Rs 500, Rs 1,000 notes withdrawn.
Upstaging the US presidential elections and stumping political parties geared up for Assembly elections in Uttar Pradesh and Punjab, Prime Minister Narendra Modi in a disruptive but deft move took a giant step towards curbing black money by demonetising Rs 500 and Rs 1,000 currency notes.
In a surprise televised address to the nation, his first since taking over as PM, Mr Modi, after detailing how black money and counterfeit notes were being used to kill the Indian economy and fund terrorism, announced that '500 and Rs 1,000 notes will be reduced to just “worthless piece of paper” starting midnight, Tuesday. He detailed several exemptions and riders, and explained the procedure of the withdrawal of high denomination currency notes.
All notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Rs 1 and all coins will continue to be valid. But banks will remain closed on Wednesday and ATMs will not function on Wednesday and Thursday, Mr Modi said.
“Banks will be closed on November 9. It will cause some hardship to you... Let us ignore these hardships... In country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,” Mr Modi said.
RBI governor Urijit Patel, addressing a press conference after the PM’s address, said the transition towards the new monetary regime would be made as smooth as possible.
The Prime Minister announced a 50-day demonetising road map under which people have time till December 31, 2016, to return their high currency notes to banks.
Even as the withdrawal of Rs 500 and Rs 1,000 notes is ongoing, the government will bring Rs 2,000 and new Rs 500 notes on November 10, 2016, to facilitate easy replacement of the redundant ones. The new notes will have advanced security features that will enable their easy tracking.
Mr Modi’s 40-minute address, first in Hindi and later in English, began at 8 pm, giving the nation less than four hours to react. Queues outside ATMs across the country grew by the seconds even as the PM was speaking.
The historic move, being called a “surgical strike” on black money, will hit hoarders of black money hard and put political parties in the dock ahead of the crucial elections in Uttar Pradesh and Punjab as slush funds fuel campaigns.
Backing the move, BJP president Amit Shah described the decision as fulfilment of the NDA’s promise to eradicate black money while the Opposition parties called the move hasty and ill-timed, coming as it does in the season of harvest and marriages.
While the move seemed timely, to convey to the people of poll-bound Uttar Pradesh about how serious the NDA government is about curbing black money, it may adversely affect the supply of essential commodities like fruits and vegetables on Wednesday morning as wholesalers transact their business only in cash and the unavailability of Rs 500 and 1,000 notes will hit them hard. Among the waivers, hospitals, petrol stations, notified milk vends and air and rail ticket counters will continue to accept Rs 500 and Rs 1,000 notes till November 11 midnight. “To minimize the difficulties of citizens in the coming days, several steps are being taken,” announced the PM. “Persons holding old notes of Rs 500 or Rs 1,000 can deposit these notes in their bank or post office accounts from November 10 till close of banking hours on December 30, 2016, without any limit,” he said assuring that people need not worry about their money. “After depositing your money in your account, you can draw it when you need it,” he said. Keeping in mind the supply of new notes, in the first few days there will be a limit of Rs 10,000 per day and Rs 20,000 per week. This limit will be increased in the coming days, he said. For immediate needs, people can exchange their Rs 500 and Rs 1,000 notes on producing identity proof like Aadhaar card, voter card, ration card, passport or PAN card. The government will give another chance to return money after December 30. People can go to specified offices of the Reserve Bank of India up to March 31, 2017, and deposit the notes after submitting a declaration form. The RBI governor said that the move will have no impact on liquidity in the wholesale markets and adequate measures have been taken to deal with this. Department of economic affairs secretary Shaktikanta Das said that the government will review the situation after November 24. He said the move was necessary for the economy. The new notes with new features will be released from November 10 onwards. They will be known as Mahatma Gandhi new series of bank notes.
