Demonetisation, Social Networks and Social Protection: Insights from Rural Tamil Nadu

Isabelle Guérin, Youna Lanos (), Sébastien Michiels (), Christophe Nordman and Govindan Venkatasubramanian ()
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Youna Lanos: IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa
Sébastien Michiels: IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)
Govindan Venkatasubramanian: IFP (Pondicherry, India)

No DT/2017/10, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: The demonetisation that took place in India in November 2016 caused an unprecedented shock. Among its other objectives, the measure was championed as an efficient means to promote a less-cash economy, in order to formalise economic transactions and boost social protection. This paper draws on ground-breaking data from rural South India to voice serious reservations over those stated goals. In the short run, the importance of cash in the Indian economy resulted in this measure strongly affecting employment, daily financial practices, and social network use for over three months. People came to rely more strongly on their networks to sustain their economic and social activities. Demonetisation has not fought, but has largely strengthened the informal economy. It has also probably further marginalised those without supportive networks. In a context such as India, where state social protection is weak and governmental schemes are notoriously subject to patronage and clientelistic networks, dense networks of supportive relatives, friends and patrons remain key for safeguarding daily life and the future. It can only be counterproductive to eliminate such arrangements without offering alternative protection. With cashless policies flourishing in various parts of the world, we believe our findings have major implications, seriously questioning their merit, especially among the most marginalised segments of the population.

Keywords: Demonetisation; Digitalisation; Social Regulation; Social Networks; Tamil Nadu; Caste and Gender Segmentation (search for similar items in EconPapers)
JEL-codes: C21 J16 J24 J31 J71 O12 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017-10
New Economics Papers: this item is included in nep-iue, nep-pay and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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