India’s demonetisation deadline ends, but cash crisis persists
NEW DELHI: India’s 50-day deadline for its citizens to deposit discontinued bank notes came to an end on Friday but Indians continue to face a cash crunch owing to problems in getting new currency notes.
In a shock move on November 8, Premier Narendra Modi announced that 500 and 1,000 rupee notes would no longer be legal tender.
The measure was intended to combat corruption and tax evasion.
People had until the close of business on December 30 to exchange or deposit old notes and get hold of new currency. The move led to widespread chaos and serpentine queues at banks as the invalid currency accounted for 86 per cent of the money in circulation.
Throughout the day across Indian towns and cities, people lined up at banks to meet the deadline and avoid their money becoming worthless.
“A crucial phase (of demonetisation) ends today. Our actual work starts tomorrow,” senior government minister Venkaiah Naidu said in New Delhi.
Withdrawal limits and queues at ATMs will continue for a few more weeks as the central bank’s printing presses have failed to replace the withdrawn currency.
The crunch is being felt the hardest in India’s rural areas and small towns where people do not have bank accounts and the bulk of transactions are done in cash.
Opposition parties have attacked the government saying the measure slowed down a rapidly growing economy and failed to weed out “blackmoney” or untaxed money, since most of the money in circulation has been put back in the financial system.
But the government said the move is a success as it led to substantial increases in tax collections and left banks flush with funds. It also encouraged Indians to open bank accounts and make digital transactions that will build a stronger economy and transparent financial system, ministers argued. — dpa
See also P5