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

Author

Listed:
  • Isabelle Guérin

    (IRD, CESSMA (Paris, France), IFP (Pondicherry, India))

  • 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))

  • Christophe Jalil Nordman

    (IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India))

  • Govindan Venkatasubramanian

    (IFP (Pondicherry, India))

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.

Suggested Citation

  • Isabelle Guérin & Youna Lanos & Sébastien Michiels & Christophe Jalil Nordman & Govindan Venkatasubramanian, 2017. "Demonetisation, Social Networks and Social Protection: Insights from Rural Tamil Nadu," Working Papers DT/2017/10, DIAL (Développement, Institutions et Mondialisation).
    • Handle: RePEc:dia:wpaper:dt201710
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    References listed on IDEAS

    as
    1. Supriya Garikipati & Isabelle Agier & Isabelle Guérin & Ariane Szafarz, 2017. "The Cost of Empowerment: Multiple Sources of Women’s Debt in Rural India," Journal of Development Studies, Taylor & Francis Journals, vol. 53(5), pages 700-722, May.
    2. Jann Goedecke & Isabelle Guérin & Bert D'Espallier & Govindan Venkatasubramanian, 2018. "Why do financial inclusion policies fail in mobilizing savings from the poor? Lessons from rural south India," Development Policy Review, Overseas Development Institute, vol. 36(S1), pages 201-219, March.
    3. Jann Goedecke & Isabelle Guérin & Bert D 'Espallier & Govindan Venkatasubramanian, 2018. "Why do financial inclusion policies fail in mobilizing savings from the poor ? Lessons from rural South India," Post-Print ird-01413177, HAL.
    4. Isabelle Gu�rin & Bert D'Espallier & Govindan Venkatasubramanian, 2013. "Debt in Rural South India: Fragmentation, Social Regulation and Discrimination," Journal of Development Studies, Taylor & Francis Journals, vol. 49(9), pages 1155-1171, September.
    5. Daniela Gabor & Sally Brooks, 2017. "The digital revolution in financial inclusion: international development in the fintech era," New Political Economy, Taylor & Francis Journals, vol. 22(4), pages 423-436, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Reboul, E. & Guérin, I. & Nordman, C.J., 2021. "The gender of debt and credit: Insights from rural Tamil Nadu," World Development, Elsevier, vol. 142(C).
    2. Tamás Végsõ, 2020. "Comparative Analysis of the Changes in Cash Demand in Hungary," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(1), pages 90-118.
    3. Jeemol Unni & Pritha Dev, 2021. "How macroeconomic shocks impact employment: comparison of Gujarat with states in Western India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(1), pages 199-211, June.

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    More about this item

    Keywords

    Demonetisation; Digitalisation; Social Regulation; Social Networks; Tamil Nadu; Caste and Gender Segmentation;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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