Ben­e­fits of cash over­haul elu­sive

China Daily (Hong Kong) - - WORLD - By AS­SO­CI­ATED PRESS in New Delhi

Fifty days ago, In­dia yanked most of its cur­rency from cir­cu­la­tion without warn­ing, jolt­ing the econ­omy and leav­ing most cit­i­zens scram­bling for cash.

As the dead­line for ex­chang­ing the de­val­ued 500- and 1,000-ru­pee notes for new ones hit on Fri­day, many In­di­ans were still stuck wait­ing in long bank lines.

Empty ATMs and ev­er­chang­ing rules are prevent­ing peo­ple from with­draw­ing money, and many small, cash-re­liant busi­nesses from cin­e­mas to neigh­bor­hood grocery stores are suf­fer­ing huge losses or go­ing un­der.

De­spite those prob­lems, Prime Min­is­ter Naren­dra Modi says his Nov 8 de­mon­e­ti­za­tion de­cree has suc­ceeded in un­cov­er­ing tax eva­sion and crack­ing down on graft.

The In­dian gov­ern­ment is urg­ing pa­tience, in­sist­ing it’s play­ing a long game that will even­tu­ally mod­ern­ize In­dian so­ci­ety and ben­e­fit the poor.

So far, de­spite the wide­spread in­con­ve­nience and costs, most of the coun­try’s 1.25 bil­lion cit­i­zens ap­pear to be tak­ing Modi’s word for it.

Modi’s an­nounce­ment that 500 and 1,000 ru­pee bills mak­ing up 86 per­cent of In­dia’s cur­rency were no longer le­gal ten­der has posed an enor­mous hard­ship for mil­lions of peo­ple who use cash for every­thing from salaries to cell­phone charges.

Al­most im­me­di­ately, huge lines ap­peared at banks and ATMs as peo­ple waited hours to de­posit or ex­change old cur­rency notes for new bills.

Since au­thor­i­ties only be­gan print­ing the new bills af­ter the pol­icy was an­nounced, de­mand vastly ex­ceeds sup­ply and cash ma­chines of­ten run dry.

Daily com­merce in essentials in­clud­ing food, medicine and trans­porta­tion screeched al­most to a halt.

Worst af­fected were the coun­try’s hun­dreds of mil­lions of farm­ers, pro­duce ven­dors, small shop own­ers and daily-wage la­bor­ers who usu­ally are paid in cash at the end of a day’s work. Many lost their jobs as small busi­nesses shut down, com­pound­ing their poverty.

Pankaj Ag­gar­wal, owner of a cloth­ing shop in the Old Delhi neigh­bor­hood of Chandni Chowk says his sales crashed by 70 per­cent.

“You can imag­ine what our busi­ness is like now. It will be some time be­fore our sales nor­mal­ize,” he said.

Modi ap­pears to have suc­ceeded in pro­mot­ing the cash over­haul as a “pro-poor” pol­icy, tap­ping into deep anger among the have-nots to­ward wealthy elites.

“The first two months have been so bad for us, we don’t even have enough money to buy food,” said daily wage la­borer Neeraj Mishra, 35.

“Over­all, I think Modi has done some good. Peo­ple with a lot of money are the ones who have been trou­bled. I don’t have enough cash for it to bother me much.”

AP

In­di­ans de­posit dis­con­tin­ued notes on the last day in a bank in Gauhati, In­dia, on Fri­day. In­dia yanked most of its cur­rency bills from cir­cu­la­tion without warn­ing, de­liv­er­ing a jolt to the coun­try's high-per­form­ing econ­omy.

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