Tourists in India caught in cash crisis

Prime Minister Narendra Modis mother Heeraben Modi visited a bank in Gujarat capital Gandhinahgar on Tuesday to exchange currency. Though aimed at fighting black money and counterfeit currency, the exercise has also caused much hardship to the common man. The money is mine, the bank account is mine, it is taxable income. Many of India’s banks are struggling for capital due to high levels of bad loans. This does not go well with assurances given by the RBI that it has enough currency to replenish banks.

Foreign tourists are also having trouble as vendors and ticket offices refuse to accept their high denomination currency notes and they have to depend exclusively on plastic.

“If your money is valid, nothing will happen to it”, union minister Venkaiah Naidu said. But it could also be a bet that India’s economy is about to slow.

The under-preparedness of government has led to the creation of extreme chaos.

Neighbourhood grocers who deal mainly in cash have offered to sell goods on credit, while some customers are bartering phone credit – bought with a credit card – for vegetables. To say that Pakistan was printing high-value Indian notes to finance terrorists could hardly be the reason for such a massive exercise.

The Prime Minister appealed to the public to bear the inconvenience for the promise of a nation free of “black money” – unaccounted-for cash on which taxes have not been paid.

Accordingly, even if we assume that the full amount of Rs 12,500 crore is being disbursed in Rs 2,000 denomination on a daily basis, it will take 116 days to replenish the financial system with what has been declared illegal.

Reddy said accusing opposition parties for the people’s anger will not yield results and they need a reply on why the Prime Minister “could not” bring back black money as promised ahead of 2014 Lok Sabha polls.

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.

That adds to the worries of a government battling to keep cash dispensing machines running after efforts to ease withdrawals failed to keep pace for the fifth straight day. Just 4 hours ago I received a call from a man from a place called Nanded who screamed at me non-stop.

The cash crisis also bedeviled people in several north-eastern states, especially in rural and remote areas.

The challenge will be to strengthen the digital infrastructure of banks and vendors failing, both of which are likely to see the threat of cyber-related theft increase.

The Congress blamed the government for what it said was an “economic anarchy” while CPI (M) general secretary Sitaram Yechury said that the decision was made with an eye on upcoming assembly elections in Uttar Pradesh. “He (Modi) has accepted garland of notes many times”.