World Economy

Anger, Chaos Grows Over India Currency Switch

Similar queues have formed at banks across India.Similar queues have formed at banks across India.

Public anger has been rising as Indian banks struggle to dispense cash after the government withdrew large-denomination bills. Nearly half of India’s 202,000 ATMs were shut and those that worked quickly ran out of cash.

Hundreds of thousands stood outside banks for a third day for long hours Saturday trying to replace 500 ($7.40) and 1,000 rupee bills that will soon be worthless, DW reported.

 The government stunned the country on Tuesday when Prime Minister Narendra  Modi announced in a televised address that the high-denomination bills would be withdrawn as part of a blitz on “black money” and fake notes.

The government has tried to reassure citizens that only tax evaders will suffer. But as these bills made up more than 80% of the currency in circulation, millions have been left without cash and large parts of the cash-driven economy have ground to a halt.

Some are angry at the prime minister—currently on an official visit to Japan—for leaving the country during the turmoil. “He is taking bullet-train rides in Japan and here you have old people knocking on bank doors for cash,” Prabhat Kumar, a college student who said he had spent six hours waiting in line, told the Reuters news agency.”He has made a terrible mistake.”

“There is chaos everywhere,” said Delhi Chief Minister Arvind Kejrilwal and a political rival of the prime minister. He said Modi’s move had upended the lives of the poor and working class while the rich—whose wealth he had sought to target—had found loopholes to get around the new rules.

In the capital city, crowds argued and banged on the glass doors of bank branches as security guards tried to keep the angry throngs of people at bay. Traders in Delhi’s vegetable market said they were considering shutting down the market as cash was running out and banks were dispensing only a limited amount.

In India’s wealthiest city, Mumbai, people said grocers were charging 10 times the price of salt in return for accepting the old cash notes, and in the southeastern city of Bengaluru, some people were using their old notes to buy one-time insurance policies.

The government has asked people to redeem the old 500 and 1,000 rupees notes by December 30. The central bank said there was enough cash available with banks and that it had made arrangements to deliver the new banknotes to branches across the country.

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