Demonetisation: Three times India faced the big move

A look at the Express front page after the demonetisation announcements in 1946, 1978, and 2016.

By: Express Web Desk | New Delhi | Updated: November 18, 2016 11:31 am
demonetisation, demonetisation 2016, demonetisation past, demonetisation 1946, demonetisation 1978, Narendra Modi, demonetisation policy, currency demonetised, currency notes, currency banned, Rs 500 note, Rs 1000 note, india news, indian express Demonetisation: Such a step was taken in 1946 and 1978 as well.

The Narendra Modi government shook the country last week by announcing the demonetisation policy and turning notes of Rs 500 and Rs 1000 into paper. While people were allowed to exchange their old notes for valid currency, deposit the money, or withdraw a certain amount from the ATM, the move saw unprecedented lines outside banks and ATMs with bank employees working overtime to make up for the cash crunch in the common man’s life.

The move to make currency illegal overnight has, however, happened earlier, both times with a view to interrupt black money deals and tender black money hoarded as illegal. By putting a cap on the money that one is able to deposit without coming under the scanner of the Income Tax department, the government aims at investigating possible tax evasions as well.

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Here’s a look at the two other times when high currency was demonetised in India.

1. January 1946: Notes of Rs 500, Rs 1000, Rs 10,000 demonetised

front-page-1946 Front page for 1946. demonetisation-1946 Front page for 1946.

On January 11, 1946, the government announced that notes of Rs 500, Rs 1000 and Rs 10,000 will not be legal tender from January 12, 1946. The front page of Indian Express from that day reads that the move was made with an aim to curb black marketing. The repercussions were similar with people dying of shock, exceptionally long lines at the bank and the middle classes being hit.

The old notes were being sold at 60 and 70 per cent of their price. The move was called a ‘death blow’ to black marketeers. A rumour also went around that Rs 100 notes were being demonetised too, leading to panic and people discarding their Rs 100 notes as well.

2. January 1978: Notes of Rs 1000, Rs 5000, and Rs 10,000 demonetised

Front page for 1946. Front page for 1978.

The Janata Dal demonetised high currency notes of Rs 1000, Rs 5000 and Rs 10,000 in a second such historic move, again with a view to curb black money transactions. It was termed as “an Act to provide in the public interest for the demonetisation of certain high denomination bank notes and for matters connected therewith or incidental thereto.”

People who possessed these notes were given till January 24 the same year — a week’s time — to exchange any high denomination bank notes. The one big difference with the announcement Tuesday is that Rs 1,000 and higher value notes were almost impossible to possess then for the common man given the value of these amounts then.

3. November 2016: Notes of Rs 500, Rs 1000 demonetised

The front page for November 9, 2016. The front page for November 9, 2016.

In Parliament, the opposition parties are still at loggerheads with the centre, with most demanding a rollback of the move. However, the government has stated vehemently that they will not be taking back the move even as lines continue to grow outside banks.

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  1. A
    aditya
    Jan 29, 2017 at 11:26 am
    good but this can not be done actually none of it. govt want to grow cash less payment for that there should be less hard cash in circulation then only public will do payments throw cards and once the employees are retired they can not be called back in any situation . co-operative banks can not be involved in it because most of the black money is with in co-operative banks. I hope you have got the point why all above was not possible.
    Reply
    1. P
      Pallishree Pattanayak
      Feb 9, 2017 at 6:10 am
      It was a right move at right time.I congratulate Mr.PM for his courageous effors but he should ve taken to reduce the effects!
      Reply
      1. B
        Bhagvat
        Nov 18, 2016 at 8:53 am
        In all fairness, the Govt. Bosses should remember Mr.Morarji Desai the then PM in 1978 and his Team mate Mr. I.G. Patel, the Authors of crusade against the evil of black money, who were not allowed to work longer by the opponents of that time who are ancestors of the present day opponents of this pious big move.
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        1. M
          Murthy
          Nov 18, 2016 at 9:36 am
          Excellent point.
          Reply
          1. M
            Murthy
            Nov 18, 2016 at 9:35 am
            The past demonetisations took place when India's potion was about half of its present level. Therefore, the stories of long queues would not have been that many. With a larger potion, longer queues are seen everywhere in India. Why are the Media and Opposition harping on that point?
            Reply
          2. N
            Niladri Bose
            Nov 18, 2016 at 1:22 pm
            After demonetisation in 1946, the British had to flee India in 1947. After demonetisation in 1978, Morarji Desai ( Janta Party) was ousted by Charan Singh ( Janata Dal(Secular) INC ) in 1979, and later Congress came to power in 1980. And after demonetisation in 2016, Modi and BJP will be decimated in Up polls and later in national polls in 2019. Modi will be remembered in Indian history as a foolish tea seller who by fluke became PM, and later dug his own grave due to his foolhardy policies.
            Reply
            1. Y
              Yashaswi Pande
              Apr 17, 2017 at 2:08 pm
              Well the results of the UP polls would have shut you up real good
              Reply
            2. P
              Palash Kundu
              Nov 18, 2016 at 3:42 pm
              Reply
              1. R
                Ranjith Nair
                Nov 18, 2016 at 3:45 pm
                Demonetization of higher denomination was a nice move. Much required to flush out some of the black money if not all. The way it was executed could have been better. lt;br/gt;lt;br/gt;The bigger problem in India is that there is a big disconnect between what central government says and what happens in reality. A few examples in this situation are;lt;br/gt;1) Govt says, you can withdraw money from ATM, but reality is none of the ATMs in a 15KM radius from my house are working. 2) Govt says, pharmacies will accept old 500 rupee notes if you have a doctor's prescription. Some pharmacies do accept old 500 rupee notes but refuse to return the balance. Some of the pharmacies who were accepting credit or debit cards earlier are refusing to accept the same as the situation is perfect for them to make some quick extra money. lt;br/gt;3) Govt says, All banks will allow exchange of old currency, but some banks are outrightly refusing to exchange old currency. lt;br/gt;lt;br/gt;Before demonetisation was done, the center should have come up with a [IRF] Instant Redressal Forum like a 24/7 helpline where public can reach out if they are facing issues with using or exchanging old currency. Police and local administration right from collector to Tahsildar should have been instructed to pitch in and sort out issues for the public. If some one in the administration does not help, have an escalation matrix to help resolve the public concern.lt;br/gt;lt;br/gt;Another action that should have been taken was; If any media (Paper / News channels / Radio channels) report incorrect happenings or twist the facts about the demonetization drive, then severe action including cancellation of license(if need be) should be taken against them. As seen many times earlier, twisting of facts by media causes more confusion and stress in the public minds.lt;br/gt;lt;br/gt;One last action that should have been taken was; Public should have been given 60 days to spend the existing old currency before the old currency was made invalid. However, purchase of GOLD or any other et should not be permitted with the old currency. Meanwhile, the currency exchange should have been initiated. This would have eased the pressure on the public. The tax evation identification drive could have also been done. lt;br/gt;lt;br/gt;Suffering of the public could have been reduced by these means.
                Reply
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