India's War On Cash Is Forcing The Rich To Beg The Poor For Help

Tyler Durden's picture

Authored by Amrit Dhillon, originally posted at The Sydney Morning Herald,

Driver Rahul Sharma, 25, remembers the exact day when his employer turned from a wolf into a lamb. It was November 9 when his employer called him  beta  - Hindi for "dear" - for the first time. The maid was asked to give him a cup of tea, for the first time.

"I was shocked at his sudden niceness. It went on for two days," said Sharma. For the past three years, his New Delhi-based employer has been abusive, bad-tempered, and imperious, often demanding that he turn up for work at 6am after finishing work at midnight.


"He didn't even bother to remember my name. When he wanted to summon me, he'd call out 'driver!'," Sharma said.


"On the third day, the penny dropped. He asked me to deposit 250,000 rupees ($4900) in my bank account on his behalf so that he could get rid of his black money."

An Indian woman shows discontinued Indian currency notes and a photocopied ID card as she queues outside Reserve Bank of ...

An Indian woman shows discontinued Indian currency notes and a photocopied ID card as she queues outside Reserve Bank of india. Photo: AP

Maids, drivers, nannies, and cooks in India are experiencing unusual politeness from their employers. Beyond the work they do every day, they suddenly have another use – to launder the undeclared cash which the rich have been hoarding in steel wardrobes, under the mattress and in under-bed storage.

This sudden outbreak of niceness is the outcome of India's current crackdown on "black money" - income in the form of cash that has not been declared to the tax authorities. On November 8, the day before Sharma's employer became a lamb, Indian Prime Minister Narendra Modi scrapped 500 and 1000-rupee notes to root out corruption and force more Indians into the tax net.

In one fell swoop, the tens of millions of rupees that the rich kept at home in these denominations became worthless. If they deposit the money in the bank tax officials will pounce, imposing staggering penalties and taxes.

However until December 30, each Indian is allowed to deposit a smallish sum of 250,000 rupees in such defunct notes in their bank accounts without questions being asked. That is why the rich need the service of the poor.

A presswallah who irons the clothes in the Indian capital says he was asked by three clients to deposit 200,000 rupees ...

A presswallah who irons the clothes in the Indian capital says he was asked by three clients to deposit 200,000 rupees in his account in return for a payment of 10,000. Photo: Amrit Dhillon

Sharma and others like him have been implored by suddenly humble employers to deposit the amount in their accounts by the deadline - to be returned to their employers later.

"I refused him. I don't want to get into trouble later if someone asks me how I got this money when I'm only a driver," Sharma said.

Coconut water seller Mohan Kishore says the cash crisis has made it hard for him to pay his suppliers but he feels the ...

Coconut water seller Mohan Kishore says the cash crisis has made it hard for him to pay his suppliers but he feels the hardship is worth it for the "punishment" of the rich. Photo: Amrit Dhillon

Domestic staff and factory employees are going around with big grins, delighting in the panic and anxiety etched on the faces of the fat cats who never showed them any consideration, not to mention the delicious irony of being beseeched by their now squirming masters.

Modi's message in a recent speech - "see how I make the powerful suffer with you" - has resonated powerfully. "For once the rich are as troubled as we poor Indians are every day," said Akash Atwal, a driver with a New Delhi car rental firm.

Greengrocer Bittu Bharati in Lajpat Nagar, south Delhi, has been offered payment in advance for the fruit his clients ...

Greengrocer Bittu Bharati in Lajpat Nagar, south Delhi, has been offered payment in advance for the fruit his clients will buy over the next year. Photo: Amrit Dhillon

In return for depositing the scrapped notes, domestic staff and others are being offered 10 to 25 per cent as commission. Some have accepted, happy to pocket an unexpected windfall; others, fearing trouble, have refused; and others have refused out of the principle that, if some big fish have been caught, leave them wriggling at the end of the line.

In their desperation to get rid of their ill-gotten money, rich Indians are dumping sacks of notes into the River Jamuna in New Delhi. Some have made a bonfire of their cash at some deserted place before running away to avoid identification. Police have stopped cars filled with suitcases stuffed with 1000-rupee notes, their drivers rushing to distant relatives they haven't seen for years to ask them to deposit their cash.

Rupee withdrawal: customers wait in line to exchange discontinued rupee banknotes at a Bank of Baroda branch in Dadri, ...

Rupee withdrawal: customers wait in line to exchange discontinued rupee banknotes at a Bank of Baroda branch in Dadri, Uttar Pradesh, India. Photo: Bloomberg

"Some families who buy fruit from me regularly wanted to get rid of 100,000 ($1900) worth of notes by paying me in advance for the fruit they will buy over the next year" said Bittu Bharati, who runs a fruit stall with his uncle in Lajpat Nagar.

Others who are usually paid in cash – florists, beauticians, personal trainers and "presswallahs' who iron clothes in neighbourhoods – have also been told they can have their services paid for two years in advance, just so that affluent families can dispose of their expired cash. Then it's up to them to exchange the money at the bank.

Indians stand in a queue to deposit and exchange discontinued currency notes outside a bank in Allahabad, India.

Indians stand in a queue to deposit and exchange discontinued currency notes outside a bank in Allahabad, India. Photo: AP

Some Indians are being too clever by half. A divorced man who had defied the courts by refusing alimony to his wife was seized with a new respect for the law and offered to pay her the arrears - in the banned currency notes. The judge threw him in jail until he paid in the new notes.

Domestic staff have been chuckling while exchanging stories of what's been happening in the homes of their employers: sudden palpitations, wailing wives, altercations over how to get rid of the banned notes, profuse sweating and pure despair.

Chemists have reported a spike in the sale of sleeping tablets. Mumbai hospitals have reported a surge in panic attacks. But some doctors are feeling queasy themselves – it's estimated that about 40 per cent of doctors are paid in cash.

"I'm an ordinary man and I'm suffering hardship too. I was in a long queue on Saturday. But it's worth it. The rich need to be punished for being greedy. I am savouring the moment," said a smiling Mohan Kishore, who sells fresh coconut water on a South Delhi street.

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LawsofPhysics's picture

My advice remains the same to people with real assets and cash.

become your own bank!!!

Traditional banking is long dead, fuck em!

"Full faith and credit"

tick tock motherfuckers!!!

Fizzy Head's picture

And the Indian people have benefited from this war on cash how?

I agree, people of the western nations ought to pay attention to this disaster. When someone else is your bank you are at their mercy.

Haus-Targaryen's picture

"Coconut water seller Mohan Kishore says the cash crisis has made it hard for him to pay his suppliers but he feels the hardship is worth it for the "punishment" of the rich"


NoDebt's picture

I'm with you on that one, Haus.  Welcome to liberal idiot-think logic.  It's never about making things better, it's always about punishment.  The artform reaches it's zenith when you realize the rich aren't even actually being punished.

Okienomics's picture

Hmmm... not sure you two are right on this one.  Have you ever met an "entitled" Indian "elite"?  I can appreciate how a merchant would consider this a step in "making things better."  Not everything is about economics and I think we're seeing that played out all over the globe.  The issue is CULTURE; many "not rich" Indian people are seemingly willing to incur economic losses as a trade for a change to their culture.  The people in Britain are willing to risk the forecast "collapse" to protect their island culture from being overrun by sword-weilding islamists, and the American people are willing to risk all kinds of consequences in rejection to what the left is bringing.  The Fourth Turning will see all kinds of apparent contradictions.

Just looking beyond the obvious to appreciate the motiviation of people.

NoDebt's picture

"Hmmm... not sure you two are right on this one"

Wouldn't be the first time.  But let me point a few things out in my defense:

1.  Whatever tax dodge they are pulling to make that cash is going to continue after the banknote change.  They'll keep right on going.

2.  It was pointed out to me yesterday that I was misiformed what was going on with the currency change (RadioFlyer nailed me on this and he was right).  Yes, the 500 and 1000 Rupee notes are going away but they are being replaced with 2000 Rupee notes (which were just unveiled at the beginning of November).  The 100 and 1000 will be coming back as well (maybe the 500), but with a redesign.  They are NOT getting rid of large denomination bills, they're just changing red scrip for blue, an old trick used by the military to "clean house" from time to time.  But it never changes the underlying problem.

3.  Exactly how "rich" a person do you think you would be if you were saving all your money in the equivalent of $10 bills?  You'd need a dump truck to hold them all if you were actually "rich".  These are just your ordinary middle/upper-middle class tax cheats you're jamming up here.  Not the "rich".


This is a TEMPORARY business arrangement between upper middle class and poor, not a permanent one.  After December it all goes back to the way it was before.  Only this time the "rich" will buy gold (or other hard assets).  The effectiveness of the currency change will be greatly diminished the next time they try it.



laser's picture

The general population of India probably have more savings in gold than the US government.

Motasaurus's picture

The poor are poor because they are short-sighted and foolish. If you have three people approaching you, asking you to deposit their money into your bank account, then by all reasonable logic you do it. And you do it for as many people as possible. And you let the government take their massive cut of the money, since it isn't yours, and you keep the rest. And then you're not poor any more.

Every person asked to deposit money for someone who has been hoarding cash has the historically rare opportunity to change their lives for the better with no consequence. But they shall remain poor, because they can't even think on this basic level of self-interested greed. 

a Smudge by any other name's picture

You are foolish to think you understand India. Most of the poor are poor because of the limitations imposed by the caste system. If you are born untouchable you will NEVER succeed. Your options in life are limited to hauling shit, digging through garbage and begging. Almost all opportunities in life (in Hindu majority areas) are dictated by your caste first and your ability second.

And as is amply demonstrated in the arcticle, middle class lower-caste people are afraid of the potential tax burden of these new transactions to refusing them turns out to be enlightened self interest in the long term, something you accuse them of lacking and something which proves you didn't bother to read the article.

So nice job faking it. Have a real day!

El Vaquero's picture

Hyperinflation happens when people lose faith in the currency.  Does anybody doubt that no matter how the rich are punished, this is going to put a big crack in that faith?

Relentless's picture

There in an ancient concept, "noblesse oblige". Basically, you don't treat the people who work for you like crap. You give them some respect, maybe you give them a cash present for their birthday or Diwali, time off when they need it, maybe you overpay the coconut seller near your house every week. In return those people will help you when the governemnt, or the mob, comes howling for the blood of the wealthy.

During the French Revolution, those aristocracy and wealthy merchant families that followed the concept of "noblesse oblige" got warnings when the agents of the people rolled into town with their shiny new guillotine. Those that didn't found themselves tied up in the square waiting for its arrival.


roddcarlson's picture

It sounds good and I think one should be generous anyway, but I've seen the most giving become the most disrespected and even murdered by those they were helping. Saints are the classic example. Still there is a certain truth to what you said as well. Maybe a middle ground somehow where people respect both your fairness and generosity. I always tell my wife one shouldn't overpay someone either, as it sends bad signals for the quality of work versus payment expected. But then again if paying them more gives better products or service worth more the incremental increase then by all means pay them more.

flyingcaveman's picture

If the had enlightened self-interest they would stop shitting out babies thereby enabling the other classes can get a chance to shovel shit and dig through garbage.

canisdirus's picture

Although it sounds like a tiny amount to you, in context, in a country teeming with over a billion people, that's a pretty good chunk of change. By US standards, the "employers" mentioned wouldn't even be considered middle class. A half a million rupees a year would buy you a fairly lavish lifestyle with personal servants of every kind to handle everything from cooking and cleaning to caring for your children and driving your car.

If you were born a Brahmin, chances are that your income is at least that high.

roddcarlson's picture

Again an argument against allowing US to become a nation teeming with over a billion people, mostly new immigrants and first generations borned to them.

Badsamm's picture

The rich, regardless of their loss, are still better off then the coconut vendor who is losing too

PirateOfBaltimore's picture

There is a thin line between equality and vengeance or equality-as-vengeance.

Azannoth's picture

The only way to make everybody equal is to pull them (by force if necessary) to the lowest common denominator.

If you punish success all you will have left is a miserable nation of losers.

flaunt's picture

Class warfare is alive and well.  

slammin_dude's picture

LOL...because was well's always "the rich" that suffer....

Fuckem....the poverty, petty, envious mentality is why India and most 3rd world countries are shitholes! But not too worry....the Demoncrats are busy importing them into the West by the millions, pretty soon, we can all be "culturally enriched" all the way to the gutter!

roddcarlson's picture

Welcome to third world America's future.

joeyman9's picture

This type of thinking contributes to the inability of many people to become wealthy or even just raise their standard of living.

pound the vix's picture

Increased tax revenue for sewers, water, sanitation, schools, hospitals, etc.  India is home of a billion tax cheats

gojam's picture

'It's clever' to avoid paying taxes - until you get caught that is.

I seem to recall someone once saying, "Render unto Caesar, the things that are Caesar's"

Given the amount of foreign aid that India receives why should anyone take exception to Indian tax dodgers getting their fat fingers burnt?

canisdirus's picture

Many "developing countries", plus countries with rampant government corruption, and even the first world is full of tax cheaters. The unique thing about India is that most have stored up their ill-gotten gains in physical cash. In the first world people just fear an audit of the tax authorities.

In many countries, all-cash businesses probably move a lot of cash around from person to person and business to business without it ever ending up officially recorded. Could you imagine how hard it would be to track all of this in places where electronic deposits and card transactions are relatively rare?

Badsamm's picture

Plenty of money in all those temples. Maybe the world needs to go after religions

LawsofPhysics's picture

Talk about a government engineered crisis...

Are the people of the western world paying attention?

GunnerySgtHartman's picture

Are the people of the western world paying attention?

We can hope that they are (but I have my doubts).

A government-engineered crisis, indeed!

theright555J's picture

Purging corruption out of a society is never pretty.  At least one world leader has had the balls to do it.

bankbob's picture

It is important to realize that 80% of Indians do not have bank accounts.  It is still primarily a cash driven economy.

Also, realize black money is not from criminal activity.  It is just unreported income.  You sell a piece of land for cash and do not report it to the government so you have a pile of black money.  Or, you are a doctor who moonlights by performing surgery in rural clinics for cash.  Your regular hospital income is taxed.  But, your extra work is not.


The aim of this program is to 1) get people to move to banks, 2) force people to declare income for tax purposes and 3) root out the very large amount of Rupees that were counterfeited by the country's official money printers and laundered through banks along the Indian / Pakistan border.

PirateOfBaltimore's picture

It's also not necessarily "unreported income" which is what makes this a pretty fucking stupid policy.


So if I receive a large cash payment, pay my taxes on the declared income, and keep the rest in my mattress?  That's not black money at all.

East Indian's picture

"The aim of this program is to 1) get people to move to banks, 2) force people to declare income for tax purposes and 3) root out the very large amount of Rupees that were counterfeited by the country's official money printers and laundered through banks along the Indian / Pakistan border."

1. yes

2. yes

3. no. So far almost half of the demonetized notes have been surrendered to the banks, but very little numbers of counterfeits have been caught.

and these aims too:

4. recapitalize the bankrupt banks

5. write-off the loans friends have taken earlier.

6. more loans to friends.

7. Stop donations to rival political parties (in India all the donations are in cash, and anonymous).

Al Huxley's picture

And the lesson is, if you're going to keep money outside the system, make sure it's real money, and not money owned and controlled BY the system.  Oops, too late India, looks like your reputation for using gold as a store of wealth was undeserved.

Dubaibanker's picture

In many branches across India, cash has finished, replenishment is not available.

A Hyderabad branch manager just left the branch and fled.


One can only imagine the state of thousands of branches in the rural areas.

In many cases police is beating the customers.


Bank manager flees faced by irate customers

Demonetization is the most useless exercise in decades anywhere in the world....according to Larry Summers.


President of Harvard


Director of US National Economic Council


Secretary of the Treasury


Chief Economist of the World Bank

Demonetisation resulted in chaos and loss of trust in government: Summers


India - A Nation under Siege.

8,400 garment factories are shut in Ludhiana out of 5,000.
5 million trucks are halted out of 9.3m trucks in India.
Doctors, furniture sellers, car sellers etc have seen declines of 50% to 90% across entire country.
Almost 70-80% of contract workers across the country have not been paid and work has stalled.

Almost 70-80% retailers and wholesalers are shut.


Demonetization in India Has Paralyzed Retail Trade and the Informal Economy, Triggered Violence, Poverty and Despair
shamus001's picture

CORRECT!  The standardization of money is the linch-pin of civilization.  Without it, were back to rough measure barter and trade. (lots of room for error/or profit/loss)

Coinage brought trade to measure down to the smallest possible denominator.  Without it, people are back to asset driven economy, and of course, the only hard assets that dont burn, rot, or rust, is Gold/Silver.

Which is why you store long term wealth in Gold/Silver, not paper notes.  Notes are for DAILY transaction only.  No one should keep a years salary in notes (or digitals) unless they wish to be schooled in the art of "getting the shaft".

Salzburg1756's picture

Hinduism = economic oppression turned into a religion

Bam_Man's picture

This is the "Beta Test" for when this program gets implemented in the EU and then the USSA.

Evidently, it still needs some de-bugging.

chennaiguy's picture

The morale of the People of my country is rotten to the core... Here almost all the middle class upper class people treat the poor like piece of crap.... There is a rift between rich and the poor because of that.....  And I won't lie.. I am no good either... It may be becuse my society had created a barrier between the haves and have nots.. We middle class people simply cannot go along with the wonder the poor hate the middle class and the rich... 

bankbob's picture

All my Indian IT friends are solidly behind this program.  They say that when all the black money is smoked out India will have a budget surplus with money for roads and schools.  They do not see how this will stiffle a good deal of economic activity. (But it will).

PirateOfBaltimore's picture

Not if its being thrown into rivers and burned in bonfires.


Hello, deflation.

chennaiguy's picture

I am in IT too... I know.. Many in my friends circle support this... But when I cautioned them it could be used to bailout the distressed banking system they understand it as a risk.... But other people don't understand... People in my circle accept that it may serve other purpose when I talk to them.. But the problem I cannot convince other people beyond my friends and people working with me... The problems is 90%of people in India don't understand that modi is pro business(read crony capitilasm and not real capitalism) They see him as a Messiah of the poor. Many billions of rupee in old bill will not be deposited.. The RBI will be able to clear its book of some of the liabilities... Will modi use this amount to repair our infrastructure or will he simply lend it to failed businesses which will not repay any dept to the state banks.. The problem was because of the  some of theUseless business in our country that borrows money and never repay.. The Indian banks has to waier many billions rupees of bad loans...

chennaiguy's picture

Think it of like the subprime motgage... Many many loss making business gets more loan from govt banks , which will never get repaid... Our former rbi governor raguram rajan forced the state banks to clean their balance sheet and  refused to cut interest and said inflation Is bad.... And he was promptly removed from his position

East Indian's picture

This is 110% crony capitalism.

As soon as the banks were recapitalized with the money confiscated from the people, banks wrote off bad loans of the super-rich.

Now the banks have collected 5.5 trillion rupees, but have released only 1.5 t in return; the remaining Rs 4t will be available for banking transactions - you can transfer it from account to account, but cannot be withdrawn in physical cash - cashless economy! If you dont have a credit or debit card, you lose your access to it!

As on 1.11.16, Rs 127t was the total money in circulation; of which Rs 27t was in physical currency; of which Rs 13t was demonetized. So, now the poor have access only to about Rs 15t, whereas the rich and the superrich can access the remaining Rs 112t! 

Extreme liquidity crunch has brought deflation; agriculture sector - 50% of the population - will be starved. 

To pump money into the system, soon the PM will open the floodgates of money through banks - not to the very poor, but to his friends. Trillions of rupees will be lent to the crony capitalists, who will immediately buy all and every available asset. 

What Obama has done to America is now repeated in India.

chennaiguy's picture

Well , we are screwed aren't we. :|

SubjectivObject's picture

What prevents Indian citizens from rioting against the Government in the face of this action/policy?

GraveDancer's picture

Support for the policy and Happiness at the action. That prevents...

shamus001's picture


You can change that, if only for yourself, and your heart.  It's quite simple.  Go to the market, buy something affordable (fruits/food) and give it to a complete stranger.  Don't accept thanks, don't accept praise.  When they praise you, tell them your not worthy of praise, your just doing what everyone should do every day.

I'm certain that fruit it's practically free where your finances are concerned; yet that poor someone will have a handful of grateful children happily munching away on that fruit the same day.  

Help someone at least once a week.  Try it, and see if your inner light doesn't increase, if not burst out of you!

Ghordius's picture

it's an amazing development

btw, all a by-product from long-forgotten times when Indira was presiding a quite socialist government which was taxing the rich to the tune of 98% of their income

high, isn't it? even higher then the amazing rates that Uncle Sam was asking, in other long-forgotten times which included Uncle Sam paying back debt

yes, the War on Cash is real, but the local situations matter more, in most cases. and the enemies of cash are many

I guess every single Indian that had some in gold is now not regretting his decision. and even less if he was friendly to his environments. like servants, neighbours, etc. gives plenty of opportunities to get back to the hated, this situation

LawsofPhysics's picture

Historically speaking economies have always been local.  I know who my bank managers and owners are.  if there is a problem, I  will simply pay them a visit.

As it should be, and the same applies to my "representation".