The Use of Social Networks in a Self-Inflicted Macroeconomic Shock Context: Demonetisation in India

Isabelle Guérin (), Youna Lanos (), Sébastien Michiels (), Christophe Nordman and Govindan Venkatasubramanian ()
Additional contact information
Isabelle Guérin: CESSMA UMRD 245 - Centre d'études en sciences sociales sur les mondes africains, américains et asiatiques - IRD - Institut de Recherche pour le Développement - Inalco - Institut National des Langues et Civilisations Orientales - UPD7 - Université Paris Diderot - Paris 7, IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique, IRD [Ile-de-France] - Institut de Recherche pour le Développement
Youna Lanos: LEDA-DIAL - Développement, Institutions et Mondialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, IRD [Ile-de-France] - Institut de Recherche pour le Développement, IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique
Sébastien Michiels: IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique, LEDA-DIAL - Développement, Institutions et Mondialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, IRD [Ile-de-France] - Institut de Recherche pour le Développement
Govindan Venkatasubramanian: IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: The demonetisation that occurred in India in November 2016 has created an unprecedented shock. Among other objectives, the measure has been presented as an efficient mean to promote a less cash economy in order to formalise the economy and to promote social protection. Drawing on ground-breaking data collected in rural south-India, this note expresses serious reservations about the stated goals. In the short run, due to the importance of cash in the Indian economy (98 percent of transactions are estimated to be in cash), this measure had strong impacts on employment, daily financial practices, and network use for more than three months, as people relied more strongly on their networks to sustain their economic and social activities. Rather than fighting against it, demonetisation has mostly strengthened the informal economy, while probably marginalising further those who lack networks. In the long run, and in a context like India, where state social protection is still weak and where governmental schemes are known to obey to patronage and clienteles' networks, having a dense network of relatives, friends and patrons ready to help when needed remains the essential form of securing everyday life and the future. Eliminating such arrangements without offering alternative protection would be counterproductive. While cash less policies flourish in various parts of the world, we believe our findings have major implications and seriously question the merit of such policies, especially for the most marginalised segments of the population.

Date: 2017-05
Note: View the original document on HAL open archive server: https://hal.science/hal-05515069v1
References: Add references at CitEc
Citations:

Published in NOPOOR Policy Brief No. 36, 2017

Downloads: (external link)
https://hal.science/hal-05515069v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05515069

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().