India scrapped its highest-denomination currency notes overnight,
delivering a blow to black-market money launderers but plunging hundreds
of millions of common citizens holding cash savings into fear and
uncertainty.
Within hours of Prime Minister Narendra Modi announcing the surprise move in a televised address, people thronged to ATMs, standing in long lines in hopes of grabbing bills that might still be in circulation on Wednesday.
As of midnight Tuesday, all 500- and 1,000-rupee notes — worth about $7.50 and $15 — had no cash value. Modi assured that people holding the discontinued notes would be able to deposit them in banks and post office savings accounts before the end of the year, and that new bills for 500 and 2,000 rupees were being printed and sent quickly to banks.
He said anyone making large bank deposits in the coming weeks would find themselves the target of Indian tax authorities.
"A few people are spreading corruption for their own benefit," he said in the speech. "There is a time when you realize that you have to bring some change in society, and this is our time."
For a few days, the old bills would still be accepted at hospitals, petrol stations, crematoria and for other businesses and services deemed essential.
Banks applauded the move as the strongest-ever measure against the parallel, black economy, and pledged to quickly restock their cash reserves with the newly printed bills.
"It's a good measure," said Anuj Mathur, a banker who was among more than two dozen people lined up outside a south New Delhi ATM machine at about 10 p.m. Tuesday. It will be inconvenient for a few days, but "this will clean up the system."
India's economy - and its tax base - has long been hobbled by a culture of what is known here as "black money," with business people using cash to avoid paying taxes. Raids on corrupt politicians and businesses regularly turn up people holding millions of dollars' worth of rupees, with cash sometimes filling dozens of boxes.
Much of India's illicit money stores are believed to be used in land purchases, or secreted away to accounts overseas.
Modi said authorities have discovered 1.25 trillion rupees, or about $18.8 billion, in illegal cash over the last two and a half years. Counterfeiting was also a major concern, he said, and, in an indirect reference to rival Pakistan, accused a neighboring country of circulating fake Indian currency to damage the Indian economy.
"We as a nation remain a cash-based economy, hence the circulation of fake rupees continues to be a menace," the Reserve Bank of India said in a statement Tuesday night.
But many of the poor also do not have bank accounts and keep their savings in cash. Some criticized the currency measure for the suffering it would cause among common citizens, who may not have lower-currency notes available to keep themselves afloat for the next few days.
"Withdraw this draconian decision," said Chief Minister Mamata Banerjee, the highest elected official in the eastern state of West Bengal, in a series of Twitter posts. "This is a financial chaos and disaster let loose on the common people of India."
The government has been urging people over the past year to declare the money they are holding in cash.
(AP)
Indians stand in a queue in front of an ATM machine in Ahmadabad, India,
Tuesday, Nov. 8, 2016. India's highest-denomination currency notes are
being withdrawn immediately from circulation, the country's prime
minister said Tuesday night, a surprise announcement designed to fight
corruption and target people who have stashed away immense amounts of
cash. Across the country Tuesday night, people rushed to bank ATM
machines where money could be withdrawn in 100-rupee notes, trying to
avoid being caught without cash over the next few days.
Indians crowd around an ATM machine, as a billboard displays a portrair
of Indian prime minister Narendra Modi, in New Delhi, India, Tuesday,
Nov. 8, 2016. India's highest-denomination currency notes are being
withdrawn immediately from circulation, the country's prime minister
said Tuesday night, a surprise announcement designed to fight corruption
and target people who have stashed away immense amounts of cash. As of
midnight Tuesday, 500- and 1,000-rupee notes, worth about $7.50 and $15,
will have no cash value, Prime Minister Narendra Modi said in a
televised address.
Indians stand in queues in front of ATM machines in New Delhi, India,
Tuesday, Nov. 8, 2016. India's highest-denomination currency notes are
being withdrawn immediately from circulation, the country's prime
minister said Tuesday night, a surprise announcement designed to fight
corruption and target people who have stashed away immense amounts of
cash. As of midnight Tuesday, 500- and 1,000-rupee notes, worth about
$7.50 and $15, will have no cash value, Prime Minister Narendra Modi
said in a televised address.
Indians stand in a queue in front of an ATM machine in Ahmadabad, India,
Tuesday, Nov. 8, 2016. India's highest-denomination currency notes are
being withdrawn immediately from circulation, the country's prime
minister said Tuesday night, a surprise announcement designed to fight
corruption and target people who have stashed away immense amounts of
cash. Across the country Tuesday night, people rushed to bank ATM
machines where money could be withdrawn in 100-rupee notes, trying to
avoid being caught without cash over the next few days.
Indians stand in queues in front of ATM machines in Ahmadabad, India,
Tuesday, Nov. 8, 2016. India's highest-denomination currency notes are
being withdrawn immediately from circulation, the country's prime
minister said Tuesday night, a surprise announcement designed to fight
corruption and target people who have stashed away immense amounts of
cash. As of midnight Tuesday, 500- and 1,000-rupee notes, worth about
$7.50 and $15, will have no cash value, Prime Minister Narendra Modi
said in a televised address.
An Indian street food vendor counts Indian currency notes of 500 in
Hyderabad, India, Tuesday, Nov. 8, 2016. India's prime minister has
announced scrapping of high denomination 500 and 1,000 Indian rupees
currency notes in what he describes as a major step to fight the menace
of black money, corruption and fake currency. Prime Minister Narendra
Modi in a speech carried live on radio and television on Tuesday says
there is no need to panic as people would be able to deposit these
currency notes in their bank account until December 30.
In this Dec. 16, 2011 file photo, a cashier holds bundles of Indian
rupee bank notes at a bank in Allahabad, India. India's prime minister
has announced late Tuesday, Nov. 8, 2016, scrapping of high denomination
500 and 1,000 Indian rupees currency notes in what he describes as a
major step to fight the menace of black money, corruption and fake
currency. Prime Minister Narendra Modi in a speech carried live on radio
and television on Tuesday says there is no need to panic as people
would be able to deposit these currency notes in their bank account
until December 30.
An auto driver refuses to take a 500 rupee note from a passenger in New
Delhi, India , Tuesday, Nov. 8, 2016. Indian Prime Minister Narendra
Modi has announced scrapping of high denomination 500 and 1,000 Indian
rupees currency notes in what he describes as a major step to fight the
menace of black money, corruption and fake currency. Modi in a speech
carried live on radio and television on Tuesday says there is no need to
panic as people would be able to deposit these currency notes in their
bank account until December 30.
A man refuses to take 500 rupees from a customer in New Delhi, India ,
Tuesday, Nov. 8, 2016. Indian Prime Minister Narendra Modi has announced
scrapping of high denomination 500 and 1,000 Indian rupees currency
notes in what he describes as a major step to fight the menace of black
money, corruption and fake currency. Modi in a speech carried live on
radio and television on Tuesday says there is no need to panic as people
would be able to deposit these currency notes in their bank account
until December 30.
In this Sept. 5, 2013 file photo, a roadside fruit vendor checks the
authenticity of a 500 rupee note received from a customer in the eastern
Indian city of Bhubaneswar, India. India's prime minister has announced
late Tuesday, Nov. 8, 2016, scrapping of high denomination 500 and
1,000 Indian rupees currency notes in what he describes as a major step
to fight the menace of black money, corruption and fake currency. Prime
Minister Narendra Modi in a speech carried live on radio and television
says there is no need to panic as people would be able to deposit these
currency notes in their bank account until December 30.
In this Dec. 16, 2011 file photo, a cashier counts Indian rupee bank
notes at a bank in Allahabad, India. India's prime minister has
announced late Tuesday, Nov. 8, 2016, scrapping of high denomination 500
and 1,000 Indian rupees currency notes in what he describes as a major
step to fight the menace of black money, corruption and fake currency.
Prime Minister Narendra Modi in a speech carried live on radio and
television on Tuesday says there is no need to panic as people would be
able to deposit these currency notes in their bank account until
December 30.
