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Amid Cash Crunch, a Man gets Rs 20,000 Currency in 10-Rupee Coins from a Delhi Bank

"Though I was concerned on how to carry it (the bag full of coins) but I gladly agreed... at least it is valid money,' Mr Alam said after he got Rs. 20,000 in 10 rupee coins from the bank

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Indian Coins. Pixabay
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New Delhi, November 19, 2016: A PR professional, Imtiaz Alam after standing in the bank queue for four hours, his pockets finally got heavy, literally. The bank gave him Rs. 20,000 in 10 rupee coins, according to NDTV report.

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Mr Alam, on Friday, stood in line for four hours outside the Jamia Cooperative Bank to exchange his Rs. 500 and 1,000 notes. He was told by the manager that the funds were not sufficient and that he could only exchange Rs. 2,000. After Mr Alam explained to the manager that a larger amount is needed, he finally agreed, but said, he will get all money in 10 rupee coins.

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“Though I was concerned on how to carry it (the bag full of coins) but I gladly agreed… at least it is valid money,’ Mr Alam said.

Coins. Pixabay
Coins. Pixabay

Mr Alam already used some of the coins for cab fares and restaurant bills.

The demonetization move was announced suddenly by Prime Minister Narendra Modi on November 8 in order to fight against black money and counterfeit notes.

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In the past 10 days, the government made several additional announcements to ease the crisis for people.

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The Answer to The Impending Questions On Demonetization Are Here

While it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

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Indian Currency. Pixabay

Nearly all of the currency removed from circulation in a surprise 2016 attempt to root out illegal hoards of cash came back into the financial system, Resever Bank of India  has announced, indicating the move did little to slow the underground economy.

Prime Minister of India, Narendra Modi’s currency decree, which was designed to destroy the value of billions of dollars in untaxed cash stockpiles, caused an economic slowdown and months of financial chaos for tens of millions of people or demonetization.

Modi announced in a November 2016 TV address that all 500-rupee and 1,000-rupee notes, then worth about $7.50 and $15, would be withdrawn immediately from circulation. The banned notes could be deposited into bank accounts but the government also said it would investigate deposits over 250,000 rupees, or about $3,700. The government eventually released new currency notes worth 500 and 2,000 rupees.

 

demonetization
An activist of Congress party hold the banned 500 and 1000 rupee notes.

 

In theory, the decree meant corrupt politicians and businesspeople would suddenly find themselves sitting on billions of dollars in worthless currency, known here as “black money.”

“A few people are spreading corruption for their own benefit,” Modi said in the surprise nighttime speech announcement of the order. “There is a time when you realize that you have to bring some change in society, and this is our time.”

But even as the decree caused turmoil for those in India who have always depended on cash — the poor and middle class, and millions of small traders — the rich found ways around the currency switch. In the months after the decree, businesspeople said that even large amounts of banned currency notes could be traded on the black market, though middlemen charged heavy fees.

demonetization
Prime Minister Narendra Modi along with mayor, flickr

The reserve bank of India report said in its Wednesday report that 99.3 percent of the $217 billion in notes withdrawn from circulation had come back into the economy. Some officials had originally predicted that number could be as low as 60 percent.

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“Frankly, I think demonetization was a mistake,” said Gurcharan Das, a writer and the former head of Proctor & Gamble in India. He said that while it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

“You can’t overnight change that in a country which is poor and illiterate. Therefore, for me it’s not only an economic failure but a moral failure as well,” Das said. (VOA)