During the first few days of “demonetization” we were all patient and thought that this disruption would pass. Most of us, myself included, had never heard of the term but in light of what was happening, it didn’t take long to comprehend its meaning. It meant that most of the money in our pockets was worthless.
It’s been one month since Prime Minister, Narendra Modi ,announced this surprise (attack) on a nation that relies on a cash economy, upsetting a lot of apple carts in the process. Over night the bills that were the most common were now illegal and not accepted anywhere. The bills that were still legal tender were in short supply and still are. The banks and ATMs closed for 24 hours. Most of us thought that with in 10 days or so, the new notes would be in circulation and business would get back to normal.The wheels turn extra slowly in India. It’s hard to imagine that the economy of a country of 1.3 billion people would just stop but it did just that.
It has been a disaster. No one has any money for basic survival unless you are rich. It is such a complicated story. I am hardly in a position to explain it or to fully understand it but I think that it was a big mistake. It is an attempt to curb black money and counterfeiting and to push the country into a cashless direction that they are not ready for.
It’s been a month and the new 500 rupee notes are still not in circulation. Most ATMs aren’t operating. A few fill up and within a half an hour are empty and there’s been a limit of 2,500 rupees that you can withdraw daily. No banks are exchanging any foreign currency period.
No special facilities or allowances have been made for foreign tourists. Can you imagine arriving at the airport in India on your long awaited holiday in early November, only to be informed after waiting in a very long line that you can’t change more than $50.00? Enter the money changers who are eager to change your foreign currency if you were clever enough to have brought any with you and give you a very unfavorable rate of exchange. Black money lives on and proliferates!
Here are a few comments by a prominent American professor of economics at the University of California, Berkeley, Pranab Bardhan, …demonetization…”it cannot make much of a dent in the long – term problem of corruption or black money. …..Most business people do not keep their black income under a mattress. They keep it in the form of gold, real estate, commodity stocks and offshore accounts. Of course, they keep some amount in cash for various current transaction needs but I doubt it’s more than a very tiny percentage of total black money.”
We are all waiting, watching and hoping this mess will end soon. With it all, I am still loving India and managing to thoroughly enjoy myself. I don’t need a lot of money but I worry about how I am going to pay for this and that. Credit card payment is not in wide use-yet!
Next post will be more aesthetic, I promise.