Modi prom­ises to ease cash crunch

Kuwait Times - - BUSINESS -

Prime Min­is­ter Naren­dra Modi yes­ter­day urged In­di­ans to give him more time to re­solve a cash crunch that fol­lowed the with­drawal of high-value ban­knotes from cir­cu­la­tion, as ri­val politi­cians lashed out at his han­dling of the cri­sis.

His com­ments came as the gov­ern­ment said it was in­creas­ing a weekly cash with­drawal limit and tak­ing steps to help peo­ple in re­mote ar­eas ac­cess money as frus­tra­tion mounted. There have been huge queues out­side banks and ATMs ever since they re­opened last Thursday, two days af­ter Modi an­nounced that 500 ($7.50) and 1,000 ru­pee notes would no longer be le­gal ten­der in a bid to tackle cor­rup­tion and tax eva­sion.

In­di­ans rely heav­ily on cash for their daily trans­ac­tions and those liv­ing in ru­ral ar­eas or who do not have bank ac­counts have been par­tic­u­larly hard hit. Modi said he had been “pained” by the hard­ships peo­ple were fac­ing, but in­sisted the move would ul­ti­mately ben­e­fit poor In­di­ans in the long run. “I am aware you are fac­ing dif­fi­cul­ties... I un­der­stand the in­con­ve­nience,” he said at a po­lit­i­cal rally in Uttar Pradesh, In­dia’s most pop­u­lous state, which goes to the polls next year. “I am re­ally pained by the in­con­ve­nience and that is why I am work­ing tire­lessly to help peo­ple over­come this sit­u­a­tion. “I will never let any­one loot money that be­longs to In­dia’s poor.”

But op­po­si­tion par­ties lashed out at Modi’s cur­rency re­call with sev­eral po­lit­i­cal par­ties team­ing up to cor­ner the gov­ern­ment in the par­lia­ment’s win­ter ses­sion, which be­gins on Wed­nes­day. “Modi is say­ing give me 50 days to deal with the crises. But who created the crises?” Ran­deep Sur­je­w­ala, main op­po­si­tion Congress party spokesman said. Op­po­si­tion lead­ers have ac­cused the gov­ern­ment of throw­ing mil­lions of com­mon peo­ple in fi­nan­cial dis­tress as the gov­ern­ment failed to put ad­e­quate mea­sures in place. “(The) rich are sleep­ing in peace and only poor peo­ple are on roads to ex­change their notes,” Ku­mari Mayawati, for­mer chief min­is­ter of Uttar Pradesh state said. She termed the de­ci­sion anti-poor and anti-farmer, say­ing it has hit the com­mon man “very hard”.

Two lead­ing bank unions also crit­i­cized the note ban say­ing it has led to “fi­nan­cial chaos” and the de­ci­sion was taken “with­out proper plan­ning or prepa­ra­tion”. Banks re­mained open over the week­end to try to ease the crunch, but were closed yes­ter­day due to a pub­lic hol­i­day with many ATMs across the coun­try run­ning out of cash. The gov­ern­ment has said it will take time for the ma­chines to be re­cal­i­brated to ac­cept the new notes, adding to the gen­eral frus­tra­tion.

Yes­ter­day, Shak­tikanta Das, In­dia’s sec­re­tary for eco­nomic af­fairs, said the gov­ern­ment would in­crease a weekly with­drawal limit of 20,000 to 24,000 ru­pees. It will also al­low a net­work of so-called bank­ing cor­re­spon­dents, who travel to ru­ral ar­eas to pro­vide peo­ple with ac­cess to bank­ing ser­vices, to carry more cash. The gov­ern­ment has said the old notes can tem­po­rar­ily be used for es­sen­tial ser­vices such as med­i­cal as­sis­tance. They can be ex­changed for new ones or de­posited in a bank ac­count un­til De­cem­ber 30, but long queues and a lack of cash has ham­pered that process. Modi pledged to crack down on so-called black money-vast piles of wealth kept hid­den from the tax author­i­ties-when he came to power in 2014. An­a­lysts have broadly welcomed the lat­est ini­tia­tive, but said con­sumer spend­ing would likely dip in the short term as the new notes made their way into cir­cu­la­tion.— AFP

SILIGURI: In­dian cus­tomers queue out­side a ATM to with­draw money in Siliguri yes­ter­day.— AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.