Demonetisation showcase village junks its PoS machines

18 September 2017

The Narendra Modi government implemented the controversial demonetisation of November last year partly to usher in a less-cash economy, but here's one example of how India just isn't ready to go cashless.

Dhasai, a mid-sized village in Thane district just north of Mumbai, had shot into the news after demonetisation as ''India's second cashless village and Maharashtra's first''.

From stationery shops to beauty parlours, news reports declared, everyone had installed point of sale machines - sponsored by the Bank of Baroda - to encourage a shift to digital transactions. reports that when it visited Dhasai in the third week of December, many shopkeepers were enthusiastic about the new machines that would allow cashless sales.

But 10 months later, it is a very different story.

''You want to know where the machine is now?'' Pravin Gholap, owner of a kitchenware and stationery shop, asked a reporter on a recent revisit. ''I will have to look for it.''

Gholap and his assistant scrounged through the crammed shelves of his shop for a longish while and finally found the machine tucked away behind boxes of fireworks.

With cash easily available once again, there are almost no takers for cashless transactions at least among small shops like Gholap's, as merchants reckon with transaction fees, poor network connectivity and a simple lack of bank cards among customers.

Around 70 of 100 members of the local traders' body, Dhasai Shahar Vyapari Association, opted for the free point of sale machines in December, according to its president Swapnil Patkar. Today, traders say only around 25 still have functioning machines, and even they mostly do not use them.

''We used it for just 15 to 20 days and that too when we specifically asked customers to pay by card,'' Gholap said. ''Now the machine itself doesn't work anymore so we just put it away.''

Scroll reported that initially, the problem was that most of his customers did not have debit cards because they did not have bank accounts. Without steady jobs and regular salaries, many did not see any value in keeping one. Even those who had bank accounts for instance, shopkeepers stopped depositing cash earnings in banks.

''The ATMs did not have cash so people did not deposit their earnings at all,'' Gholap said. Depositing cash would mean difficulty and long waits for withdrawals. ''Since they did not deposit money in the bank, they could not use debit cards even if they had them and wanted to.''

Another problem was poor internet connectivity. This meant transactions on the machines did not get logged, leading to general disgruntlement.

Many shop-owners in Dhasai did not opt for the point of sales machines in the first place.

''It was just drama,'' said Eknath Dhavad, a tailor on the main street. ''Only those who are regularly employed use it. There is no MIDC (Maharashtra Industrial Development Corp) or highway near this village so most people don't have that kind of job. If the customers themselves don't have cards, how will anyone use machines in this tribal area?''

According to the Scroll report, Sachin Tupange, who runs a store that sells ladies' watches, lipsticks and nail polish, also never opted for a point of sale machine. His customers are women who do not have debit cards. His sales usually slacken at this time of the year, in the months between Ganesh Chaturthi and Diwali. This year, however, because his business never really recovered after demonetisation, the slump is far worse.

''Mostly ladies buy only items worth less than Rs500 so they use only cash anyway,'' Tupange told ''But they have been buying less of late.''

So was demonetisation worth the financial disruptions it caused? Among economists looking at the larger picture, the jury may be still out though the balance of opinion is that it was misconceived but for villages like Dhasai, it was clearly a disaster.

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