While the election results took a toll on the United States a few days ago, the citizens of India were shocked by Prime Minister Narendra Modi’s decision to withdraw current bigger currency notes worth 500 and 1000 rupees. Although it sounds ridiculous to carry notes worth that much, these values roughly translate to $10 and $20 notes. The biggest denomination currency after this announcement is Rs 100, the equivalent of about $2. As expected, several people panicked after realizing that the cash stored in their homes and wallets were no longer legal tender. Misinformed citizens tweeted about having to carry wads of Rs 100 notes in order to make cash payments. However, this isn’t the case. The public can get new, large currency notes at banks, but almost all banks and ATMs have been faced with long waiting times. While this decision may seem sudden, it is backed by a will to rid the nation of its widespread corruption.
The decision to make all current Rs 500 and Rs 1000 notes illegal essentially prevents the use of “black money” and makes all such transactions illegal. The belief and hope behind this decision was that people
would be forced to come forward with stacks of undeclared income. The announcement came across as almost destructive at first, but in the long term, it will tackle issues such as the use of counterfeit currency, tax evasion and corruption. People with operations driven by the use of fake currency notes will end up with mounds of money that is just worthless paper.
Given that India is a cash-driven economy where a majority of the transactions are made via paper tender rather than debit or credit cards, many citizens voiced their concerns for people without bank accounts. Maids, drivers, cleaners and the village population tend to not have bank accounts and often store cash in their homes. Miscommunication of information and a lack of education has caused unnecessary worry about the validity of the money they currently have. While Modi’s move was nothing but well-intended and for the betterment of the country, it is important to create awareness about the ways money can be swapped out within local banks. A decision at such a large scale was bound to create some backsplash. It’s essential that the government address all of these concerns it order to ensure successful enforcement of their rules and regulations.
Although the transition has been far from smooth, and obstacles still stand in the way of an effortless change, these complications are short-term. With the support of multinational companies and small shopkeepers alike, bolstered by the increasing use of digital transactions, this decision will turn out to be fruitful. The public simply needs to bear with the inconvenience for a short period of time before the positive results of this announcement become apparent.