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The Poorest Suffered the Most From Demonetisation: Meera Sanyal

Meera Sanyal passed away at the age of 57 on 11 January 2019. Read our interview with her.

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(This story was first published on 7 November 2018 and is being republished with minimal changes in light of the fourth anniversary of demonetisation on 8 November 2020.)

On 8 November 2016, millions queued up outside banks and ATMs across the country. People were desperate to draw out cash as the Central Government had, in a single stroke, banned all 500 and 1,000 rupee notes in circulation. While the chaos that the country was immediately plunged into was extensively documented , two years since, have Micro, Small and Medium Enterprises (MSMEs) managed to shake off the after-effects of demonetisation?

Banker Meera Sanyal explores these after-effects on the Indian economy in her upcoming book ‘The Big Reverse: How Demonetization Knocked India Out’.


Speaking to The Quint, she points out that the Government’s intentions of tackling black money through demonetisation have failed completely.

“It didn’t tackle black money. Didn’t tackle corruption. These were great intentions but demonetisation hasn’t worked in the past and it hasn’t worked this time. It was mentioned in the Supreme Court that it was a carpet bombing of the Indian people and its economy and I think that’s a good description because this touched every single person and harmed every single person to a different extent. The poorest suffered the most but everyone suffered.”
Meera Sanyal to The Quint

MSMEs Still Haven’t Recovered

“On the day demonetization was announced, my mother and I had just arrived in Delhi, breaking journey for a few days on our way to Ajmer and Pushkar. The note ban had us scrambling to try and exchange notes to manage expenses for our travel. It proved to be more difficult than we imagined, and we each spent several hours in bank queues – only to end up with a few unusable ₹2,000 notes.” 

Summing up the experience of crores of Indians, Sanyal goes on to document how hard MSMEs were hit due to the note ban, focusing on the impact it had on every industry. While addressing the plight of small manufacturers, she writes:

“Employing millions of workers, these micro and small industries were starved of working capital and forced out of business. A survey conducted by the All India Manufacturers Organization (AIMO), representing more than 3,00,000 industries engaged in manufacturing and export activities, showed that post-demonetization there was a 35 per cent drop in employment and 50 per cent drop in revenues. AIMO stated that almost all industrial activities have stopped, with the small and medium-sized enterprises being worst affected.”

Leather Manufacturers and Tanneries

Narrating the struggles of the leather footwear manufacturing units at Agra, which are reportedly around 10,000 in number and provide employment to nearly 5,00,000 people, Sanyal writes:

“In Quazipada, Agra, home-based microunits produce over one million pairs of shoes every day. A shoe passes throughat least five to six hands before finally reaching the stores. ‘A fitter gets ₹20 pershoe while the one who fixes the sole gets paid ₹15 per pair. The onewho puts the lace gets ₹4–5 and the man who does the pasting and stitching gets ₹10–15 for every pair. This is the price for a pair of rexine shoeswhile this gets doubled in the case of leather shoes,’ says Taj Ahmed, theowner of one such small unit. ‘Nine of my 20 workers have left the job since 8November. The others simply sit around as I have not been able to source rawmaterial with the limited money I have.’”

The Textile Industry

India’s textile industry, that contributes between 2 to 3 percent of the GDP, are yet to recover from the blow dealt by demonetisation. Taking Maharashtra’s Bhiwandi as one the many examples from across the country, Sanyal writes:

“Bhiwandi, Maharashtra, holds more than a sixth of India’s 6.5 million power looms, and is one of India’s largest power loom hubs, providing direct employment to a million people. ‘Only 20 per cent of these (Bhiwandi’s looms) are running today,’ said Mannan Siddiqui, president of Bhiwandi Textile Mills Association. ‘Notebandi ne humko paanch saal peeche fek diya (Demonetization has set us back by five years),’ said Asad Farooqi, 65, a labour contractor who has been running more than 100 power looms for about 30 years.”


The note ban left farmers severely affected. Unable to procure new currency as co-operative banks ran out of cash, farmers were forced to watch their crops rot or sell them at very low prices. Quoting news reports, Meera Sanyal writes about the case of a farmer from Nashik.

“The price of tomatoes at Girnare mandi near Nashik, Maharashtra dropped to as low as 50 paise per kg, making it impossible for farmers to recover the investments they made while sowing. Faced with the alarming fall in the price of tomatoes, Yashwant and Hirabai Bendkule, a poor adivasi couple, were forced to destroy their crops because keeping them standing would result in a greater loss”

(Published with excerpts from Meera Sanyal’s ‘The Big Reverse: How Demonetization Knocked India Out’ with the permission of HarperCollins. The excerpts have been extracted from the book’s 4th chapter, ‘The Human Impact’.)

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