POLITICS

Brilliant Or Heartless: Reactions To Modi Government Scrapping ₹500 and ₹1000 Notes

"It’s perhaps the most significant move ever taken to curtail the parallel economy."

09/11/2016 10:31 AM IST | Updated 09/11/2016 3:08 PM IST
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The Modi government's decision to scrap ₹500 and ₹1000 notes is either heartless or brilliant, revolutionary or a gimmick - depending on whom one speaks with or listens to. This move to combat tax evasion and end the "disease" of black money has been met with wide-ranging reactions from the public and polity.

While West Bengal Chief Minister Mamata Banerjee and Delhi Chief Minister Arvind Kejriwal condemned the move, Bihar Chief Minister Nitish Kumar pointed out that the public would be inconvenienced for a short duration but the economy would benefit in the long-run. "Heartless and ill-conceived blow to the common people and the middle class in the fake name of anti-corruption. Withdraw this draconian decision," said Banerjee.

The feeling that the Modi government should have given the public more time to adjust to the change was widespread. People thronged ATM machines, petrol pumps, and gold shops shortly after Prime Minister Narendra Modi announced on Tuesday that ₹500 and ₹1000 notes would be of no use after midnight. New currency notes of ₹500 and ₹2000 would be issued in the coming days.

Welcoming the demonetization of the ₹500 and ₹1000 notes, President Pranab Mukherjee asked people not to panic. "We welcome bold step of Government of India which will help unearth unaccounted money and counterfeit currency," he said.

The Congress Party said that the demonetization was unfair to farmers, who had to buy fertilizers and seeds in the market today, and those who had to buy necessary items for marriages. "Modiji has withdrawn the Rs 1,000 note on one hand and he has introduced a Rs. 2,000 note on the other side. Does it not defeat his own argument? What is the point of cancelling large denomination notes and replacing them with even larger denominations?" Congress Party leader Randeep Surjewala told the media.

On Wednesday, Congress Party Vice President Rahul Gandhi lashed out at Modi. "One Q for the PM: How is replacing 1000 Rs notes with 2000 Rs notes going to make black money hoarding a lot harder?" he tweeted.

The All India Trinamool Congress Party leader and spokesperson Derek O' Brien said that instead of bringing back black money from abroad, the "not well thought out" scheme would only inconvenience the public.

The Modi government has made this move at the halfway mark of its five-year-long term. The Bharatiya Janata Party-led government came to power on the promise of cracking down on corruption, bringing back the black money which is stashed away in bank accounts abroad, and curbing tax evasion.

Despite various efforts, Modi acknowledged that India still ranked poorly on the global corruption index, with Transparency International putting the country at 76 out of 168 countries, earlier this year. The country's 2015 corruption perception score remained 38/100 - the same as 2014.

Milan Vaishnav, a senior associate with the Carnegie Endowment for International Peace in Washington, told Bloomberg News that Modi is "changing the narrative at a time when everyone was sating this government's moves on black money were mainly hype."

Noting that the UP state polls were just a few months away, Harsh Pant, a professor of international relations at King's College London, told The New York Times, "Politically he probably felt he needed to do something more visible." Eswar S. Prasad, a trade policy professor at Cornell, also told NYT, that demonetization had put India on the "leading edge of countries restricting the use of high-denomination currency notes that are now seen as mostly fuelling illegal activities rather than legitimate commerce."

Reactions from the industry were largely positive. Chanda Kochhar, Chief Executive Officer of ICICI bank, said that scrapping the notes would allow allow formal channel of payments to grow, and this in turn would boost the economy. "It's perhaps the most significant move ever taken to curtail the parallel economy," she said.

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