India Braces For A Currency Overhaul

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How is India reacting to Narendra Modi’s new policy push?

India recently explored a new financial policy to combat black money enterprises, corruption in India, smuggling, terrorism and drugs. In a sudden turn of events, Prime Minister Narendra Modi proclaimed on November 8, that a certain type of Rs. 500 and Rs. 1000 notes will no longer be of any use in the country and they need to be replaced for the public with the newly issued Rs. 500 and Rs. 2000 banknotes. This overhaul of the Gandhi Series banknotes was followed by long queues at ATMs for many in an intolerably humid environment because they were facing a shortage of cash.

Apart from that, agriculture, transports and businesses were also affected grievously, and the Indian stock market crashed for two days. The whole process of the rush to exchange old banknotes with the new is still ongoing and people in India have until 30 December this year to follow through with it. The move has been regarded as a ‘bold and fierce one to fight corruption in the country’ and it is a good effort to clean up after a shoddy 2013, where reportedly 1percent of the Indian population had paid income tax; it has become a cultural barrier to national growth often – although, tax-free cash is black money, even the poor of India sometimes keep a small amount of money safe for family matters.

Narendra Modi reigns well over people invested in small businesses and merchants but this policy initiative is expected to hit both the groups hard, as Modi gears up to deliver promises made before his election in 2014. Despite the cultural barrier existing there, the move has been welcomed overwhelmingly by Indians because one of their deeply entrenched fears involves finding no justness whatsoever in the reasoning that the rich of India do not pay their taxes appropriately. India is solidly warming up to the idea of paying income tax more regularly, which can really prove to be beneficial for it’s national economy and infrastructure in the long run.

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