starts shifting to card payments only to find that first time usage is always a challenge. Expired PIN and other usage issues, leads to crash of payment servers

2)      Householders pays their maids etc in cash advancing for the next year even

3)      Instance of a NPA defaulter for 4 years, turning up at the bank branch to clear off dues…all in 500/1000 Re note. The same person had expressed ‘inability to pay’ earlier when notices were sent!

4)      Instances of daily wagers etc given 50/100 notes to stand in line & exchange on behalf of black money hoarders. The identity card of these daily wagers perhaps gave the best ever return on that day!

  1. 14th (Day 6)

1)      Barter system peaks up at villages.3 kg cauliflower for 1 kg of fish. But I eat my fish with cauliflower, so not sure what would have been my going rate!

  1. 15th  (Day 7)

1)      In Kolkata, a septuagenarian shows up at his estranged wife place to pay his long standing alimony due in 500/1000 notes. Unfortunately for him, the wife was not impressed. The man is send to jail the next day!

2)       Cash mules in action: Elderly woman, truckload of people arriving at branch with huge cash and high number of ID cards for exchange and deposit to different accounts.

3)      At a small Mizoram village, paper being used temporary as promissory notes to get over cash crunch, papers bears amount & signature of the issuer

  1. 16th (Day 8)

1)      Politicians with black money queues up to remote cooperative banks (which are still run on physical ledgers) for backdated FD/DDs to make use of their 500/1000 notes

2)      A few in UP rings up real estate agents to offer cash component at 40% discount. Converting black cash to real estate/ lands etc


There are a lot of jugaad happening from use of plain paper promissory notes to barter system and more heinous ways like buying gold & land or using dummy to beat the system. And it again proves how innovative we can be, if need be!!!

Challenges also throws up the good & bad side of human beings. While a lady doctor refusal to admit a patient who did not have enough legal tender led to the death of the infant, good sense prevailed in a long queue at a branch in Jaipur, where people made way for cash strapped groom so that he can avail the exchange facility fast. Not to mention, of good Samaritans being found to distribute water, cakes/ food packets to people in long queue.

Hope you have found reading this interesting. If so, leave your comment on what else you have observed in these days!



Source: TOI newspaper reports, News in various digital mediums

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