Demonetisation Effect: Workers To Receive Cashless Salary Only

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In a bid to continue cashless economy, the government has new plans for cash payments made to industry and factory workers all over India.

Reports from TOI state that it will soon be mandatory for workers to receive their wages through cheque or by direct transfer into their bank accounts. This move goes hand-in-hand with the demonetization that came into effect in November. Only workers with wages below INR. 18,000 will be included under this new scheme.

The rule will be enforced by amending Section 6 of the Payment of Wages Act, 1936. The Central government will mandate the wages of workers in railways, air transport, mines, oilfields and more. The respective state governments will handle their industries. In the amendment, the appropriate governments will ensure that they include the industries which come under the mandate. States like Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already started making amendments in the said Act.


A Bill is being prepared for the amendment which will be put into effect once it is approved by the Cabinet. The Payment of Wages (Amendment) Bill, 2016 will impact the lives of millions of workers in India.

Workers’ Woes To End

Ever since the demonetization came into effect, workers and labourers have faced the worst. Their wages and salaries were either paid in old notes or not at all.

The government has stopped exchanging of notes for quite some time. Anyone with old notes would have to deposit the same to their bank accounts. However, some of the workers who were paid in old notes had no bank accounts at all and hence had no means to deposit them.

There was no leniency given to workers who had to stand in long queues at banks. If they missed more than their allotted break times, they lost a part of their daily wages. And those who refused old notes had their salaries deferred to February-March.

Worst of all, factory owners have worked around the government trailing bank transfer to workers. After paying the workers, they take back the amount from the bank accounts 3-4 days later. Since they keep the workers’ passbooks and debit cards, this is not a hard thing for them to do. As a result, workers weren’t very happy with the demonetization. It was causing them more problems that the black money hoarders. Ironically, the demonetization was done to make things uncomfortable for the latter.


With this new move, the government aims to reduce their woes; reports TOI. Workers will receive their minimum wages through cashless means only. As per the deciding authorities, since Jan Dhan Yojana ensures easier opening of bank accounts, implementing this rule should not be a problem.

The government has already ensured that more than 5 lakh textile workers will have their own bank accounts. The government has asked the textile units to help their workers open bank accounts. Camps were set up to ease the workers’ payment means. These includes regular workers, migrant labourers and those working on contract.

Students Facing Trouble Too

Delhi landlords have been refusing to accept online transactions. They remain completely unaffected by the demonetization and have strictly told tenants to pay only by cash. This has been done in a bid to safeguard their wealth and convert their black cash to white at the same time.

With exams beginning in most of the colleges in December, students have taken to studying in the long queues outside the ATMs. Students in Delhi University and others have faced this problem as landlords refused their old notes. They persistently asked the tenants to get the notes exchanged before payment.

Many of these students had no other option but to hound the ATMs at midnight. They had to keep a close watch as to when the cash gets filled in the ATMs.

Demonetization has affected everyone. It is not just the students, but even residents of Bengaluru, Karnataka have complained that e-cash is not being accepted in many places. It’s not just the landlords, but even maintenance cash in apartments, maid fees, milkman services and others have refused online payments.

Loopholes in Demonetization:

Despite the demonetization and constant surveillance of the Income Tax department, money hoarders are still doing everything they can to save their losses. Some of the methods through which black money hoarders are converting the money are:

  • Temples:

The government has already declared that sums in temple handis will not come under the tax scanner. Thus, people started donating their black money to temples, and the management returned the amount in new notes, after taking their commission.

  • Poor People:

As per the new rule, poor people can deposit up to 2.5 lakh and not be questioned. Thus, black money hoarders have turned to their staff and relatives to deposit the money and withdraw it immediately after that. The money, in new notes, will be returned to the hoarders after the staff or relatives have kept some for themselves.

  • Zero Interest Loans:

Some lucrative businesses have started offering interest-free loans to the poor. A good thing right? Apparently not. This is just another way for them to convert their black money into white.

  • Jan Dhan Account Holders:

Jan Dhan accounts have seen a surge in their deposits since demonetization. Whether it’s because of people wanting to deposit their old money or black money is being laundered, is an unanswered question.

  • Bank Note Mafia:

As with all new rules, there are newer scams and black markets that have cropped up. A new black market that exchanges your old notes with Rs. 100 notes for a deducted commission has sprung up. The irony is obvious: A black market scam to help people save their black money.

  • Paying Advance Salaries:

For some workers and employees, Diwali came early. With industries paying advance salaries to employees in cash, it is an easy method of getting rid of old notes. Some companies paid the workers full six months’ advance salary in old notes, while others were cautious and paid only three months’ salary. Each of them was careful enough to stay under the 2.5 lakh umbrella.

  • Buying Gold:

Between the time of the announcement of demonetization and the time it came into effect, black money hoarders stocked up on gold. They rushed into the jewellery shops and made the most of the 4 hours. Thus, gold prices surged after the demonetization!

  • Cancelling Train Tickets:

Until 14 November, old notes were accepted at train stations to book tickets. The wit of black money hoarders must be admired. Most of them booked expensive tickets during this time and then cancelled them. Refunds were given in new notes, with a small cancellation fee. Smart work; defeating the whole purpose of demonetization in a snap!

  • Using Farmers:

Agriculture income is not taxed. Hence, farmers are easy fodder for people to convert their black money into white. The farmer, as well as a person with black money, benefitted together!

  • Donations to Political Parties:

Political parties can collect donations from people under Rs. 20,000. By saying that these donations were collected before demonetization, its easy for the parties to exchange their money before December 30th.

Will Demonetization Help?

Speculations are rife that government’s demonetization may not help win the war against black money. According to reports, only 6% of all black money wealth is in the form of hard currency. The rest is always converted in the form of real estate, gold, foreign currency, foreign banks, unsolicited accounts in Indian banks, the stock market and regular commercial enterprise.

Whether the government’s endeavours succeed or not, remains to be seen. To be honest, the measures taken by the government after the demonetization, are too little and too late. The demonetization has hit all sectors badly, and not just the people with black money. The government should have taken initial measures to prevent the note ban from affecting the general public.

All these steps towards a ‘Digital India’ and ‘Cashless Economy’ are not going on the safe path. If landlords can still demand new notes as the only form of rent, then where’s the digitalization? Measures should have been put in place before announcing the demonetization. But, what the future of demonetization will be, only time will tell.


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