India's $1 Trillion Hidden Economy Has Stalled
- Cash ban cuts supply chains in Varanasi, Modi’s political base
- Informal economy estimated to account for 46% of India’s GDP
A weaver works on a handloom to make a silk saree at a workshop in Kotwa village in Varanasi, Uttar Pradesh, India, on Thursday Dec. 8, 2016.
Photographer: Dhiraj Singh/BloombergIn Prime Minister Narendra Modi’s political base of Varanasi, Hinduism’s holiest city, weaver Zainul Abedin stares at the uneven mud floor of his home. Behind him, more than a dozen handlooms lie idle.
Abedin is part of the collateral damage of Modi’s Nov. 8 decision to ban high-value currency notes, effectively canceling 86 percent of cash in circulation. The move was designed to stifle corruption and tax evasion, but many of the hardest-hit are workers in India’s vast and intricate informal economy -- the small businesses, shops, drivers and countless other basic industries and services that employ more than 90 percent of Indian workers.