Consequences of India’s Demonetization Scheme

Leo Timm
By Leo Timm
November 23, 2016News
Consequences of India’s Demonetization Scheme
An Indian resident counts 500 and 1000 INR notes at her home in New Delhi on November 8, 2016.

Eighty-six percent of India’s cash is out of circulation as the government under Prime Minister Narendra Modi launched its ambitious demonetization plan to account for billions in untaxed money, Reuters reported. The bold move has had immediate and wide-ranging effects across the country, drawing criticism regarding its implementation.

Only about 50 days remain for people to turn in their savings. This has affected not only terror groups and tax evaders but also burdened millions of ordinary Indians. Of the country’s 260 million farmers, many do not have bank accounts and relied on the invalidated 1000- and 500-rupee notes for daily life.

Lines forming at banks have lasted days, and there is rioting in some areas. Several people died of exhaustion as they endured the long wait.

Economic affairs secretary Shaktikanta Das said the National Bank for Agriculture and Rural Development will provide 210 billion rupees ($3.07 billion) in farm credit to help the sowing of winter crops such as wheat.

“Almost more than 40 percent of the small and marginal farmers get their crop loan credit, get their agricultural credit from the cooperative institutions,” he said.

Apart from extending credit lines to the peasantry, the government has increased bank transaction limits, reduced railway ticket surcharges, and extended payment deadlines.

Maoist rebels and Islamist militants were hit hard by the demonetization, since it made their stockpiles of hidden cash unusable.

Overall, a vast majority of Indians agree with the action, but think it should have been implemented better, the Times of India reported.

(NTD Television)

Front page image: An Indian resident counts 500- and 1000-rupee notes at her home in New Delhi on November 8, 2016. Credit: Prakash Singh/AFP/Getty Images)

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