Nov 19, 2016: This year, November 8, 2016 marked a turning point not only in the history of BJP but on India’s economy as well and the reason is none other than demonetization. The demonetization of India followed by the devaluation of China shows that the two most powerful developing countries are into some serious drive of setting their own examples in world politics. When 86% of currency notes in a country of 1.3 billion people are rendered illegal tender in a matter of hours, it is bound to create a short-term disruption in daily lives.
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Prime Ministers repeated speeches and thanking his people or their constant co-operation is even going in vein as the money supply is too short of demand. It is becoming an issue for the small traders, middle class and the poor at large. Moreover, the speedy transition in withdrawal and deposit are acting as an insult to injury. The information is resting on the educated mass while the poor ones are getting depressed at repeated shocks. There are certain consequences as listed below:
The biggest cash crunch is experienced by the Automated Teller Machines (ATM) which are still lagging in the reconfiguration of new 500 and 2,000 notes. In order to reconfigure 220,000 cash machines in India at least a period of one month is required, according to Mr. Navroze Dastur, the managing director of India and South Asia at NCR Corporation. It supplies about two-thirds of country’s machines. Dastur said it will take as much as a month to adjust all the ATMs.
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Most successful way to hide one’s black income is by purchasing gold. This will not only put a white mark on the black spot but will be a safer asset for the long run. Thus a new gold rush also emerged soon after Modi’s announcement. “Jewellers who had shut shop for the day on Nov. 8 had to reopen their stores within a couple of hours and were selling gold up to 4 a.m,” Chirag Thakkar, a director at gold wholesaler Amrapali Group said by phone from Ahmedabad in Modi’s home state of Gujarat. “Customers were lining up with bags of cash. Some jewellers even had to call the police to organise the crowds.” Customers paid as much as 52,000 rupees per 10 grams, almost double the current prices, he said. In order to curb the situation, all the gold shops are closed as of now. Thus, bringing a halt to the gold market, which is incurring the loss for a week now.
Re-employment of the Retirees
Banks are under huge pressure of masses and their huge responsibilities. The extreme mass pressure is complimented by the lack of cash which is adding to the chaos. The State-run banks have called their retired employees to handle the pressure of exchanging money. Bank employees have been working long hours without breaks to ease the transition, and the government has told lenders to provide them with transportation and food, All India Bank Employees’ Association General Secretary C H Venkatachalam said over a call.
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Inputs of religious institution
The Government has requested the religious institution to donate their cash of lower denomination to meet up the cash crunch. Martin De Porres church in the Ernakulam district of Kerala, a south Indian state, decided to open its donation boxes after seeing the public’s suffering, Jimmy Poochakkatt, the parish priest, told India Today magazine. Shree Dharma Shastha Mahavishnu Temple in Mumbai also opened its offering box, Raghunath Raghavan, president of the temple trust said by phone. According to Finance Ministry, for easing out the tension and bringing back the money in circulation, the money lenders are also reaching out to religious places to ask them to deposit funds given by devotees.
Cash supply to the remote areas of the country are undertaken by the Defense Jets. “Depending on urgency, security and non-availability of commercial aircraft, requests for support from the Indian Air Force is within standing procedures,” a spokeswoman for Reserve Bank of India said.
Currency notes are usually transported from printing presses owned by the central bank to some 4,000 vaults around the country and then to bank branches in specially-built trucks with gunners for security. Since the crackdown, new currency bills have had to be airlifted by helicopter from Patna after reports of shortage in Bokaro and Jamshedpur, a finance ministry official said.
Naveen Gupta Secretary General of All India Motor Transport highlighted that nearly 9.3 million trucks were abandoned by the drivers midway after eight days of the announcement as they were in short of cash. India’s roads carry about 65 percent of the country’s freight. Drivers don’t have enough money for food, truck maintenance and to make payments at border check posts. “It will take a few more days for the situation to normalise,” Gupta said in an e-mailed statement.
In Delhi, Mumbai and Bangalore, Starbucks Corp. has been serving free coffee to people waiting for many hours in queues in front of ATMs and banks, a spokesman for the company said.
Over demand of Rolex
Soon after PM Modi’s announcement of demonetization, there was a rush for buying costly stuff to cover up the black earnings. Demand for Rolex watch was one of them. One luxury watch outlet in north-west Mumbai saw 45 units of Rolex watches sold on a single day, according to a representative of a watchmaker, who was present when the sales took place. Demand matched what the shop would usually sell in a month and the store had to turn away customers, the person said, asking not to be identified because the person is not authorised to speak to the media.
– by Shivam Thaker of NewsGram with inputs from agencies. Twitter: @Shivam_Thaker