News these past few days has been the equivalent of a one-two punch. The cross punch arrived Wednesday (November 9) morning with news of Donald Trump winning the US presidential election. The lead punch, however, was delivered the previous night with Narendra Modi announcing that Rs 500 and Rs 1,000 notes would not be valid starting Tuesday midnight.
With one “masterstroke” as many people put it, Modi is said to have solved the problem of black money and of terrorist funding. Notwithstanding whether that has happened or will happen, with the same stroke, he also pressed the reset button on how most of India transacts. Over 80% of the transactions that happen in India are done with these notes. And now these notes cannot be used for any transactions.
I have already been living cashfree for the past 15 months or so. Most of my planned purchases are done online. I don’t remember the last time I bought something at a mall
Predictably, all companies that are trying to push India towards being a more cashless society pumped their fists. Within hours of the news breaking, PayTM’s twitter account was reminding people of their advertising tagline. The bank whose credit card I use sent me an SMS telling me that for the next couple of days, I would be getting 2x reward points on transactions under Rs 10,000. There are snide jokes all over social media about how this is a move to save Reliance’s fledgling digital payment service, JioMoney.
Given that new Rs 500 and Rs 2,000 notes are being introduced, the demonetisation of Rs 500 and Rs 1,000 notes by Modi and the RBI definitely does not seem geared to push India towards being a more cashless country. However, for the short term at least, until the old notes get replaced by the new, many Indians will be forced to lean more on ways to survive without cash.
Procrastination push towards digital money
In some ways, I have already been living cashfree (as opposed to cashless, as it’s liberating) for the past 15 months or so. Like most things in my life, it did not happen because I wanted it that way, but because my usual approach to most things can be summed up by the maxim: “When you have to do something, sit on it for a while, and then don’t do it.”
In this case, the last of active debit cards expired, and my bank promptly dispatched the new card to my old address (which of course had not been updated in the bank’s records because I sat on that too.) While I eventually did get my address updated, I never bothered to apply for the new card.
The inertia may also have been slightly influenced by the month I spent in 2014 in Los Angeles (LA), where I got by just by using a credit card, and not having to use any cash at all. Of course, given that I did all my getting around by walking or by Uber, and was not using any public transport (because back then, LA’s public transport was really horrible), I did not actually need any cash. Every establishment I had to deal with in that month was happy to accept cards.
And that’s not to say one can’t live without cash in India. We’re slowly getting there. I actually get a lot done here without any cash. Most of my planned purchases are done online. I cannot remember the last time I bought something of any worth at a store or a mall of any sort and paid by cash. Even when I make an impulse purchase like I did with a power bank at an electronics store, I can still pay by credit card.
Living without cash in Bengaluru, India
My two main day-to-day needs are transport and food. Here in Bangalore, I rely on Namma Metro and Uber entirely for getting around. I use a smart card for Namma Metro which can conveniently be recharged using the Karnataka Mobile One app. And for Uber, I have PayTM integrated, so that’s taken care of too without the need for cash.
Food is where it gets tricky. Yes, most restaurants from the Shanti Sagar types to fancy places in the Central Business District accept credit cards. But that is not where you always eat. The chaat gaadi wants cash. The Darshini for the dosa and the strong coffee wants cash. Even for places that do accept credit cards, some of them do not slap a service charge on your bill, so you will need cash if you want tip the servers. And, of course, when you are travelling, you tend to feel hungriest right at a bus stop or train station where vendors dish out things that your arteries cry out against but your stomach craves. And you need cash for that.
The last of my active debit cards expired, and my bank dispatched the new card to my old address (which I hadn’t updated). While I eventually did get my address updated, I never bothered to apply for the new card
Then there are people who need to have their poison, like cigarettes, paan, gutkha or chewing tobacco. While it’s not a use case for me, for everyone who is addicted to these unhealthy kicks, having cash handy is imperative. It’s difficult to buy a sutta (colloquial Hindi for a cigarette) at a wayside paan shop without some chhutta.
But, you can “make cash” even when you don’t have access to it. Ask me how. Whenever I am eating out in a group, I am usually the first to say, “I’ll pay by card, why don’t you pay me in cash?” And half of the times, people are happy to do that. At other times, every one ends up paying their bit by card, giving the service staff a nightmare about splitting the bill. If I am successful in getting cash in this manner, I am usually set for a month or so. And, on a couple of occasions, I have managed to get friends to pay money they owe me in cash instead of doing a bank transfer. That gives me enough cash for me to get by when I need it.
A quick back-of-the-envelope calculation, based on my monthly credit card bill, of how much cash I usually need to last me a month reveals it’s in the range of 2-5%. Though there has been an extreme case too, when I managed an entire month with nothing more than a few very unhealthy looking tenners and some loose change in my wallet. This experience should stand me in good stead for the next month or two, given the new ruling.
From cashfree to cashless
Ironically, it looks to me that the biggest impact of this move by the Modi government is on my cashfree way of life. It has invalidated the way I make my cash despite not possessing a debit card. Because, the one source of the small amounts of cash I needed to sustain my largely cash-free existence were people who were willingly parting with cash.
You can “make cash” when you don’t have access to it. Whenever I am eating out in a group, I say, “I’ll pay by card, why don’t you pay me in cash?” This is how I make cash and am set for a month
Since Tuesday night, no one is willing to part with cash, however small. At least not until the ATMs open and they have enough usable notes. So, while there are already some great analyses being done out there on how this move by Modi and the RBI impacts things like businesses, the economy, the aam aadmi, terrorism, and so on, for me the problem is existential at a more basic level.
For starters I haven’t eaten any street food for the past few days. All my eating out now has been in places that add service charge onto the bill, a practice I used to scorn earlier. I have had to kill all “dosa-coffee at Darshini” cravings mercilessly. And I still have not figured out how I will make up my “petty cash” reserve in this new world order. Thanks to this “masterstroke” by Modi, I’ve gone from being cashfree to truly cashless overnight.
Thejaswi Udupa is chief technology officer at Buildkar. He lives in Bangalore, though may often be seen at quizzes in various parts of the country on weekends. He tweets from @udupendra.