Indians line up at banks
to deposit savings or see them disappear
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[December 30, 2016]
By Mayank Bhardwaj
NEW
DELHI (Reuters) - Indians lined up outside banks across the country on
Friday, the last day for them to deposit their savings or see them
become worthless after large denomination notes were scrapped in a bid
to fight corruption.
Prime Minister Narendra Modi last month said 500 and 1,000 bank notes -
worth a combined $256 billion and 86 percent of cash in circulation -
would cease to be legal tender after Dec. 30, disrupting the lives of
hundreds of millions.
"I'm here to deposit a few old notes before the deadline expires," said
Rakesh Kumar, queuing outside a bank in New Delhi.
"But I expect the government and RBI (central bank) to quickly replenish
banks and ATMs with new notes so that we can withdraw without any
trouble."
Only 35-40 percent of ATM machines were currently dispensing cash,
according to Ramaswamy Venkatachalam, managing director, India and South
Asia, Fidelity Information Services, a banking technology provider.
Modi had said his government would end the chaos and restore normality
in 50 days. But analysts said the impact would last at least six more
months, with concerns about lower economic growth, job losses and a fall
in demand for goods.
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"Economic growth, the obvious casualty, will tank to about 6.5 percent
in the second half of the 2016/17 fiscal year against an average 7.2
percent in the first half," said D.H. Pai Panandiker, president of RPG
Foundation, an economic policy group in New Delhi.
Another cost would be job losses, especially in the informal sector,
where most poor people work, Panandiker said.
The informal sector accounts for 20 percent of gross domestic product
and more than 85 percent of total employment.
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![](../images/123016pics/busine7.jpg)
People wait for a bank to open to withdraw and deposit their money,
after the scrapping of high denomination 500 and 1,000 Indian rupees
currency notes, in Ahmedabad, India, December 5, 2016. Amit
Dave/File photo
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"I
also believe that even after the 50-day deadline, people will face immense
difficulty in withdrawing money as remonetising 86 percent of India's cash will
take a long time," he said.
In an
interview to India Today magazine, Modi on Thursday said the demonetisation
decision would give the economy a boost and provide long-term benefits,
including forcing the vast shadow economy into the open.
"We took the demonetisation decision not for some short-term windfall gain, but
for a long term structural transformation," Modi was quoted as saying.
He has said the demonetisation action was needed to fight corruption and cut off
financing for attacks by militants who target India.
Paranjoy Guha Thakurta, editor of Economic and Political Weekly, said there was
"a fair amount of evidence" to suggest that economic activity had shrunk because
of the move.
"The prime minister will have a tough time justifying his action," he said.
(Additional reporting by Manoj Kumar and Sudarshan Varadhan; Editing by Nick
Macfie)
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