On the eve of the US elections on 8 November 2016, as the world awaited the unveiling of the new President of the
United State of America, in India, it was Prime Minister Narendra Modi who created waves. With a surprise announcement that he was removing 500 and 1000 rupee notes from the money flow, freezing 86 per cent of the Indian currency, he focused national discussion on him rather than the US elections.
Amidst the widespread panic caused by this announcement St Martin De Porres Church in Ernakulam district of Kerala was widely regarded as a beacon of hope and humanity as it opened its collection box for those who were in urgent need of money, expecting nothing in return.
Jimmy Poochakkatt, the parish priest told the media, “People are facing a lot of difficulties due to demonetization. Many in the parish are even struggling to buy daily necessities. A lot of them don’t know how to get the cash from ATMs and banks. That is why we decided to open the donation boxes. We have lower denomination in our cash box. People in need can take money from there and return whenever they want.”
The announcement by the Church was made on 13 November, and the donation boxes were opened from 6 am till late evening. People were free to take as much money as they needed and were told that they could give it back to the church later, whenever they can.
It is estimated that around 200 families took advantage of the offer by the Church.
“There were many Rupees 500 and Rupees 1,000 notes in the boxes, but these were left untouched. Smaller denomination currency notes were the ones taken. Though no limit was prescribed, none was seen grabbing at the money. All of them came and took according to their needs in an admirably disciplined manner,” Fr Poochakkad said.
On the evening of 8 November 2016, in a sudden special address to the nation, Mr. Modi announced that starting midnight on 9 November 2016, existing notes of 500 and 1000 Rupees respectively could no longer be used for any transactions. Mr. Modi said that the move was needed to tackle black money, corruption and terrorism in particular.
The announcement created a sudden panic in the country as people queued up in front of ATM’s to get adequate cash before the ATM’s all over the country would remain close after midnight for two consecutive days upon their recalibration to dispense bank notes of only Rupees 50 and Rupees 100 denominations. All banks would remain close for public dealing for 9 November and resume dealings from 10 November.
Jewellery shops remained open almost through the night of 8 November 2016 as people rushed in to buy gold and jewellery to convert their cash into gold.
The Prime Minister announced that people could deposit their existing 500 and 1000 Rupee notes in Banks and Post Offices from 10 November till 30 December 2016 and can get a replacement of 4,500 only. He announced a total withdrawal limit (including exchange of old denominations as well as withdrawal from one’s own account) of Rupees 10,000 a day and Rupees 20,000 a week. This limit has been subsequently revised to Rupees 24,000 per week.
Although hailed as a bold and courageous step by many, some experts and the opposition at large have criticised the demonetization exercise saying that enough measures to handle the deposits and withdrawals were not taken and that the public has been heavily inconvenienced. The timing of the move has also invited allegations of the whole exercise being politically motivated as key states are awaiting elections. Some opposition leaders have demanded a complete roll back of the scheme but the government is not yielding.
A week later, the country is still dealing with an acute shortage of money as large queues outside banks and ATM’s continue. At least 25 people have died due to issues related to demonetization since Mr. Modi announced the step and reports say that it will take up to 4 months for situation to normalize and not 50 days as claimed by the government.
Almost every day there are reports of people who have nothing to eat and scuffles in queues have become the order of the day throughout the country, as people queue up from the wee hours of the morning till late at night. Weddings and private functions have largely been postponed and the price of gold is up as many people with undeclared incomes have been buying the precious metal.