NEW DELHI • From deploying "cash coolies" to buying Rolex watches, Indians have found unique ways to dodge the government's surprise move to withdraw high-value bills in a bid to tackle widespread corruption and tax evasion.
Prime Minister Narendra Modi sent shockwaves through the country by announcing on Nov 8 that all 500-rupee (S$10.45) and 1,000-rupee notes - some 85 per cent of all bills in circulation - would cease to be legal tender within hours.
The announcement threw India's cash-dependent economy into turmoil and triggered a mad rush among people with undeclared, unaccounted cash - so-called "black money" - to exchange old notes or use them to buy gold and luxury items.
There have been multiple reports of factory owners and businessmen asking staff - or even hiring casual labourers - to stand in bank queues and exchange cash for them before the Dec 30 deadline.
The initial over-the-counter currency exchange limit was 4,000 rupees but was later reduced to 2,000 rupees after the government said "unscrupulous elements" were paying poor people to queue to exchange their money.
The government also asked banks to ink people's fingers - a tactic normally used to fight voter fraud - after they had exchanged bills, to prevent them from queueing up again.
Wealthy Indians rushed to make costly purchases with unaccounted cash soon after Mr Modi's announcement. Several luxury retailers stocking brands like Rolex and Dior sent e-mails to clients stating that their stores would be open until midnight that day, the Economic Times reported.
Some affluent buyers have reportedly been paying almost twice the market value for gold in old notes. Customers lined up outside jewellery stores in Delhi and Mumbai with bags of cash, with one report saying they paid as much as 52,000 rupees per 10g of gold, almost double the going rate.
Officials say they are keeping an eye on all cash deposits made into new "Jan Dhan" bank accounts which were opened by the government as a part of its financial inclusion scheme for the poor and farmers, and which were designed for deposits such as welfare payments.
Following Mr Modi's announcement, many of these accounts have seen deposits of thousands of rupees in a single day.
Local media has reported that some corrupt individuals are "renting" these accounts to deposit their money, only to withdraw it later.
In a sign of how desperate some Indians were to convert cash, a massive spike was also seen in the number of railway ticket bookings after authorities said old bills could be used until Nov 11 to make reservations.
Most were advance bookings made using old notes. Bookings can be cancelled at a later date and refunds paid out in new notes with only a small fee deducted.
AGENCE FRANCE PRESSE
