Demonetisation: In times of cash crunch, jugaad comes to the rescue

Srinivas, a farmer in Siddipet town of Telangana, fished out his wad of Rs 2,000 notes from his pocket. “This is Rs 10,000, all in denominations of 2,000,’’ he said. “This is of no use. I can neither buy a cup of tea for myself or a meal for Rs 5 nor buy a bus ticket. When I go back home, my wife also scolds me for keeping these notes which cannot be used.’’ In neighbouring Medchal district, several women are standing in a long queue at a bank, armed with lunch boxes and water bottles. Hussaini Bi said she had left her children at home and come to the bank, knowing it will be a long haul for her to get money. Another woman has to withdraw money so that she can visit a doctor. Her worry is that the doctor would be gone from the clinic by the time she manages to withdraw cash. But not everyone in non-metro India is so badly off. A well-known hospital in Adilabad district generates income of more than Rs 10 crore but files income tax returns of only around Rs 27 lakh. The cash at hand is regularly invested in real estate. When the prime minister announced on 8 November that currency notes of Rs 500 and Rs 1,000 will no longer be legal tender, the doctors running this hospital had Rs 2 crore plus in cash in hand. [caption id=“attachment_3102330” align=“alignleft” width=“380”] Representational image. PTI[/caption] The next morning, salaries of all employees for the next three months were paid in advance using the old currency. The hospital then ordered items and medical equipment it would need for the next one year. The cash was exhausted. No questions asked. The positive fallout of the crisis sparked by demonetisation is that the management now vows to transact only in white. The real estate sector has seen a slump and those sitting over vast tracts of land are an aggrieved lot. There are no ready buyers in the market and no one wants to invest in a huge chunk, fearing that Modi’s next strike will be on those who own land. And not every seller is willing to take old currency notes. But it is not for nothing that India is called the land of jugaad. This person who owns land in Ranga Reddy district on the outskirts of Hyderabad came up with an idea. He wants to sell his land for Rs 6 crore and has already prepared backdated documents for the land sale. His plan is to take Rs 6 crore in old currency, deposit it in the bank, pay 30 percent tax on the land deal that he will claim happened before November 8. This would mean he will pay Rs 1.8 crore in tax. After three months, as an incentive to the buyer, he is also willing to give him some amount in new currency as a cashback. He is trying to convince potential buyers sitting on that kind of humongous cash to settle for this “win-win deal’’. Jewellery shops came under the scanner throughout the country after it was reported that most of them reported huge purchases immediately after the PM’s demonetisation announcement. Several jewellery stores were raided after that to get a handle on the kind of turnover generated using black money. It now seems that many of these stores may have pushed their jewellery inventory underground and passed it on their friends, including several chartered accountants. The connection was made when some CAs offered to take old currency and give gold in return. Which means if you have Rs 1 crore of old currency, you can be offered Rs 60 lakh worth of jewellery. This cash would be shown against purchases made before 8 November, with some furious book building exercise at work. In sharp contrast, Mohammed Jameel in Begumpet area of Hyderabad is a hassled man. His son is getting married on 16 November but instead of making arrangements, he is standing in queue to withdraw cash. “The ATM has no money. I requested the bank manager to allow me to withdraw more but he refused to let me take more than Rs 10,000. How do I manage for a wedding?’’ asks Jameel. The refusal by bank officials perhaps is because they too are under the radar. Two Syndicate Bank employees in Saroornagar area of Hyderabad were booked over the weekend by the police for exchanging demonetised notes worth Rs 6 lakh, without the customer providing any ID proof. In the last one week, India — in its big cities, small towns and villages — is in a state of flux. In the times of demonetisation, desh badal raha hai. Watch: Firstpost goes on the road to see if Modi’s demonetisation scheme is working