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ATMs run dry to ever-changing rules: Defining headlines of Modi’s demonetisation move

When Indians queued up to get their own money and wondered what had they gained from note ban.

india Updated: Aug 31, 2017 11:54 IST
HT Correspondent
HT Correspondent
Indians deposit discontinued notes on December 30, the deadline allowed by the government after Prime Minister Narendra Modi announced demonetistion on November 8, 2016. (AP)

The Reserve Bank of India’s revelation on Wednesday that all but 1.4% of the scrapped Rs 1,000 notes had returned to the banking system post demonetisation put the spotlight again on Prime Minister Narendra Modi’s most contentious, risky decision yet.

Most analysts have written off demonetisation as not living up to its promise of cracking down on black money, and have questioned whether the massive exercise was worth it. Union finance minister Arun Jaitley mounted a defence of demonetisation, saying the decision to recall 500 and 1000-rupee notes was not only to curb black money but also to confiscate illicit cash and bring them into formal channels and tax them.

While the debate is still on, here is a look at the how the events unfolded, in HT’s

Demonetisation is announced

On November 8, India added a new word to its vocabulary: demonetisation.

In a surprise televised address Prime Minister Narendra Modi announced that Rs 500 and Rs 1000 currency notes would cease to be valid from midnight, and gave citizens a deadline till December 30 to submit the old notes to banks. In the same speech, he announced that the government would be introducing new Rs 500 and Rs 2,000 notes. The government stressed that the decision was aimed to crack down on black money and encourage a cashless economy.

The announcement came as a shock to the country, as panicked citizens rushed to their nearest ATMs to withdraw cash. On November 9, India woke up to Rs 500 and Rs 1000 notes being history. Read Hindustan Times’ wrap from the day here.

The long queues and cashless ATMs

In the immediate aftermath of demonetisation, India stood in snaking long queues at ATMs and banks to get cash.There were reports of people standing in queues, over worked bank tellers dying of exhaustion .

An HT photo of an elderly man breaking down after missing his spot at a Gurgaon bank went viral on social media, touching a raw nerve with many. Nand Lal, a 78-year old retired soldier, became the face of the hardship demonetisation inflicted on the common man, as people gave up work and other commitments to stand in lines.

This HT photo by Praveen Kumar of an old man crying after missing his spot at the State Bank of India’s New Colony branch in Gurgaon went viral on Twitter.

The changing rules

Adding to the confusion, the government repeatedly changed the rules relating to the deposit of old notes. Limits on how much cash you could exchange at a counter or withdraw from an ATM kept swinging. And places where old notes were accepted also changed every couple of days.

HT’s interactive on demonetisation’s ever-changing rules kept track of these flip-flops and changes.

The new currency notes

The new Rs 2,000 currency note introduced by the RBI came with its share of rumours -- that it had a nano chip embedded to track black money, radioactive ink and other tracking features, which were all untrue.

Reports of ATMs dispensing fake Rs 2,000 notes issued by a ‘Children’s Bank of India’ surfaced as well. We did a comprehensive explainer on how one could tell if their new acquired currency notes were fake or real.

Police display fake currency notes in denominations of Rs 2000 and Rs 500 worth over 26 lakhs seized in Rajkot, Gujarat. ( PTI )

A win for Modi?

The consensus on the ground was that while citizens were inconvenienced by demonetisation, they largely believed in the prime minister’s claim that it would crack down on corruption and black money. In an opinion piece, Manu Joseph argued that the move constituted a win for Modi since people had a surprisingly accommodating view of demonetisation, especially one that has hurt them.

In late November, the PM thanked people for supporting demonetisation, after conducting a survey on the issue.

Raghuram Rajan

Speculation suggested that former RBI governor Raghuram Rajan was replaced because he did not support the idea of demonetisation. Later reports suggested that Rajan didn’t think much of demonetisation and had earlier said there are other ways of tackling black money.

Economic impact

There were conflicting estimates of how demonetisation impacted India’s economy. On one hand, India’s economic growth slowed to 6.1% in the fourth quarter ending March 2017, compared with 7.1% in the previous quarter, as the government’s note ban decision slowed activity in cash-dependent sectors. A World Bank report, however, concluded that Modi’s demonetisation had more pluses than minuses.

Status checks

HT did several stories on the impact of demonetisation all across the country. In Kerala, temple coffers ran dry as devotees could get no cash; in Bastar, locals fear increase in Maoist extortion after note ban and in Sunderbans’ Satjelia island, a lone man dispensed cash to the locals.

HT did several status check on how India’s financial policy decision affected people on the ground.

When the deadline set by the PM expired, HT revisited persons and places to do a reality check on whether Modi has delivered on his pledge to ease the situation for his countrymen. The feedback was mixed, with some people praising the government’s move, while others detailed the hardship it entailed.

First Published: Aug 31, 2017 11:30 IST