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In course correction after demonetisation, govt eases cash withdrawal norms

black money crackdown Updated: Nov 15, 2016 01:33 IST
Cash withdrawals

People stand in a long queue outside the Punjab National Bank ATM in New Delhi.(Ravi Choudhary/HT Photo)

The government relaxed cash withdrawal norms on Monday to help small businesses and the rural poor, but a bank holiday in 18 states and empty ATMs piled more misery on people from last week’s surprise recall of high-value banknotes.

The latest decisions are part of government efforts to ease a cash crunch following the abrupt withdrawal of 500-and 1,000-rupee bills by Prime Minister Narendra Modi to fight counterfeiting and “black money” or wealth hidden from taxmen.

The announcements came after a meeting chaired by Modi late on Sunday. But with banks closed and ATMs dry they did little to help the situation on Monday.

Read | Demonetisation has ended terror-funding, stone-pelting in Kashmir: Parrikar

Banks were open in south Indian states, Gujarat, Tripura and Goa, among others. In the rest of the country, most ATMs weren’t even refilled, sparking fears the crowds will swell manifold when banks reopen on Tuesday.

But Modi on Monday reiterated an appeal to the people to bear with him, saying “demonetisation” will ultimately benefit poor Indians.

“After demonetisation, the poor are enjoying a sound sleep while the rich are running from pillar-to-post to buy sleeping pills,” he said, speaking at a public rally in Uttar Pradesh.

“I am trained to make ‘kadak’ (strong) tea since my childhood and I know poor people like this type of tea, while the rich feel its bitterness,” he said, referring to his childhood days as a tea seller.

But the less-than-perfect execution of the “demonetisation” plan has seen a united opposition sharpen its attack against the move ahead of the winter session of Parliament starting Wednesday.

At the all-party meeting, the opposition leaders raised concerns over the “demonetisation” scheme and sought to debate it on priority in Parliament.

Earlier in the day, top parties, including the Congress, Janata Dal (United), Trinamool Congress, and the Left parties, met on Monday to draw up a common floor strategy against the government. The opposition has called for rolling back the plan, saying the move will not help fight black money but only put people through hardship.

Leftist activists shout slogans against Indian prime minister Narendra Modi as they carry his effigy, decorated with posters of rupee notes, during a protest rally in Kolkata on November 14, 2016. Prime Minister Narendra Modi on November 14, urged Indians to give him more time to resolve a cash crunch that followed the withdrawal of high-value banknotes from circulation, as rival politicians lashed out at his handling of the crisis. / AFP PHOTO / Dibyangshu SARKAR (AFP)

Hours before that, economic affairs secretary Shaktikanta Das threw a lifeline to millions of traders crippled by a cash crunch and those in the countryside with limited access to banks.

He said businesses with current accounts active for three months can withdraw Rs 50,000 a week. The government also allowed a network of so-called banking correspondents, who travel to rural areas to provide people with access to banking services, to carry more cash.

Read | New notes in ATMs soon, withdrawal limit raised: 10 updates on demonetisation

ATMs will start dispensing new Rs 500 notes by Tuesday, Das said. He said an extended daily limit of ATM cash withdrawals — Rs 2,500 from Rs 2,000 — will apply to only re-calibrated machines.

The process of updating ATMs to dispense the new currency — which come in a fresh design and size — is expected to take up to three weeks.

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