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India to eliminate largest banknotes in strike at corruption

09 November 2016

While the move seemed timely, to convey to the people of poll-bound Uttar Pradesh about how serious the NDA government is about curbing black money, it may adversely affect the supply of essential commodities like fruits and vegetables on Wednesday morning as wholesalers transact their business only in cash and the unavailability of Rs 500 and 1,000 notes will hit them hard. However, he stressed that the nation is moving ahead with the government's promise of eradicating corruption and bringing back black money.

The Prime Minister announced a 50-day demonetising road map under which people have time till December 31, 2016, to return their high currency notes to banks.

While most people laud this move, some express their apprehension and discomfort since the available currency of Rs 500 and Rs 1000 isn't being accepted by shopkeepers. Anticipating panic and rush at bank counters, the Reserve Bank of India (RBI) as well as the government has set up control rooms in Mumbai and Delhi to avoid any crisis, Department of Economic Affairs Secretary Shaktikanta Das said. ATMs will be shut on 9 and 10 November. The limit for this is Rs. 4000 upto November 24.

Banks will however report any unusual transaction to the Financial Intelligence Unit and tax authorities for scrutiny.

"To break the grip of corruption and black money, we have decided that the 500 and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight tonight", Modi said, speaking first in Hindi and then in English. Most of those who came to know about the Union Government's decision to declare the currency notes in question as invalid were apprehensive about what will happen on the morrow.

Modi also informed the President that these notes can be used for certain goal for a limited period. The government of the largest democracy in the world surprised its population of 130 billion citizens by scrapping the 500 and 1,000 Rupee denomination notes with immediate effect.

There will be a limit on withdrawal from banks and post offices to Rs 10,000 a day, and Rs 20,000 a week. Tourists can change these notes at airports.

The incidence of fake Indian currency notes in higher denomination has increased. Das said infusion of Rs 2000 note will be closely monitored and regulated by RBI.

Prime Minister Narendra Modi has time and again raised the issue of black money at the global forum, including at important multilateral summits and in bilateral meetings with leaders.

We welcome this landmark move by the Hon'ble Prime Minister.

President Pranab Mukherjee tweeted the move is a "bold step of Government of India which will help unearth unaccounted money and counterfeit currency". The country has reportedly lost hundreds of billions of dollars as a result of illegal financial practices such as undeclared cash holdings and counterfeit bill production.

RBI governor Urijit Patel, addressing a press conference after the PM's address, said the transition towards the new monetary regime would be made as smooth as possible.

He urged the people to bear the temporary hardships that the new measures would cause and join "this festival of integrity and credibility" which would enable coming generations to live their lives with dignity. Also, with so many large denomination notes out of the circulation for good, the economy will be strengthened.