After the deadline for depositing old large-denomination rupee notes passed December 30, all eyes are now on Indian Prime Minister Narendra Modi who is expected to make a big announcement late Saturday to ease the pain his shock ban on the banknotes caused.
Late Friday, the Reserve Bank of India raised the daily withdrawal limits from ATMs to Rs4,500 from Rs2,000. However, there will be no change in the weekly over-the-counter withdrawal of Rs24,000.
Friday saw thinner queues before ATMs and banks across the country, maybe because many machines have gone dry or people were waiting for Modi’s address before taking their next step.
The day also saw the launch of BHIM, Bharat Interface for Money, a real-time cashless transaction program named after Bhim Rao Ambedkarthe, the architect of India’s Constitution and an icon for the low-caste Dalit community.
“Earlier, an illiterate person was associated with the thumb impression, but now, your thumb has become your identity and bank,” Modi said.
The 50-day process of withdrawing Rs500 and Rs1,000 bank notes from circulation has thrown the lives of hundreds of millions of ordinary Indians into turmoil. Many are now hoping the government will announce tax benefits and other sweeteners to bring a disgruntled public on board with its project to flush out tax cheats, crush the black market and prod the country toward a digital and cashless economy.
The note ban will boost India’s economy, bring cash from the shadow economy into the mainstream and benefit the poor, downtrodden and marginalized, Modi said in an interview with India Today on Thursday.
“Modi is likely to announce something big,” said K. Jayaraj, a former senior officer of State Bank of India now living in Chennai. “Millions of Indians are pinning their hopes on him.”
While there were lapses in the execution of the demonetization plan, there were also a number of positives, he said. “About Rs6 trillion of deposits by some 600,000 individuals and companies are under scrutiny. Tax collection may be delayed but the money thus gained could be used for the common good.”
Rs14.6 trillion in the scrapped notes has been returned to banks – instead of Rs10 trillion the government had anticipated, he said. With more money in the formal financial system, banks should be in a position to lend more, he said. Tax collections have also gone up by 14.4% as of December 19, he said.
Those numbers don’t take into account the cost of the demonetization exercise, said T. Jayachandran, owner of CICC Books in Ernakulam, adding that not all the money deposited can be labeled as “black money.”