The Journey of Demonetization

By | February 27, 2017

At the stroke of midnight hour, when the world sleeps, India will awake to life and freedom.

We all remember this historic quote from the “Tryst with Destiny” speech by Jawaharlal Nehru on the eve of India’s Independence in August 1947. But who would have believed that after 69 years there will be another roar from our current Prime Minister, Mr. Narendra Modi, and this time to awaken India from corruption. The PM addressed the whole nation that after midnight on November 8th, 2016, the 500 and 1000 denomination currency notes in the Indian economy will not be valid to use.

narendra-modi-demonetization

Image credit – thestatesman.co.in

According to Huffington Post, this was a masterstroke by the government to challenge all three malaises plaguing the economy—a parallel economy, counterfeit currency and terror financing.

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However there was a considerable amount of cash crunch in the entire nation, as around 95% of all transactions in India were conducted in cash and 85% of workers were paid exclusively in cash and almost half of the population didn’t even have bank accounts.

Currently, after around 3 months of the announcement, the condition has improved significantly.

Here is a timeline of how the days have passed in the last two month of the note ban:

9 Nov:

  • Banks and ATMs remained closed for the public on the first day of demonetization
  • Any amount deposited above 2.5 lakhs faced tax.
  • Government suspended highway toll till November 11.

10 Nov:

  • Banks across India witnessed long queues to exchange and deposit annulled notes witnessed at banks across India, whilst the ATM’s remained shut.

11-12 Nov:

  • ATMs opened for the first time after demonetization announcement. But, after opening, most ATMs went dry in a few hours with people drawing the maximum possible amount; long queues beginning to see across the country, in selected places like the Government hospitals and the petrol pumps.
  • Toll waiver on national highways extended till 14 November midnight by the government.

13 Nov:

  • Currency exchange limit increased from Rs 4,000 to Rs 4,500
  • ATM withdrawal limit increased from Rs 2,000 to Rs 2,500
  • The weekly limit of Rs 20,000 for withdrawal from bank counters has been increased to Rs 24,000. The maximum limit of Rs 10,000 per day on such withdrawals has been removed.

 

14 Nov:

  • Government extended acceptance of Rs 500 and Rs 1,000 notes for public utility and fuel payment till 24 November.
  • Cash withdrawal for current account holders increased to Rs 50,000 per week
  • Charges on ATM transactions waived till 30 Dec

 

15-16 Nov:

  • No relief from long queues at banks, ATMs
  • Government asks banks to put indelible ink on the right hand finger of those exchanging banned 500 and 1,000 rupee notes
  • SBI collected Rs 1,14,139-crore in deposits in last 7 days.

 

17 Nov:

  • Government lowers the exchange limit for now-defunct 500 and 1,000 rupee notes to Rs 2,000 from the existing cap of Rs 4,500
  • Cash withdrawal of Rs 2.5 lakh from bank account were allowed for wedding ceremonies
  • Government eases cash withdrawal limit for farmers by allowing them to withdraw up to Rs 50,000 cash per week from bank.
  • Government extended toll exemption on National Highways till November 24 midnight.

 

18,19,20 Nov:

  • No respite from queues, chaos; ATMs still fight cash shortage.
  • Congress party alleges 55 died due to demonetization, seeks PM’s apology
  • Queues got shorter at banks; long wait at ATMs continued.
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21 Nov:

  • Farmers allowed to use old Rs 500 notes for buying seeds
  • Bank received Rs 5.12 lakh crore of deposits and exchanged Rs 33,006 crore, RBI said in a release

 

22 Nov:

  • 82,500 ATMs out of 2.2 lakh ATMs recalibrated to dispense new notes
  • Some relief for cash-starved public, queues shortened as about 40 percent of total ATMs have started dispensing new Rs 500 and Rs 2,000 notes.

 

24 Nov:

  • Government extends toll exemption on NHs till 2 Dec mid-night
  • Government withdraws exchange facility of old currency notes and extends deadline for exemptions of using old Rs 500 notes up to 15 December midnight

 

25 Nov:

  • RBI says the facility to exchange old Rs 500 and Rs 1,000 notes will continue to be available at its counters
  • Queues at banks thin, but some branches still faces cash pain.

 

26 Nov to 30 Nov:

  • Deposits in Jan Dhan accounts rises sharply by around Rs 27,200 crore to Rs 72,834.72 crore in just 14 days after the announcement of ban on old Rs 500 and Rs 1,000 currency notes
  • Rs 32,631 cr deposited in post offices since demonetization
  • Banks get about Rs 8.45 lakh crore worth of scrapped notes, RBI says

 

1,2 and 3 Dec:

  • Government says that old Rs 500 notes are valid till 2 Dec for fuel, air ticket purchase instead of 15 December announced earlier.
  • 80 lakh ATMs re-calibrated to dispense Rs 500, 2,000 notes

6-7 Dec:

  • Tax department seizes Rs 130 crore cash, jewellery and Rs 2,000 crore of undisclosed wealth has been admitted by taxpayers post demonetization
  • RBI defends note ban and plays down its impact on economy. Demonetization was not done in haste, says RBI Governor during the monetary policy presser
  • Rs 11.55 lakh crore or 76 percent of junked notes have come back into the system, RBI said.

 

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After these forgetful days, the whole demonetization buzz calmed down in the month of December, with many bureaucrats and the opposition leaders taming the move by the Prime Minister. However, it did made a difference for moving on to cashless transaction where every small outlet or shops in the metro cities as well as in the rural areas started using Paytm, Freecharge applications for their transactions. On 31st December 2016, there was one huge announcement of PM’s speech at 1900 IST. The entire universe was waiting for 00:00hrs for the New Year’s Eve, but Indians were keenly waiting for 1900 hrs for the PM’s. However, this time around there were no surprises by Mr.Modi, relieving some much wanted decisions which actually made people enjoy their New Year.

As the days passed by the long queues in ATM’s drained away and the cash crunch became history. By 15th January 2017, the cash limit withdrawing from the bank was increased. Also, there was a huge announcement on 30th January from the PMO that from 1st February, 2017, there will be no limit on any withdrawals done from the ATM’s.
The common people heaved a sigh of relief after the limit of withdrawal from ATM’s was removed. The masses were relived from . However, this masterstroke from the Government is successful because of us, the people. We have started this fight against corruption which will surely be reason for a new dawn in our country. A new India. A corruption-free India.!!

One thought on “The Journey of Demonetization

  1. Srinivas

    I understand the article is not for/against the demonetization decision and merely stating facts, there were many things that were unnerving about the whole exercise of demonetization

    a) The fact that it was done unilaterally without the cabinet knowing of the decision – For such a far reaching decision with national level implications was it thought through completely and the larger fear that is there a breakdown of decision hierarchy and rules are being bypassed in the name of grandoise.

    b) The narration of intended benefits accruing from the exercise also seemed to change as the exercise progressed. As the the fallacy unfolded the people who mattered RBI governer, Finance Minister, cabinet were not allaying fears of the common man nor sharing consistent messaging on the subject clearly showing lack of any authority on the subject.

    c) Through the exercise the debate on the subject was also stifled out which is even worse. We stand for freedom of expression in whatever limited fashion or implementation we enjoy. That brings a fear of further important decisions which will not be debated and implemented without thought.

    d)The UP bjp win has make believe the poor that the demonetization was against the rich and pro poor …..the political class continues to play on those class differences ….while a capitalist economy will run on empowered business and better labor coordination….our businessmen are definitely not exploitative ……

    We should find those 1 crore job generating ideas……. the IT and Pharma ideas are only going to plateau….make in india idea is a lost bus

    given the explosive Job needs facing us and aggravating over the next couple of years this is not an environment for tomorrow’s india

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