Ever since the government’s November 8 announcement to withdraw the old Rs 500 and Rs 1,000 notes, it has been a topsy-turvy sequence of decisions relating to exemptions granted for use of old notes, limit on exchange of notes at bank branches, cap on withdrawal limits for individual accounts.
Barely a week into the decision, the government increased the daily exchange limit initially set at Rs 4,000 to Rs 4,500 on November 13, but then subsequently brought it down to Rs 2,000 once per person beginning November 18. On November 15, the government announced another decision to use indelible ink so as to mark individuals who have already exchanged their currency.
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As lower exchange limits and inking did not help in reducing queues, and the facility was being misused by people in converting unaccounted old notes, the government announced to stopped exchange at bank counters from November 25. This was despite the initial assurance that the exchange limit will be raised after November 24. The facility to exchange notes was subsequently allowed at the Reserve Bank of India offices.
Another announcement followed on November 24, when the government advanced the deadline for using old Rs 500 notes at petrol pumps and for air tickets, bringing it forward by a fortnight to December 2.
On usage of old Rs 500 notes at toll counters of NHAI, the government had earlier allowed it till December 15, but later made it conditional only for purchase of FASTag and in cases where toll fee exceeds Rs 200.
With deposits of old notes at banks rising every day, the government hurriedly announced a new scheme on declaration of black money, coming just two months after the closure of the Income Declaration Scheme (IDS)- which was pitched as a “last chance” for those having black money to come clean. During campaigns prior to IDS, the government had categorically denied any extension to the scheme, but it did announce the Pradhan Mantri Garib Kalyan Yojana, 2016, which is somewhat similar to IDS, except that the tax rate is higher at 50 per cent and a quarter of the declared income will be locked in for four years.
The government, however, has also given relaxations and extensions to ease cash crunch during the first month. Some of the key extensions include — doubling of balance in prepaid wallets to Rs 20,000 till December 30; waiver on transaction charges on debit and credit cards; allowing withdrawal of Rs 2.5 lakh for wedding expenses; raising the cap on weekly cash withdrawals from banks to 24,000 rupees from 20,000 among others.