CHENNAI: Things are back to their monsoon bustle at the Koyambedu Wholesale Market Complex in Chennai, Asia’s largest perishable goods market. Demonetisation is remembered this rainy November morning as a cautionary tale: India’s markets, with volumes ranging from micro to mega, just can’t do without cash.M Thiyagarajan, president of the market’s vendor welfare association, said merchants were still recovering from the impact of the cash crunch imposed on them last year. The first month had been a wipeout, and it was five months before a semblance of normalcy began to return. But the wastage and loss of earnings for smaller merchants had been huge.
Merchants did try to switch to cashless transactions as a coping measure but that’s not the way Indian markets work. “We tried giving cheques to farmers we bought produce from,” said S Srinivasan, president of the Koyambedu Fruit and Flower Vendors Association, a wholesaler himself. “They always bounced because the retailers would not deposit money on time.”
The Koyambedu market is a maze of 3,154 licensed shops plus at least a few hundred more unauthorised shops that spill over onto the pavements. It’s a complex social system of wholesalers, retailers, agents, commissioners, labourers and farmers all engaged in a mind-boggling array of nimble transactions.
Scores of trucks bring in produce from across the country before sunrise. Smaller trucks cart away smaller portions from the wholesale retailers to be sold locally in Chennai. What is left is picked up by men and women in jute sacks and wire baskets to be marketed on the roads. Most outflow from the market finds its way into small retail shops at street ends and local markets. Most transactions are in cash.
By 10 am, the roads that grid the market complex are filled with wet hay, vegetable waste and mucky water. A truck that brings nine tonnes of tomatoes from about 250 miles draws a rent of around `12,000 a day. The rent increases with increase in distance, terrain and type of product.The wholesaler pays a bata of about `300 to the truck driver and a cooli for helpers who transfer the load between vehicles and retails. “We pay `2 fox a box of tomatoes, `5 for a sack of onions, `10 for an 80 kg sack. The type of vegetable or fruit, weight of the load they have to lift, whether it’s in a sack or box determines the payment,” said A Murugusubramaniam, a vendor.
Every transaction has to be instant to ensure free flow of trade and labour, says Srinivasan, the president of the vendors association. Labourers such as the driver and helper have to be paid in cash every day. “The trucks leave the premises before 8 am and no banks are open at that time. And they can’t do digital transactions in local shops to eat breakfast,” he said.
Small retailers and vendors pay the wholesalers from their previous day’s collection before taking away their stock. “We cannot go cashless because only after we pick up goods do we decide how much should be paid. And we have to pay it immediately,” said V Saralakumari, a coconut vendor.
Attempts by vendors to adapt to a cashless economy fell flat particularly after some of them came under sudden scrutiny by the Income Tax Department.
“We had to deposit all the cash we had and we appeared on the radar of the IT Department,” said a fruit vendor who didn’t want to be named. “Many of us were called to meetings with IT officers. We simply explained that farmers who didn’t have bank accounts had deposited their money in our accounts and took it back later,” he said.
Instant & day-to-day
Traders say the biggest hindrance to cashless transactions is that almost all, from drivers to helpers, need to be paid on a daily basis. And these men in turn depend on cash for their daily needs. The payments are often in small amounts.