PM Modi defends his surprise currency strategy

Anti-graft move, however, has crippled business as banks, ATMs run out of money

MUMBAI • Voice quivering, India's Prime Minister Narendra Modi dramatically countered criticism of his surprise ban on most currency in circulation in the country, a bold attack on corruption that crippled business as millions scrambled for cash to meet even basic needs.

"My fellow citizens, I left my home, my family, all that I left for my country," Mr Modi said on Sunday, pausing to compose himself, as he raised his left arm skyward and pounded his chest.

"Did you vote for me to abolish corruption?" he thundered, a rhetorical question from a man who led his party to victory two years ago with vows to fight graft and promote economic development.

"If you asked me, should I do it or not?" he bellowed.

Mr Modi delivered the speech at a groundbreaking ceremony for a new airport in Goa. Known for its beautiful beaches, Goa is one of five states with local elections in the coming months, and Mr Modi's speech seemed aimed in part at using his anti-corruption move for political gain.

But for the most part, it was a response to the biting criticism from opposition leaders who argued that poor Indians were struggling to make ends meet as a result of his ban on the existing 500-rupee (S$10.50) and 1,000-rupee notes.

Mr Modi said last week that the public could get new large currency notes at banks and smaller denominations at ATMs, but people have faced waits of many hours at banks that at times have run out of cash, and many machines are not working or have run out of money.

The Prime Minister appealed to the public to bear the inconvenience for the promise of a nation free of "black money" - unaccounted-for cash on which taxes have not been paid.

Even as people jostled in lines that continued to last several hours long over the weekend, many of those interviewed seemed willing to accept monumental inconveniences if Mr Modi's policy would reduce their country's endemic corruption.

Mr Tanvir Sheikh, 38, a hairdresser to Mumbai's elite, has suffered personally and professionally since Mr Modi's ban went into effect. Mr Sheikh cut short his family's vacation in Goa and returned to Mumbai last Thursday because he had cash that was no longer usable and his hotel did not take credit or debit cards.

He spent five hours queueing at his bank, only to reach a teller who had run out of the new notes. And on Sunday, when he usually has appointments all afternoon at Beau Monde salon in the neighbourhood of Colaba, only one client showed up. The rest lacked the cash to pay.

His family was surviving on a total of 1,500 rupees in small-denomination notes from his daughter's piggy bank, he said.

"I am willing to handle all of this if this will really reduce corruption," Mr Sheikh said as he blow-dried his sole client's hair.

A Mumbai taxi driver, Mr Girja Prasad Goswami, 48, said his daily earnings had been cut in half, to 300 rupees, since the ban. He said he was not sure how he would send money to his family in his home village in Uttar Pradesh if business did not pick up. Yet he added: "If it's going to help the nation, I am willing to continue."

In banning the two largest denomination notes last Tuesday, Mr Modi was aiming to reduce the use of "black money" in India, estimated to account for one-third of transactions in the country. The sudden ban rendered vast caches of this money useless.

Mr Modi, in his Sunday speech, asked the Indian public for 50 days of forbearance to transition to new bills of 500 and 2,000 rupees.

The Finance Ministry on Sunday said Indians had deposited about US$45 billion (S$64 billion) in banned currency notes since the policy began.


A version of this article appeared in the print edition of The Straits Times on November 15, 2016, with the headline 'PM Modi defends his surprise currency strategy'. Subscribe