Cash crunch, long queues, frayed nerves: Tracking the first 10 days of demonetisation
Wednesday marks a year to the day Prime Minister Narendra Modi announced that his government was abolishing Rs 500 and Rs 1000 banknotes, a dramatic move aimed at stamping out corruption and draining illicit cash from the economy.
While the government said it would celebrate the first anniversary of demonetisation as the ‘anti-black money day’, the Opposition was organising protests, saying the cash ban triggered hardships for the people and slowed down the economy.
The Prime Minister’s surprise announcement in a late-evening televised address on November 8 last year resulted in large queues outside ATMs and banks across the country for several weeks.
Here is how the nation dealt with the cash ban announcement for the first 10 days:
November 9: Banks closed for the day, big cash deposits under scanner
A day after the demonetisation move, the government said cash deposits above Rs 2.5 lakh could attract tax besides a 200% penalty in case of income mismatch.
In his November 8 address, PM Modi said all banks would be closed the next day to prepare for the changes brought in by the demonetisation announcement. “It will cause some hardship to you... Let us ignore these hardship... In a country’s history, there come some moments when every person feels he too should be a part of it,” Modi said.
Finance minister Arun Jaitley said: “The credibility of the Indian economy will increase.”
November 10: 500-1,000 degrees of chaos
Winding queues of angry and panicking customers formed outside banks and post offices across India, as millions of people tried to exchange banknotes.
At places, banks called in police or closed down for the day to cope with the crush of customers. Scenes of chaos and brawling were reported from all over the country, indicating the authorities were probably underprepared for the currency switch.
Some banks opened late, staggered the entry of customers or ran out of cash within hours. Filing forms and other formalities for an exchange led to longer queues and patience running thin.
November 11: Panic at banks and ATMs
Millions of panicked people lined up outside banks and ATMs as chaos ensued for the second straight day, with poor cash flow and no signs of immediate relief.
The government extended by 72 hours a window for using the old notes for specified purposes, including paying utility bills and taxes, and the Reserve Bank of India (RBI) said it had “enough cash” to meet the demand.
But the announcements did little to assuage the increasingly desperate people struggling to meet their daily needs with little cash in hand.
Small business also appeared to suffer, with street vendors selling ice cream, tea and snacks at iconic tourist locations such as India Gate disappearing overnight as people held on to their cash of smaller denomination.
November 12: ATMs run dry
Prime minister Modi warned of more action against people holding illicit cash even as anger rose across the country with ATMs running dry and banks struggling to dispense cash three days after demonetisation.
Finance minister Jaitley said it would take two-three weeks to upgrade the ATMs to enable them to dispense the new Rs 500 and Rs 1,000 banknotes.
“I would like to announce once again that after the end of this scheme, there is no guarantee that something new will not be introduced to punish you (the corrupt),” Modi told members of the Indian community in Kobe, Japan.
But back home, the initial public support for the clampdown on “black money” appeared to be waning as millions of people stood in serpentine queues in banks and ATMs for hours.
November 13: Modi seeks 50 days to change India
Prime Minister Modi choked with emotion during an impassioned speech in Goa as he appealed to people to give him 50 days to end their hardship after his government abolished high value banknotes.
Modi defended his government’s demonetisation decision, saying this was “an important step in my fight” against black money and corruption.
“I have asked the country for just 50 days. If after December 30, there are shortcomings in my work or there are mistakes or a bad intention found in my work, I will be prepared for the punishment that the country decides for me,” he said.
November 14: Govt goes for course correction
The government relaxed cash withdrawal norms to help small businesses and the rural poor, but a bank holiday in 18 states and empty ATMs piled more misery on people.
The latest decisions were part of government efforts to ease a cash crunch following the abrupt withdrawal.
November 15: Indelible ink to cut cash crowd
Those exchanging recalled banknotes were to have indelible ink put on their finger to deter repeat transactions and the crowding of banks. The inking idea was the same as the one used to prevent repeat voting.
Economic affairs secretary Shaktikanta Das said on the government would also examine Jan Dhan accounts — opened mostly by the poor — following worries that cash hoarders were be inducing account holders to deposit illicit money.
A week into the surprise decision, queues outside ATMs and banks remained long and more unruly.
Over the week, elderly people collapsed in queues, patients were denied treatment and at least 23 deaths were linked to panic over the crisis.
November 16: Oppn says nation in grip of economic anarchy
The opposition parties attacked PM Modi for unleashing an “economic anarchy” by recalling high-value banknotes.
They also demanded a probe into the demonetisation move, saying the government had leaked the information to “BJP’s friends” in advance.
The Prime Minister walked over to Congress president Sonia Gandhi, Trinamool Congress MPs and other opposition leaders in the Lok Sabha. Soon after, the opposition parties launched a diatribe against the government during a debate on the issue in the Rajya Sabha.
November 17: Govt rejects rollback
Opposition parties paralysed Parliament, demanding PM Modi’s presence during a debate on the government’s shock case recall.
The government rejected the demand, citing its prerogative to decide who should reply to the debate and ruled out any rollback of the decision.
The political blame game took an unpleasant turn in the Rajya Sabha as it deviated from demonetisation to patriotism and Pakistan.
It was triggered by a controversial remark by leader of the Opposition, Ghulam Nabi Azad, over the death of 40 people in long queues outside banks and ATMs, a comment expunged later.
November 18: SC says situation serious, fears riots
The Supreme Court came down hard on the government for not doing enough to ease the cash crunch in the country, warning that the situation was serious and people were still so anxious that there could be riots.
“People are affected and they have the right to approach the courts. People are frantic. There may be riots,” said a bench of Chief Justice TS Thakur and Justice AR Dave.
The court also refused the government’s request to put on hold petitions pending in various high courts challenging the decision to scrap Rs 500 and Rs 1,000 banknotes.
“Multiple petitions show the kind of problems people are facing. They are going to high court for relief. If we shut them from going to the high court, how can we know the magnitude of the problem?” the judges argued.
A year on...
A year after the demonetisation move, finance minister Arun Jaitley on Tuesday described India’s biggest-ever note ban as a watershed moment in the country’s economic history, saying it provided the next generation with a fair and honest system to live in.
Jaitley said the move has met its objective of reducing cash in the economy, ending anonymity of cash, bringing in more individuals in the tax net and dealing a body blow to black money.
However, the Opposition, especially the Congress, has repeatedly blamed demonetisation for economic slowdown and unemployment in the country.