Scores rally against In­dian cur­rency ban

Kuwait Times - - FRONT PAGE -

Tens of thou­sands of peo­ple joined na­tion­wide protests yes­ter­day against In­dia’s ban on high-value ban­knotes, which or­ga­niz­ers say has caused a “fi­nan­cial emer­gency” in a coun­try that op­er­ates al­most en­tirely on cash. In­dia is still reel­ing from Prime Min­is­ter Naren­dra Modi’s shock de­ci­sion nearly three weeks ago to pull 86 per­cent of the cur­rency from cir­cu­la­tion overnight, trig­ger­ing a chronic short­age of cash. Many or­di­nary In­di­ans say they sup­port the scheme if it forces the rich to pay their taxes by mak­ing them bank un­de­clared in­come, but economists have warned it could hit growth hard.

Around 25,000 peo­ple took to the streets of the east­ern city of Kolkata, cap­i­tal of West Ben­gal state, whose left­wing Chief Min­is­ter Ma­mata Ban­er­jee has warned of “ri­ots and epi­demics” if the ban con­tin­ues. Pro­tester Su­mit Sen said he had been forced to close his gro­cery shop af­ter busi­ness slowed to a trickle. “Run­ning my gro­cery shop be­came im­pos­si­ble,” the 45-year-old told AFP, urg­ing the gov­ern­ment to re­verse the move.

An es­ti­mated 6,000 ral­lied in Mum­bai, In­dia’s west­ern com­mer­cial hub, po­lice said. “We are protest­ing against the un­de­clared fi­nan­cial emer­gency im­posed by the gov­ern­ment and the hard­ships peo­ple across the coun­try are fac­ing be­cause of this il­le­gal de­ci­sion,” said Man­ish Ti­wari of the op­po­si­tion Congress party. “The de­ci­sion to de­mon­e­tize high-value cur­rency was done with­out any author­ity and leg­is­la­tion and is clearly il­le­gal.”

Own­ers of the banned 500 and 1,000 ru­pee ($7.30, $14.60) notes have un­til the end of the year to de­posit them in a bank, and can only di­rectly ex­change a small num­ber for new cur­rency. But author­i­ties have strug­gled to print enough new notes to meet de­mand and economists say the en­su­ing cash crunch will hit growth.

For­mer prime min­is­ter Man­mo­han Singh, a re­spected econ­o­mist, said last week it would shave at least two per­cent­age points off growth, which topped seven per­cent in the first half of the fi­nan­cial year.

“I do not dis­agree with the ob­jec­tives but it is a mon­u­men­tal case of mis­man­age­ment,” the Congress party law­maker told par­lia­ment.

“The way de­mon­e­ti­za­tion has been im­ple­mented, it will hurt agri­cul­tural growth and all those peo­ple work­ing in the in­for­mal sec­tor.”

Over 90 per­cent of trans­ac­tions in In­dia are con­ducted in cash and many of the coun­try’s poor­est have no ac­cess to bank­ing. Many have been left with­out enough cash to buy food or daily es­sen­tials, while farm­ers have been un­able to buy seeds and small traders say busi­ness has fallen off a cliff. None­the­less Modi has re­peat­edly de­fended the scheme, ac­cus­ing its de­trac­tors of be­ing tax evaders and urg­ing all In­di­ans to switch to non-cash pay­ment meth­ods.

Yes­ter­day, the gov­ern­ment pro­posed in­tro­duc­ing a penalty of 85 per­cent for any­one caught with un­de­clared money, but said it would charge any­one who comes for­ward vol­un­tar­ily a lower rate of 50 per­cent. Par­lia­ment has yet to ap­prove the pro­posal, which is con­tained in an amend­ment to the ex­ist­ing tax laws. — AFP

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