The ugly face of India’s demonetization: Dozens of deaths

When Mr Lee passed away in March a year ago, Mr Modi in leading the tributes and condolences pouring in from all over India, acknowledged Mr Lee Kuan Yew a “lion among leaders”.

“Most people who have black money keep it in Swiss banks, debentures, stocks and bonds, so they are the winners, “says Khalid Seyid of Jamun Media who has around INR 35,000 ($700) that he brought back from Mumbai from his last visit”.

Assuring that there is a sufficient supply of notes, the Reserve Bank of India on Thursday urged the people not to panic and hoard currencies.

Many expressed shock at such a sudden and decisive step, as cash still rules supreme in India.

A manager of a Bank of Maharashtra also had a similar story to tell.

“Bitcoin is a sanctuary in emerging markets where knee jerk policy reactions are commonplace – India’s move on high value bank notes is just the latest in a string of poorly communicated & executed judgments”, he told CNBC via email.

Recently, economist Ajit Ranade in an article, argued how “large denomination notes are highly likely to be used for illegal activities and not so much as a medium of ordinary transaction”. This will increase demand for government securities and cause a fall in bond yields. The unscrupulous elements were trying to convert their black money into white by going to different banks branches several times over in a day. They also enable a parallel economy which is hard to control and where policies are less than effective.

Adding to the chaos were rumors the government was planning to announce further measures, however India’s state-run Press Information Bureau said talk of plans to demonetize smaller notes was a myth. Indians who rely on cash for their daily transactions are struggling to pay for the basic commodities.

Even when a government wants the economy to go “cashless”, its forcing people to do so through a demonetization of the currency is an act of sheer authoritarianism that is no less reprehensible than an attack on people’s civil liberties. Any mismatch with income declared by the account holder will be treated as a case of tax evasion and the tax amount plus a penalty of 200 per cent of the tax payable would be levied as per the Section 270 (A) of the Income Tax Act.

Customers paid as much as 52,000 rupees (S$1,086) per 10g, nearly double the current price, he said.

Prime Minister Narendra Modi addressed the people in an unscheduled live televised address at 8:15 pm the same day. It requires, in short, near universal bank-coverage of the population, compared to the current figure of around 30 percent of the population having access to the banking system.

The Government launched the Jan Dhan Yojana (People Money Scheme) in 2014 aimed at boosting financial inclusion, and almost 220 million accounts had been opened by April 20, 2016.

” It is a novel way to provide cash to the people”. Some Rs1.5 lakh crore ($22 billion) in deposits have been collected by banks since the demonetization announcement was made, the Times of India reported on November 14. As cash-strapped consumers look for suitable alternatives to cash, mobile wallet systems and payment banks look to capitalise on this opportunity through mass advertising and word of mouth. Thus, RBI would need to incur some significant higher costs in stopping the issuance of R500 and R1000 notes, and replacing them with other denominations over time. Even if the long queues vanish in the next few weeks, that damage to the government’s reputation is permanent. (Indian small businesses typically rely heavily on cash for their day-to-day operations.) While the government on November 14 tweaked certain rules and increased withdrawal and deposit caps, it should still be a tough few weeks for small businesses. Though such restrictions were aimed at black money holders, common men too have suffered in the process.

Trucks are responsible for transporting essential goods all over India.