Time for change: Here’s everything that happened after PM Modi’s demonetisation move

Finance Minister Arun Jaitley has asserted that the new initiative is not an immunity scheme and it does not provide any relief from taxation on new deposits.

By: Express Web Desk | New Delhi | Updated: November 9, 2016 4:43 pm
500 1000 rupee ban, 500 rupee ban, 1000 rupee ban, India news currency, India notes, 500 rupee notes, Rs 500, Rs 1000, news, latest news, India news, national news As most ATMs are programmed to dish out higher denomination notes of Rs 500 and above, people were withdrawing smaller amounts of up to Rs 400 to avoid getting a Rs 500 banknote.

In a decisive step to root out corruption and black money, the government on Tuesday abolished currency notes of Rs 500 and Rs 1000. In a televised address to the nation, Prime Minister Narendra Modi announced that ‘from midnight Nov 8, 2016, Rs 500 and Rs 1,000 notes are no longer legal tender”. He also said that new notes of Rs 2000 and Rs 500 will soon be introduced in the market. The announcement led to a chaotic situation as minutes later people rushed to their nearest ATM to exchange their notes in their wallet and withdraw Rs 100 notes to meet their daily expenses. As most ATMs are programmed to dish out higher denomination notes of Rs 500 and above, people were withdrawing smaller amounts of up to Rs 400 to avoid getting a Rs 500 banknote.

WATCH VIDEO: Rs 500 & Rs 1000 Illegal: Scuffle At An ATM With People Queuing Up To Withdraw Money

Reaction from politicians

The decision evoked mix reactions from politicians with many appreciating the move against black money as a ‘positive step’. However, they slammed the manner in which the decision was imposed. West Bengal Chief Minister Mamata Banerjee called it “a drama” and said the decision was heartless and ill-conceived blow on the common people and the middle class in the name of anti-corruption. The Congress on the other hand questioned the government’s decision to introduce Rs 2,000 currency note. The party expressed concern over the difficulties faced by the farmers in buying fertilizers due to the new decision. Swaraj Abhiyan leader Yogendra Yadav called the announcement a “positive move against counterfeit currency” and condemned the Opposition for overplaying transitional problems.

President Pranab Mukherjee welcomed the government’s step saying it will help unearth unaccounted money and counterfeit currency.

RBI calls it a bold step against black money

Calling the government’s decision a bold move against corruption and black money, the Reserve Bank of India said the most important reason for the ban was the abnormal rise in fake currencies of higher denomination and higher incidence of black money in the system. RBI Governor Urjit Patel linked the government decision to use of high denomination currency notes for terrorism financing and also for holding black money.

WATCH: Government Says New Currency Notes In ATMs From November 11

While the government imposed strict cash withdrawal limits – Rs 2,000 from ATM and Rs 10,000 from bank account in a day and Rs 20,000 in a week, Patel said there will be no impact on liquidity in the markets including financial markets.

What the experts said

Welcoming the step introduced by the Prime Minister, bankers and industry leaders said that it has been “a bold and revolutionary” move, and affirmed their commitment to smoothen the transition. According to ICICI Bank chief Chanda Kochhar, the “significant move” will  curtail the parallel economy and give a sharp boost to all formal channels of payments which in turn will help the formal economy to grow at a faster clip in the long term. HDFC Chairman Deepak Parekh believed that the decision will have an impact on people who are hoarding money and not disclosing money for tax purposes. IT trade body Nasscom said the government’s decision will accelerate the push towards electronic payments system, which currently has relatively little penetration in India.

Deposits not to enjoy tax immunity

Training guns at the black money holder who intend to deposit now-defunct old Rs 500 and Rs 1,000 currency notes in bank accounts, Finance Minister Arun Jaitley made it clear that those deposits will not enjoy immunity from tax and the land of law will apply on source of such money. Jaitley asserted that the new initiative is not an immunity scheme and it does not provide any relief from taxation on new deposits. “If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about. But if it is illegal money, source will have to be disclosed and if it is a crime money, or bribe money, then it is trouble, Jaitley said.

However, housewives, farmers and those whose annual income is within the tax exemption limit may not be hounded by tax authorities for depositing up to Rs 2.5 lakh of the now-defunct higher denomination currency notes in bank accounts.

Inconvenience to public

People faced inconvenience in buying milk, vegetables, medicines and other daily essentials and in commuting in auto-rickshaws and taxis Wednesday morning. As ATMs and banks were closed, harried people explored various options to get smaller denominations notes such as Rs 100 and Rs 50 which were in short supply due to the heavy demand. Long queues were witnessed at petrol pumps as well but in most filling stations, people were asked to buy fuel in multiples of Rs 500 or Rs 1000 due to shortage of cash in smaller denominations.

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First Published on: November 9, 2016 3:38 pm
  1. D
    Nov 9, 2016 at 12:49 pm
    History has been created but all antinational parties have criticized the govt for taking a bold and brilliant decision. India definitely deserves a better opposition. Bombta Banerjee is wordied about chit find money,opium and weapons money. And Khujliwal who claims that he is the most honest man in the world has been exposed more than anybody. One of his supporters who had voted for him today said at a shop-kya madarch*d insaan nikla ye.
    1. D
      Nov 9, 2016 at 12:59 pm
      1. H
        hameed mohamed
        Nov 9, 2016 at 5:29 pm
        extend the deadline is the best relief
        1. H
          hameed mohamed
          Nov 9, 2016 at 6:13 pm
          gujrat state and maharashtra state will not oppose the 1000 and 500 note phase put people know this
          1. K
            krishna kumar
            Nov 9, 2016 at 12:45 pm
            1. B
              Nov 9, 2016 at 3:10 pm
              Doomsayers will never die... as they say
              1. M
                Nov 9, 2016 at 3:52 pm
                All dramas can be carried out by feku gangs in order to hide $ 2.5 billion deposits in various Swiss Banks of the feku friends black Money. people of India know about this is a drama though rural India. ( the biggest in UP MANIPUR Punjab Guj:) aware of it..
                1. H
                  Nov 9, 2016 at 5:18 pm
                  Modi govt has done yeomen services for poor of the country who are looted by corrupt politicians in power since independence. This is the first time in 70 years that Modi has come as God gifted man to save the life of billion of people who are virtually made bankrupt by past Congress govt run by Nehru dynasty. The regional and smaller parties mushroomed due to the utter failure of Congress govt in past who promoted rampant corruption and a major portion of development funds was completely looted. Modi govt should take next step to seize all ets of corrupts for developmental activities and all corrupts must be punished in time bound manner within six months.THIS IS CONTINUOUS PROCESS ON WHICH REGULAR MONITORING IS MUST AND REMEDIAL MEASURES MUST BE TAKEN TO PLUG ANY LOOPS FOUND AT LATER STAGE. Thereafter, none of corrupt will dare to loot public money in future. This will curb flow of black money in our country which will help in rapid progress of country.
                  1. N
                    Nov 9, 2016 at 10:57 am
                    corrupt congress politicians have been stashed black money. now they are in quandary.
                    1. K
                      Kabir Singh
                      Nov 9, 2016 at 4:52 pm
                      Congress people have stacked their money in PN notes,foreign companies etc.This move is against the middle cl corrupt people. High cl remains scot free
                      1. S
                        Nov 9, 2016 at 11:52 am
                        Good decision indeed. It will help to realize black money to some extent. Similarly, inflaidate Rs. 50 and Rs.10 as there are numerous cases of duplicate notes.lt;br/gt;lt;br/gt;Hope Government will definitely succeed in extracting black money and corruption amount progressively.
                        1. S
                          Sarat Kumar
                          Nov 9, 2016 at 10:45 am
                          As usual general public will suffer. BJP might have already taken steps to exchange thousands of Crores with connivance of RBI ( Patel Group ) of party fund to be used in UP Election. Other parties will suffer where BJP will flourish distributing black money which is presumed to have been exchanged by new notes. My personal intuition is BJP and it's corrupted top br and MPS must have already planned about their stashed cash long before with the advise of PM whose dikhane ka dant kuch hai and Khane ka dant Aur kuch hai.
                          1. G
                            Nov 9, 2016 at 6:40 pm
                            what is sooooooooooooooooooooo special about this step? it was done in 1946 and 1978. demonetization makes indian economy looks like a banana republic. let us see if real estate price actually comes down.
                            1. P
                              Nov 9, 2016 at 1:19 pm
                              Stupid people queuing up at petrol stations to change their money don't they know that the government has given enough time to do the same after banks reopen
                              1. A
                                Nov 9, 2016 at 10:56 am
                                A Master stroke by the govt to curtail black money taking route to terrorism .Modi govt has shown the will to fight the menace of black money, drug trafficking and terrorism taking advantage of the porous banking system. As per statistics almost 23% increase in note circulations were noticed during last 2 yrs for the total currency and almost 109 % increase in the sam time was noticed for higher denomination currency which is taking easy route to finance drug trafficking,terrorist activities and shady transactions in the secondary property s .It is definitely a bold decision and welcome move from common man position.There will be some difficulties for common man for next few weeks but as appealed by Modi patriotic citizens should accept the difficulties as per of their involvment in national building .Well done Modiji and act tough to be kind to poor
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