Demonetisation has pushed the vibrant cooperative sector in Kerala, including the wide network of primary credit cooperatives and district banks, into one of the worst crises in its history.

It is sugarcane harvest time and the daily wagers have not turned up for over a week as the farmers cannot pay them in cash. Only those labourers who accept their wages in kind are available. They are paid in inferior or rejected sugarcane for their day’s labour. The workers in turn use these canes as fuel. Even these meagre earnings are welcome when cash has virtually disappeared from rural India.

“We cannot exchange our Rs.500 or Rs.1,000 notes for Rs.100 or Rs.50 or Rs.20 notes. Fertilizers couldn’t be bought. We are unable to pay mechanics to fix our pump sets. We are unable to maintain our tractors.”

Across the country, the fisheries sector has ground to a halt. In Tamil Nadu, despite the fact that no association has openly come out demanding relief, most of the boats across the 13 coastal districts are barely venturing out. For most of them, the economics just do not work out.

The Narendra Modi government’s sudden jolt to the country’s monetary policy ranged from adulation to shock.

A large majority of Indians are not even in the formal banking/financial net, let alone specialised forms of it such as Internet banking and mobile banking using smartphones.

Prices shot up and the living standards of the people fell as a result of the demonetisation policy. By the end of 1984, the Nigerian government had to admit that the move aimed at eradicating corruption was a failure.

On November 8, gold was selling at about Rs.31,500 for 10 grams. When the currency crisis hit, the price peaked at Rs.60,000 per 10 grams.

Aijaz Ahmad on the U.S. election.

An assessment by the international consulting firm Deloitte, which was released soon after the demonetisation announcement, also pointed out that there would be an adverse impact on the informal economy.

The effects of the currency crunch, coming as it did at the peak of the sowing season, are going to be long term. Producers of perishable items such as vegetables and fruits have already begun to feel the punch.

"I am not so worried about purchasing power. It is a short-term pain. The real problem is on the production side. If the farmer cannot buy seeds or pesticides or fertilizers and if the small manufacturer cannot buy raw materials, that will give long-term pain."

This so-called “surgical strike” was but a minor nuisance for the rich, who can go cashless to a substantial degree, but a major blow to India’s poor and lower middle classes—its casual and self-employed workers, peasants, petty producers, small traders and street vendors.

FDI has been a major conduit for the re-entry of funds that have flown out of the country but return masquerading as foreign investment. This is termed as round-tripping. The fact that Mauritius and Singapore are the primary sources of FDI gives credence to this method of recycling black money.

The lack of preparedness comes as no surprise looking at data from the Reserve of Bank of India (RBI), which show that there are barely two lakh ATMs for a population in excess of 121 crore. The number of credit cards issued in the country is around 2.59 crore, while debit cards are exponentially higher around 69.72 crore.