Modi hits back at critics of rupee move

India's oppposition parties are protesting over the countrywide demonetisation process introduced by Prime Minister Narendra Modi on Nov 8, 2016.
India's oppposition parties are protesting over the countrywide demonetisation process introduced by Prime Minister Narendra Modi on Nov 8, 2016. PHOTO: AFP

He says it's for social good, as cash crunch leads to more chaos and ever-changing rules

NEW DELHI • Indian Prime Minister Narendra Modi hit back yesterday at the mounting criticism of his decision to withdraw all high-denomination banknotes from circulation, describing the move as "for the larger social good".

The Nov 8 move to ban 500-rupee and 1,000-rupee notes - which accounted for 86 per cent of all bills in circulation - as legal tender has sparked turmoil in the cash-reliant nation.

Long queues have formed outside banks across the country as people try to get rid of their old notes, and the government has repeatedly changed rules surrounding the exchange process in response to pressure from various groups and increasing chaos.

"The decision isn't being criticised much (by the common man)," Mr Modi said in a speech yesterday, in which he praised citizens as "soldiers in this fight against corruption and black money", referring to cash stashed away to avoid tax. "Some things have to be done above politics for the larger social good," he added.

Critics of the move have included former prime minister Manmohan Singh - whose economic reforms are credited with rescuing India from the brink of bankruptcy in the early 1990s - who said the decision could shave two percentage points off the country's gross domestic product.

 
 

A NECESSARY ACTION

The decision isn't being criticised much (by the common man)... Some things have to be done above politics for the larger social good.

INDIAN PRIME MINISTER NARENDRA MODI, arguing for the demonetisation.

Others have slammed the government for "shoddy implementation" of the scheme. But Mr Modi hit out at his rivals, saying they were criticising his decision because they were "sad that they didn't get any notice, a chance to prepare for the decision".

"It is such a great step. A big, big decision. And, for those who dream of a great future for the country, let's come together to remove the problems being faced by the common man," he added.

In the weeks since the decision, people nationwide have complained of a cash crunch, with rural farming areas - where local banks and post offices have been slow to receive new notes - hardest hit.

Bureaucrats tasked with the cash swop have reversed rules twice a day on average. After an outcry, the government said those getting married could withdraw as much as 250,000 rupees from their bank accounts on proving that they were indeed getting married. But how do you prove that? Daunted, the government issued another notification deleting the relaxation.

The Reserve Bank of India has updated its frequently asked questions site 10 times, highlighting amendments made along the way.

Mr Modi urged Indians to switch to non-cash methods of spending.

"Every person has a right to spend his or her money. No one can take anyone's money. Now people can also spend through mobile technology," he said, mentioning that the country had around a billion mobile handsets and 60 per cent of its population was under 35 years old.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on November 26, 2016, with the headline 'Modi hits back at critics of rupee move'. Print Edition | Subscribe