Prime Minister Narendra Modi on November 8 announced the government’s decision to withdraw old currency notes of Rs 500 and Rs 1000 and replace them with new currency notes of Rs 500 and Rs 2000 notes with an aim to weed out black money from the system. While declaring the ‘bold’ move, the Prime Minister said people will be allowed to replace their old currency from banks till the end of December. The government also decided to put a cap on the amount of money that can be withdrawn from the bank in a single visit. The move received support from several sections of the society but also caused massive problems for thousands of others, who were forced to stand in long queues outside banks and ATMs across the country to avail cash.
Being the wedding season, several families faced troubles to make proper arrangements due to the massive cash crunch caused by the move. Several daily wage labourers were forced to leave their work and many lives were lost as people could not pay for food and medicines.
This is how the foreign media interpreted the demonetisation move of the government.
“The rich will not suffer, as corruptly acquired fortunes have almost all been converted to shares, gold and real estate. But the poor, who make up the bulk of the nation’s 1.3 billion people, will lose out. They don’t generally have bank accounts and are often paid in cash. For them, getting to a bank and queueing for hours will cost money and time they don’t have. In less than a week the policy has reportedly claimed more than a dozen lives. The government says that it will take weeks to sort out the problems,” an editorial said.
“Mr Modi’s scheme has more in common with the failed experiments of dictatorships which led to runaway inflation, currency collapse and mass protests. While Mr Modi campaigned to end corruption, it would have been better if the government had updated its antiquated tax system to realise such a task,” it added.
The New York Times
“Cash is king in India. It is used in an estimated 78 per cent of transactions, compared with 20 per cent to 25 per cent in industrialised countries like Britain and the United States. Many people do not have bank accounts or credit cards, and even those who do often must use cash because many businesses don’t accept other forms of payment,” the article read.
“At least, that was the plan. The change, however, has thrown the economy into turmoil, with many millions of people forced to line up at banks to deposit or exchange their old bills,” the editorial read.
“What seemed at first to be a masterstroke by Prime Minister Narendra Modi now looks like a grave miscalculation… What’s changed in a week? Well, for one, it’s become clear that the government was simply too cavalier in its planning. Now that 86 percent of India’s currency is no longer valid, the central bank has struggled to print replacement denominations — and the new notes are the wrong size for existing ATMs. Modi’s asked people to be patient for 50 days, but the process could take as long as four months,” Bloomberg said.
“Few villagers have access to an ATM. Most have to trek to a bank branch to change their cash, which means losing out on crucial days of labor. Many Indians, particularly women, still don’t have an active bank account. Finance Minister Arun Jaitley wondered aloud how many poor people would even have 1,000-rupee notes — probably a rhetorical question, but surely it shouldn’t have been. Someone should’ve sought the answer before shutting down India’s financial system,” it said.
“A currency note is a promise that must be kept, whatever the circumstances. Because this trust has been broken in India, queues have formed outside banks and ATMS, with banks closing down mid-way through the business day, saying they have run out of cash… Pro-establishment die-hards would snigger and argue that the two high value notes have been withdrawn to check black money. It had to be done in total secrecy, they say, to thwart nefarious attempts by hoarders to dump currency. But what is it that these hoarders could have done in a reasonable time frame that they are not doing now?” the Pakistani magazine said.
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