The World Bank has post on one of its blogs explaining the rise of zero rupee notes in India as a protest against bribery and corruption in the governement. The notes are printed by 5th Pillar, a local NGO. 5th Pillar has distributed over a million of the zero rupee notes, which have effectively reduced corruption in India. For example, one old lady outside Chennai City needed to pay a bribe to obtain a title for the land she owned.

Fed up with requests for bribes and equipped with a zero rupee note, the old lady handed the note to the official. He was stunned. Remarkably, the official stood up from his seat, offered her a chair, offered her tea and gave her the title she had been seeking for the last year and a half to obtain without success. Had the zero rupee note reached the old lady sooner, her granddaughter could have started college on schedule and avoided the consequence of delaying her education for two years. In another experience, a corrupt official in a district in Tamil Nadu was so frightened on seeing the zero rupee note that he returned all the bribe money he had collected for establishing a new electricity connection back to the no longer compliant citizen.

Is the zero rupee note money? It’s not official in any way, and, by definition, it isn’t worth anything. Does it function as a store of value when it is intended to store no value? (Think about that one for a while.)

Yet, I say that it does function as money, at least in the case above. The old woman presented a object worth the advertised price of the service she wanted and exchanged it for that service. I doubt that she could have gotten the same effect out by writing “zero rupees” on a piece of paper and handing it to the official.

This entry was posted on Tuesday, January 26th, 2010 at 3:13 pm and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.