GAYETI SINGH | 25 NOVEMBER, 2016
NEW DELHI: In the weeks that have followed Prime Minister Narendra Modi’s surprise announcement to demonetise 500 and 1000 rupee notes on November 8, the rules governing the move have repeatedly changed.
As the queues keep getting longer and reports of distress come pouring in, with over 70 people having lost their lives in demonetisation-related deaths since the announcement, the government has responded to the crisis by putting in place a set of confusing measures, that are haphazardly extended or scrapped.
The original cap of of Rs. 4000 on exchange of old notes -- which was to be reviewed after 15 days -- was first raised to Rs. 4500, but as the queues kept getting longer, the government decided to use indelible ink to prevent people from making multiple exchanges, inviting a measure of protest from the election commission in the process. Unable to curb the queues, the government quickly cut the note exchange limits to Rs. 2000 from 4500, just a day after select banks began using the ink.
While many defend demonetisation of the higher value notes, saying that a few weeks of uncertainty is to be expected, criticism relating to the lack of organisation and preparedness is quickly mounting, with the government being faced with an Opposition almost unanimous in its criticism of the move. This lack of preparedness and organisation is evident in the abrupt changes to policy.
On November 17, almost 10 days after 500 and 1000 rupee notes were demonetised, a new measure in the relaxation in cash withdrawal limit for weddings was to come into effect. However, owing to the lack of operational rules, both public and private sector banks cited non-issuance of operational guidelines from the central bank as the reason for being unable to disburse the new permitted amount of cash upto Rs. 2.5 lakhs to families of brides and grooms. It took an additional four days for the operational guidelines to be issued.
Similarly, on November 21, weeks after the original announcement, the government moved to allow farmers to purchase seeds for Rabi crops using old Rs 500 notes from government outlets or the state / central agriculture university. The fact that it took almost two weeks for such a measure to be introduced is indicative of the lack of preparedness on the part of the government.
A timeline of the original policy and subsequent changes is as follows:
In addition to the official guidelines -- that have changed repeatedly, the chaos is evident in the fact that bank branches all have their own rules for dispensing withdrawals, deposits and exchanges. “Even after the government said we can withdraw Rs. 50,000, banks are refusing to do so citing shortage of funds,” a Delhi-based entrepreneur told The Citizen.
A bank manager at an HDFC branch in the capital admitted to The Citizen that the branch had received no money on one particular day, and was thus unable to dispense any amount. “We’re told the money has been sent to rural areas,” the manager admitted. At another HDFC branch also in New Delhi, the manager told The Citizen “only Rs. 2 lakhs has come in today.”