NRIs were left high and dry on the note ban
India needed this economic shake up. Prime Minister Narendra Modi took a brave step when on November 8 he demonetised ₹1000 and ₹500 currency notes. Never before has a country with a huge population and an economy of such proportions wiped out 86% of its currency on such short notice.
In the larger perspective, the Non-Resident Indians (NRIs) were suddenly under the direct purview and inclusion of the government and especially that of a PM. From New York to London and Dubai to Melbourne, Modi’s message to the diaspora was clear — inclusivity and integration with the mainland when it comes to the country’s decision making. This continues to be one of his strong pillars, a key to attain global mileage through his ability to rally magnificent crowds even outside of India.
The televised broadcast on November 8 equally surprised NRIs as it did the residents. While the deadline for exchanging the old notes was capped at December 30, the NRIs awaited for directions to get on with the process. Plaudits turned into panic as weeks passed nearing December 30, and there still seemed to be no clarity on how the NRIs could proceed on with converting their invalidated currency notes locally. The lack of communication from New Delhi, which always remained vocal for the diaspora, was indeed baffling.
It was only in the New Year that the first communication emerged of the extension until June 30. If the NRIs are to travel to India within the window period to exchange their old currency, it may be tricky under the current FEMA guidelines considering the cap for bringing in Indian currency from abroad is set at ₹25,000 per person, and it would be economically unviable to spend nearly ₹70,000 on travel just to convert it. Expecting millions of Indians to return just to drop back dead notes is inconvenient and ineffective. Therefore, a localised solution through any of the Indian banks abroad would be a viable alternative.
Could the government have better communicated and assured the NRIs? Perhaps.
The next step forward for India would be to ensure a complete control of its economy by minimising its dependency on cash. This will prevent the reappearance of a parallel economy, streamline India’s market, and save high minting costs.
In countries such as Sweden and Norway, economies already operate with less than 5% in cash. Once the demonetisation programme is complete, Modi should draw inspiration from these nations and work on an outline for a progressive plan for the country to reduce its dependency on cash by the next decade, The government appears to have already begun exploring this.