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desideewar des se WITH SONAL KULSHRESTHA

VISITING INDIA- EXPERIENCING DEMONETIZATION ...

The Modi government in India announced demonetization of  ₹500 and ₹1,000 banknotes on Nov 8th 2016. These ceased to be legal tenders in India from 9th November 2016 throwing the nation in turmoil.

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I land in India on November 15th, followed by rest of my family four days later- smack in the midst of the chaos created by demonetization of ₹500 and ₹1,000 banknotes . Like other NRIs (non-resident Indians), we had heard tales of mile-long lines at ATM and bank sites from our families in India, from the Indian media sites and also from Whatsapp where stories and jokes circulated abundantly. However, visiting India and experiencing the demonetization firsthand turns out to be an experience in and of itself.

(Picture published on SanjeevniToday- Indians stand in queues to exchange or deposit discontinued currency notes outside banks)
(Picture published on The Siasat daily of long queues outside banks and ATM on 6th consecutive day)
The experience begins right at the International airport of Delhi. As I steer by baggage trolley I see closed exchange counters with notice proclaiming, "We are out of cash". The two banks on site have long queues. I have about 7000 rupees on me from my previous trip that we tend to save to have ready cash upon arrival the next time. I get in the line but am almost immediately informed by fellow visitors that the bank is not exchanging any cash, I can only get Indian currency using credit card or check. I move on to the next bank. Same scenario. As I wait for my ride, I walk into a bookstore and pick two books. But I change my mind when my instinct tells me to save the 100 rupee bills that I'm carrying. That instinct stays with us throughout the trip as we use our American credit card wherever that is accepted and my father's Indian debit card where they refuse international cards, saving the cash only for tips to the waiters, the luggage haulers, the drivers, the maids, the cleaners. The coffee shop, the restaurants, the mall, the salons, the spas, the jewelers - everyone we encounter during our trip refuse the old currency, and man, do we try to pass some on!

The banks and its employees appear to have been thrown on the front line, having to manage huge crowd of people that show up at their doorsteps, every single day- with queries, requesting exchange, deposits and withdrawal in new currency, while at the same time they have to keep their system in compliance with the constantly evolving rules on the subject. During our ten days stay in India, we visit the bank 5 times and get a front row view of the situation. My father is a retired bank employee, so we are let in easily enough. Of course, the courtesy doesn't extend to bending any rule- we are told to not even think about exchanging old bills as the only way to get that done is to stand in the long serpentine line outside. The courtesy does extend to making withdrawals, but again within the government specified parameters- that of not more than rupees 24,000 in a Tuesday to Monday time period from anywhere in the country. My father who wanted his next 24,000 withdrawal was told that the system is rejecting his request. As he rakes his brain, feeling certain that his last withdrawal from the bank was right days ago (money that quickly disappeared in  helping us and another friend visiting from abroad), he realizes that he had made an ATM withdrawal of rupees 2000 from Ranchi airport the previous week during his visit there. The manager suggests withdrawing rupees 20,000. The system accepts it. The manager explains that nothing is under their control. Their system is updated overnight as the rules change each day. And the rules did change each day, either to tackle the most commonly faced problem or the most frequently occurring work-around that the rich were indulging in.  For example, when the hardships faced by families marrying their son/ daughter came to light, the government allowed such families a withdrawal of rupees 2.5 lakhs upon producing the wedding card, instead of being bound by the 24,000 limit.  Upon learning of the issue of house-wives' cash savings, the government allowed deposits of rupees 2.5 lakhs in individual bank accounts without penalty.  We hear of such news on a daily basis. The manager tells us that all the bank employees have been working until well past 10 pm each day. We see irate customers often barge into the manager's office demanding explanation as to why their withdrawal request was rejected, or why can't they do exchanges after standing in lines for hours- we see that each frustration is met with calmness, a sense of quiet strength and poise on part of all the employees. One such case unfolded right there in front of our eyes. There is a bride-to-be and her brother insisting a withdrawal of rupees 2.5 lakhs from their mother's account on account of wedding in the family. However, the system is rejecting it. The manager tries really hard to explain it to them that their hands are tied, but they wouldn't budge. They make some calls, asking the manager to speak to some person (probably someone big), but the manager refuses. The bride-to-be yells at him. Nobody says anything as her brother whisks her away. I feel bad for the manager. Had this been America, security guards would have promptly escorted her away. During our multiple visits to the bank, during our waits in the low-walled chamber, we witness various other issues that had arisen from the policy. We see foreigners full of questions, seeking help but refusing to submit a copy of their passports, probably having been fore warned of the potential misuse. We hear occasional yelling from the long lines outside the bank every time those waiting for hours feel that someone is breaking the line. Through it all, we never see any bank employee lose their calm.

There is actually something amazing about the way the government is on top of things, evolving rules, providing some break and yet keeping the reigns tight. To tackle long lines that mainly comprises of people withdrawing from various different banks/ branches, the bank imposed the no withdrawal more than rupees 24,000 per person in the Monday to Tuesday window. The ATM were re-calibrated to dispense the new smaller  2000 bill at thousands of ATM sites within days. All tollways were operating for free, keeping in view that people were low on change. The petrol pumps (gas stations) were accepting old rupee 500 and 1000 bills- after all, how much black money can you possibly dispense so? The government even started "inking" the finger to discourage one person from withdrawing from several different sources. As news spread that the rich industrialists were offering a day off and a cut as commission to hundreds of their employees to stand in line and deposit rupees 2.5 lakhs in their bank accounts  (the idea being that their employer's black money sits in individual accounts where the amount is well within the amount that will initiate inquiry), Modi announces that any new or old account that shows sudden deposits will be investigated. 

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It is obvious everywhere you go that cash is a problem. While shopping with couple of my college friends, it is interesting to see my friend collect the cash that I am ready to pay to the store cashiers at the mall, while he pays my bill using his card. At another time, my husband is issued a chalan (traffic ticket) for not wearing a seat belt just as he removed it to get to his camera. We ask the police man if he would take old bills since we are left with the last rupees 300 in change. When he refuses, we request him to at least, take a ₹ 2000 bill and give us change. We are happy at the deal, having gotten rupees 1700 in ₹ 100 bills.

The surprising part is the attitude of the people at large, the aam janta (common man). Despite the inconvenience that is undoubtedly caused, there is support for Modi. Most people seem happy at the prospect of black money getting flushed out of the system, at the prospect of the policy crippling the financial framework of terrorism. Almsot all the people we talk to are optimistic about the end results and enthusiastic to cooperate. Our driver, a young man around 25 tells us about being approached by people to deposit money in his account for a commission. He says he refused because, "ab Modi ko support karna hai, sahi kaam karna hai" (now we have to support Modi and do the right thing).

Time will tell the larger, long-term and the more lasting impact of demonetization. Of course, demonetizing the nation's currency makes falsehood of the promise "to pay the bearer a sum of <bill value>" (as is written in all Indian currency notes). Indian currency being a fiat currency, its value is guaranteed by the government and the Reserve bank of India. RBI is obligated to return the bearer a sum total of the same value in lesser denomination notes or coins. If that promise can no longer be fulfilled, or fulfilled with the onus on the bearer that he has legit cause to bear the currency, there is a risk of repercussion. When the US government's promise of returning gold upon return of USD was broken by President Nixon (called the Nixon Shock)  , the USD value had drastically fallen. However, uprooting deep-rooted practices requires ultra bold actions. History will tell if Modi's means justified the ends (or even- whether the end goals were achieved). Certainly counterfeiting of the Indian rupee bills allegedly used for funding terrorism will take a hit and the practice of hoarding and using black money in the country will take a hit. The hope is also that the policy will result in two much needed outcomes in India-
1. the over-inflated real estate prices will now stabilize. Property selling is by far the most common, often the only way of honest hard-working people ending up with some "black" money due to circumstances beyond their control. A retired government employee may have led all his life paying taxes without owing any black money, until the time it is time for him to sell his ancestral or his own property. The buyer agrees to pay a maximum of 80% "white". Remaining 20% is "black". 
2. the entire nation moves towards card/ check payments. The evidence of this becoming a possibility is almost immediately noticeable. With the policy taking effect over night, we notice several small vendors-the subziwala shop, the tiny grocery shop, the small barber shop- instantly equip themselves with PayTM machines to accept payments with cards.

And so the world's eyes continues to be on India, on Modi.

Good luck India! 

Meanwhile, if you are a NRI with discontinued Indian currency, you have until December end to either personally or via your family in India to deposit the money in bank. You will not be able to exchange the notes as exchanges have stopped the world over. However, until March end RBI will exchange the notes if accompanied with the required documentation.

By Sonal Kulshrestha

(Sonal is a computer programmer by profession and a writer by passion. She is an avid movie goer. She lives in Texas, USA) 

..check back and follow me right here as I journal my amazement with India and its people this summer...


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