India scraps 500 and 1,000 rupee bank notes overnight
Indian Prime Minister Narendra Modi has announced that the 500 ($7.6) and 1,000 rupee banknotes will be withdrawn from the financial system overnight.
The surprise move is part of a crackdown on corruption and illegal cash holdings, he said in a nationwide address on television.
“Black money and corruption are the biggest obstacles in eradicating poverty,” he said.
New 500 and 2,000 rupee denomination notes will be issued to replace them.
Banks have been told to exchange existing high denomination rupee notes over the next 50 days.
The move is designed to lock out money that is unaccounted for – known as “black money ” – which may have been acquired corruptly, or be being withheld from the tax authorities.
India – the seventh largest economy in the world – is overwhelmingly a cash economy, with most of its currency stored in 1,000 and 500 rupee notes.
Mr Modi explained the thinking behind the move in an unscheduled speech on Tuesday.
“On one hand, we are number one in economic growth and on the other we are ranked 100 in global corruption rankings,” he said. “Despite various steps, we have improved only to 76.”
It is seen as the boldest move by any Indian government to clampdown on tax evaders.
The 500 and 1,000 rupee notes are the highest denomination notes in the country and are extremely common in India. Airports, railway stations and hospitals will only accept them until 11 November.
People will be able to exchange their money at banks between 10 November and 30 December.
Mr Modi’s ruling Bharatiya Janata Party came into power in 2014 promising to bring billions of dollars of black market money into the country’s financial system. His government is half way through its term of office.
The announcement comes just over a month after the government raised nearly $10bn through a tax amnesty for Indians to declare hidden income and assets.
“The surprise move is part of a crackdown on corruption and illegal cash holdings, he said in a nationwide address on television.”
no its not..
“India – the seventh largest economy in the world – is overwhelmingly a cash economy, with most of its currency stored in 1,000 and 500 rupee notes.”