Approximately a week back the prime minister of India, Mr. Narendra Modi, declared that the Rs.500 and Rs.1000 currency notes that were in use, will not be valid anymore. In return, there will be new notes replacing these old ones and also a brand new currency denomination of Rs.2000. This was huge, and the effects too.
I have to say this, I don’t completely agree to this move for few valid reasons but I don’t hate it too. This plan by the PM, to ban widely used notes, was to cut down on corruption and the amount of black money that was piling up. I do like the idea of it but I don’t like the execution as it did create a lot of panic amongst the people.
It’s not like people were told before hand that this was going to happen. It was an announcement made by the PM on November 8 that from 12 that night, all Rs.500 and Rs. 1000 notes are going to be invalid and will be just mere paper. The announcement was made at 8pm, 4hrs before the official banning. That did make things a little worst.
The major problem that people started to face immediately was that they actually didn’t have any usable money. See the thing is, the 500 rupee note was widely used and was the only note that we received through ATM in large numbers. So anyone withdrawing money, say around 5k, from the ATM prior to this banning, would probably get the Rs.500 notes. This 500 note was then used for transportation and grocery shopping and all because it was perfect for the daily transactions. Every shop keeper would have change for that amount and most of the shopping bill would be in couple hundreds making the 500, a perfect choice. But when you suddenly say that the currency note that people were using so much is going to be just paper, this creates a lot of problems.
People had to forcefully exchange the Rs.500 notes for Rs.100 notes the next day itself because they needed to have some usable money. Most of the grocery shops and local transportation that don’t accept cards, refused to accept any 500/1000 notes. This kind of created a panic as the places that do accept these notes became limited. Not only the notes were a problem but the solution given by the government was absolutely not good.
Since all this was done to remove black money and bring in new notes, the currency note that was offered to the people, in return for the 500/1000 rupee notes that they give back to banks, was of .. 2000. Yes, a 2000 rupee note in exchange for 4 500 rupee notes. This makes totally no sense, for a couple of reasons.
Firstly, no one out there has change for Rs.2000.
Secondly, I myself didn’t ever carry a Rs.1000 note in my wallet because of the first reason and it also being more valuable and prone to stealing/losing, why the hell would I carry a Rs.2000 note? That’s just too much money.
Now, after acquiring 5 2k notes from the bank for a withdrawal of 10k, I’ll either have to buy something close to 1000+ so that I may get change, or go back again to the bank and hopefully getting the new Rs.500 notes after they are released.
Talking about banks, I really feel sorry for the employees and would love to say ‘Thank You’ for the work they have done to help everyone get their exchanges, deposits and stuffs with minimal confusion and frustration. The banks and the ATMs were a nightmare. Even the banks that had thin crowd everyday were jam-packed with people wanting to exchange their notes. Long lines from morning till night not only created frustration but what could have been a smooth process, was not.
And talking about ATMs, they were shut down the next 2 days after the announcement. Yes, there was no running ATM for anyone to withdraw their money. That was expected as every ATM is mostly filled with Rs.500 and Rs.1000. So they were shut down to replace them with the new notes and program them to include the Rs.2000 notes too. But the stress it caused to the people, it was not good.
It’s not like people were forced to exchange their notes in a week. Everyone could exchange them before 31st December. That’s a lot of time. But what the government, I think, failed to understand was these notes were used everyday. That indirectly forced everyone to exchange it before they run out of usable money. Hence, the long lines and frustration.
It’s been over a week now and there are still ATMs and banks filled with people getting their notes exchanged but the stress level has reduced. The new Rs.500 notes are coming out and the ATM machines are starting up again with the new big currency note, but I don’t understand what the result would be.
Before I say anything, I am bad at politics and economy and stuffs, but replacing the old higher value notes for new ones, to cut down on black money and then bringing a brand new, more higher value note.. won’t that actually help in the black money business. I don’t know, I honestly don’t know. I’m putting out a view and I might be completely wrong. Also, the new notes have tracking and all, so every note can be easily tracked and recorded. Everything may work out as planned. The Indian economy would rise, the rupee value would rise. I don’t know, but if it happens I’ll be really happy, as will the whole country and the PM would have done a great job.
I don’t know, anything could happen. Only time would tell.