Making Change in India

Change is hard in India.

No, not the profound and endemic change that so many individuals, organizations, and NGO’s here are working towards- you can see evidence of that almost everywhere you look. Instead, I’m talking about how challenging it is to break one large bill into smaller currency that can actually be circulated in corner shops, auto rickshaws and chai stalls throughout a country that has a per-capita GDP of around $2,000 annually. In the year following one that saw India’s economy grow at the fastest rate of any large country, I’ve spent the first few weeks of it wandering around looking for small bills.

I’m not the only one.

Every rickshaw driver and chaiwallah in Mumbai is scared to take anything over a 500 rupee note because they, too, will find it nearly impossible to buy a newspaper, ride a bus or procure any of the other daily goods and services under 10 rupees that make up the vast majority of purchases in this economic powerhouse. While the nation’s top batters are dealing daily incrores and lakhs, it’s hard to swing change for the average player in India’s economy. This proved the perfect metaphor for my first month observing workforce development in India.

Stepping away from the ATM with my crisp 1000-rupee bills, I’m aware that this denomination of currency marks me as a tourist. With almost 10% of the workforce employed in the tourism sector, it brings in close to 6% of the total GDP. Each year, more than 6 million people stumble around ancient sites with freshly minted discretionary income higher than the average monthly wage of more than a fifth of the country’s population.

Compare a 1000-rupee bill to a 10-rupee one and you can see the difference in circulation. No folds or marks from being tucked into a pocket or crumpled in a sweaty hand while waiting for a bus. Many of the interactions tourists will have with those involved in the tourism industry will be economically separated by a couple of zeros. This presents an interesting challenge in the training and skill development process of students entering the tourism industry. How does one deliver a service or product that one has not had the resources to experience from the user end?

When so many people are earning low wages, the small currencies become scarce, while larger bills are hardly able to circulate. One of the solutions to this challenge lies in the promise of skill development to increase the number of higher wage jobs.

After the first few folks turned my big bill down, my thought was to head to the bank and ask for change. No can do. Busy expanding their reach, both into rural areas and abroad, the bank in India does not simply make change for a 1000-rupee note. In the next few years, India has the potential to become the world’s fifth largest banking system. Commerce and financecontinue to be popular degree programs, though this field seems strangely absent from much of the secondary school curriculum I’ve sorted through so far. Seeing a need, the Bombay Stock Exchange has undertaken the task of creating lesson plans around financial literacy that are just starting to be taught at the post-secondary level. Good idea in a country that has spearheaded the use of innovations like mobile phone deposits and microfinance. Along with entrepreneurial skill development, greater availability of credit (particularly to women) will have a profound impact on the economy in the next few decades. There are several NGO’s working on just this, and the thought that financial literacy education is part of the “soft skill” development that is missing in primary and secondary education is a similar conversation, both in the US and India.

The key, I started to realize, for making change in India was in finding a larger business with retail sales, which happens to be another huge employer and makes up almost a fifth of the GDP in the country. Companies like chain stores were more likely to take a big bill and give you exact change, and also more likely to be participating in the new law for corporate social responsibility (CSR), which requires all companies making over a certain level of revenue to contribute 2% of their net profit to socially conscious causes. This has been a windfall for many organizations, and one of the causes that many of the businesses are supporting is vocational skill development. Along with retail, many famous manufacturing giants are also putting their 2% into skill development, as they realize that if they want a skilled workforce, they must be willing to help develop it. It also means that they could expand their domestic customer base. A higher wage means bigger bills to spend on the very products they are helping to make.

Stepping into a large retail store seems otherwise unnecessary. India has a huge number of small stalls, shops and roving salesmen for most of your daily needs. They, along with millions of other day laborers and semi-skilled tradesmen and women make up part of what is considered the “informal” sector. With an estimated 60%-70% of the urban workforce engaged in what’s considered informal employment, it’s hard to get a conclusive number on overall employment around the country.

This huge informal sector has some folks nervous. Like most country’s economic history, agriculture comprised the largest sector of the economy. Traditionally, countries move from an agrarian-based economy to manufacturing and then services, but India has “leap-frogged” from agriculture to services quite quickly, according to most indicators. Economists see this as a result of rapid urbanization. With cheap, unskilled labor flooding into cities, the service sector inflates. Many are concerned that it cannot absorb the volume of unskilled human resources and the division between who is paid in 10-rupee versus 1000-rupee bills grows wider.

As the country starts rolling out programs like the newly revised scheme for vocational education at the secondary level and initiatives like PM Modi’s new Skill India, the hope is that more people will be able to play a larger role in the growing economy and, hopefully, at a more skilled level. The contact info for capable plumbers and electricians are highly valued in a country studded with stunning ancient architecture amidst new apartment buildings crumbling to the sea.

Change in India in inevitable.

In the next five years, India will have the largest workforce in the world. Whether these workers will have the skills necessary to participate fully is the kind of make or break question that we need to be asking.


One thought on “Making Change in India

  1. India is so diverse with so many resources. I am so happy that you are spotlighting the challenges facing India. I am drinking a cup of “Indian” tea as I am writing this. The world is a richer place because of India. Global economies will be connected to India and learning from them in so many different ways.


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