Earlier this week, the Prime Minister of India, Narendra Modi, shocked the nation by announcing an overnight withdrawal and replacement of banknotes in the denomination of Rs 500 and Rs 1000.
His announcement was made on Nov 8 and the two notes, (the equivalent of our RM 10 and RM 20 notes in terms of popularity of usage), ceased to be legal tender a day later, from Nov 9.
The bills withdrawn in India account for 85 per cent — or $337 billion — of the hard currency in circulation. The problem for this cash-dependent economy and people, is that so far, only a small fraction of that has been replaced; leading to chaos and confusion.
The move shocked Indians both in India and the rest of the world.
Pundits applauded it as a brave move to combat corruption, tax evasion, and counterfeit money (black money) that had accumulated in billions of crores in the country.
Many Indians also felt that the initiative, though difficult to implement, was both courageous and necessary. The sudden withdrawal has forced people to provide identification for replacement bills; and will eventually lead to the Indian Inland Revenue Board collecting billions of crores of undeclared taxes and illegally gotten gains. In the long run, the move will benefit the country.
What perhaps the Indian government did not quite foresee in the short run, though, is the extent of chaos that would ensue as a result of this move. It has also caused hardship to some quarters, particularly low income earners and those who may not even have a bank account. In a country where millions live below the poverty line, it is common practice for many to store their hard earned cash at home. Many industries, particularly small ones, are largely cash based. For them, this move would have created immense frustration and suffering.
The government had stated that the scrapped notes in circulation must be deposited in Indian banks by the end of December 2016, with the country issuing a brand new series of Rs 500 and Rs 1000 Rupees.
Though these notes entered circulation on Nov 10, the demand appears to be far more than the supply, leading to long and desperate queues outside banks. At these banks, exchanges are limited to two 2,000 rupee notes per customer. Replacement Rs 500 are still are not available.
What has happened is that many people have simply queued more than once (to change more than their allocated share), a move which has led the government to call for the use of indelible ink (used in general elections in India) to try to curb this practice.
Meanwhile, demand far exceeds supply. Financial institutions appear to be ill equipped to meet the frenzy and hysteria as people fear losing their lifetime savings. People have become increasingly desperate, as they need money to buy their basic necessities and food. Grocery shops, restaurants and shopping malls will no longer accept the old notes.
Thousands of Malaysian students studying in India have also been affected. They are now caught in a dilemma, as their campus is often situated very far from the banks. And once they finally make the journey of many miles to the bank, they are then faced with long queues of about 4 to 5 hours. Once the bank closes for the day, they may be forced to stay overnight in the town or city and queue again the next day. To compound problems further, the new Rs 2000 note is not being accepted by many shops and restaurants as traders do not have small change.
Many Malaysian medical and dentistry students in India have written to their parents to let them know of their plight, as many banks and ATMs have apparently shut down in Chennai and other towns as a result of being unable to meet the demand for new notes. At one point last Friday, nearly half of India’s ATM machines were shut.
It was reported that Malaysia’s Consul – General in Chennai, Ahmad Fajarazam Abdul Jalil had been in touch with several Malaysian student leaders studying in India, and advised them to seek advice from the Malaysian consulate.
According to him, there are around 2,000 Malaysian students studying in Tamil Nadu and Karnataka. He also advised Malaysian students to bring along their passport and student identification when going to Indian banks to deposit their old notes or to withdraw new ones.
For students in India who are on government scholarships, allowance is sent in US Dollars, and students should have local bank accounts to make debit payments.
What about Malaysians, who have visited India recently, or plan to do so in the near future and may be holding these outlawed notes in their homes here in Malaysia? They obviously need to change them as soon as possible. But the question is : where?
Some money changers are longer accepting these notes, and have instructed people to speedily change them at financial institutions that may still accept them.
The situation regrettably remains somewhat unclear at the time of writing; and it is hoped that the Indian High Commission in Malaysia would be able to issue advice / direct Malaysians to institutions which would accept / change the said notes.
Source : Meera Badmanaban@The Heat Malaysia Online