In­dia’s Modi de­fends cash ban amid chaos, crit­i­cism

Fitch to re­vise down In­dia’s growth fore­cast

Kuwait Times - - BUSINESS -

NEW DELHI:

In­dian Prime Min­is­ter Naren­dra Modi hit back yes­ter­day at the mount­ing crit­i­cism of his de­ci­sion to with­draw all high­de­nom­i­na­tion bank notes from cir­cu­la­tion, de­scrib­ing the move as “for the larger so­cial good”.

The Novem­ber 8 move to ban the 500 and 1,000 ru­pees ($7.30, $14.60) notes some 85 per­cent of all bills in cir­cu­la­tion-as le­gal ten­der has sparked tur­moil in the vast cashre­liant na­tion. Long queues have formed out­side banks across the country as peo­ple try to get rid of their old notes, and the gov­ern­ment has re­peat­edly changed rules sur­round­ing the ex­change process in re­sponse to pres­sure from var­i­ous groups and mount­ing chaos.

“The de­ci­sion isn’t be­ing crit­i­cized much (by the com­mon man),” Modi said in a speech yes­ter­day, in which he praised cit­i­zens as “soldiers in this fight against cor­rup­tion and black (un­ac­counted) money”. “Some things have to be done above pol­i­tics for the larger so­cial good,” he added.

Crit­ics of the move have in­cluded for­mer prime min­is­ter Man­mo­han Singh-whose eco­nomic re­forms are cred­ited with res­cu­ing In­dia from the brink of bank­ruptcy in the early 1990s-who said that the de­ci­sion could shave two per­cent­age points from the country’s GDP.

Rat­ings agency Fitch has also said it would re­vise down In­dia growth fore­casts for the fourth quar­ter of 2016 af­ter the shock move. Oth­ers have slammed the gov­ern­ment for its “shoddy im­ple­men­ta­tion” of the scheme.

But Modi hit out at his ri­vals, say­ing those crit­i­ciz­ing his de­ci­sion were do­ing so be­cause they were “sad that they didn’t get any no­tice, a chance to pre­pare for the de­ci­sion”.

“It is such a great step. A big, big de­ci­sion. And, for those who dream of a great fu­ture for the country, let’s come to­gether to re­move the prob­lems be­ing faced by the com­mon man,” he added.

In weeks since the de­ci­sion, peo­ple na­tion­wide have com­plained of a cashcrunch, with ru­ral farm­ing ar­eas, where lo­cal banks and post of­fices have been slow to re­ceive new notes, the hard­est hit. Modi also urged In­di­ans to switch to non-cash meth­ods of spend­ing.

“Ev­ery per­son has a right to spend his or her money. No one can take any­one’s money. Now peo­ple can also spend through mo­bile tech­nol­ogy,” he said, men­tion­ing that the country had around a bil­lion mo­bile hand­sets and 60 per­cent of its pop­u­la­tion was un­der 35 years. The Modi gov­ern­ment claims that the move is an at­tempt to en­cour­age more peo­ple into for­mal bank­ing, which will also in­crease tax­able in­come in a country where only around 3 per­cent of In­di­ans pay any in­come tax. —AFP

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