Scramble to exchange worthless savings causes paralysis and death
A bank manager who died at his desk after working three straight days and nights; a woman who flung herself off a building because she could not change money; a man who shot his wife for not waiting longer at an ATM – these are just a handful of the tragedies witnessed since Indian Prime Minister Narendra Modi scrapped the country’s two largest banknotes 10 days ago.
Business has slumped at city markets. In rural areas, farmers cannot hire hands to prepare fields for winter crops and produce cannot reach markets. Banks serving huge farming areas have received only a fraction of the cash their customers need.
Parts of the cash-driven economy of a nation of 1.2 billion people are grinding to a halt as hundreds of millions of Indians queue outside banks and cash machines to try to change their savings.
Wealthy Indians are recruiting anyone willing to stand in line for them. Parents in Delhi have received emails from their children’s schools complaining that older pupils have been skipping classes to queue at banks.
The 1000- and 500-rupee notes have been rendered valueless until they are exchanged for legal tender. Some 23 billion notes, 86 per cent of the currency in circulation by value, were scrapped. For several days, India’s most valuable and sought-after bank note was the 100-rupee.
Overnight, Modi plunged the world’s fastest-growing major economy into chaos. His declared target is the hoards of cash, or ‘‘black money’’, stashed away by corrupt politicians and businessmen, whose tax evasion costs the economy billions of dollars each year.
India runs on cash, however. New 2000- and 500-rupee notes, issued to replace the redundant currency, are only creeping into circulation.
Those ATMs that do have cash are emptied in minutes. Even those fortunate enough to have a 2000-rupee note struggle to spend it, with traders unable to provide change with so little money in circulation.
Smartphone messages from Delhi prostitutes are circulating on WhatsApp, reassuring clients that they still accept the old notes.
Though the government insists that the scheme was planned for months, every day has brought new rule changes, clarifications and emergency measures, each underscoring the impression that the government is making it up as it goes along.
On Friday, the amount customers could exchange was suddenly cut to 2000 rupees, from 4500 the day before, sparking a panic that India was running out of new currency.
The government swiftly denied this, but news footage of fighting outside banks has not helped to allay public fears.
‘‘It’s almost like they didn’t think it through,’’ Amit, an engineering student in a bank queue in south Delhi, said.
A host of scams have sprung up as the nation scrambles to offload its redundant cash. Hindu temples have enjoyed a surge in donations, which can be banked anonymously. Temple leaders will return the money to their donors, minus a commission, when the situation calms down.
Government sources admit that the initiative is ‘‘do or die’’ for Modi. The crisis is becoming the defining moment of his premiership.
Despite mounting anger, public opinion is yet to turn against the prime minister, but support will evaporate if the government cannot get enough cash into circulation soon.
‘‘I cannot pay my rent, I cannot eat,’’ Saurabh, a driver, said as he queued outside a bank in Old Delhi.
‘‘I waited all day yesterday for nothing. I hope today there will be money.’’