In a remarkable decision taken by Prime Minister, Narendra Modi, existing ₹500 (approximately $7.53) and ₹1000 (approximately $15.06) currency notes cease to be legal with effect from midnight of November 8, 2016.
Prime Minister Modi, addressing the nation on Tuesday said, 500 and 1000 notes can be deposited in banks and post offices without any limit from November 10 to December 30. He also added that many ATMs in the country will not work on 9th and 10th November.
Notes can also be exchanged from banks by showing valid id proofs, with some limitations. Withdrawals from bank accounts and ATMs would be limited in the beginning. The government is planning to raise the limit gradually. However, the notes of denominations 10, 20, 50 and 100 and coins of all denominations will remain legal and are not subjected to any change.
In order to minimize inconvenience, for the next 3 days; government hospitals, railway and airline and buses booking counters, government authorised gas stations and consumer cooperative stores will continue to accept the current ₹ 500 and 1000 notes.
This is a bold and extraordinary step taken by Modi’s government to recover illegal income, also called black money. Tax evasions and illegal stashing of money has been a major problem of the Indian economy. By discontinuing the current 500 and 1000 notes, Narendra Modi has taken a clever step in digging black money and bringing it back in the economy.
The sudden announcement left the country in shock. It is physically not possible to store the black money in denominations lower than 500 and 1000, so most of the black money is stored in the form of 500s or 1000s. The suddenness of this decision, didn’t give the opportunity to anyone to work on it. Everyone who has illegal money stored has two options- either to deposit it in a bank and get their identity revealed or let the black money turn into a useless pile of paper. Their is a third option, to put the illegal money in transaction. But, considering the amount of money, it is almost impossible to convert it to “clean” money.
Interestingly, to further eliminate the problem of illegal stashing of money, RBI is issuing ₹ 2000 currency notes, instead of currently used ₹1000. These new notes are said to be embedded with a Nano GPS Chip (NGC) which would make it easier to track them down. It is not possible to remove or tamper with this NGC without damaging the note.
It is indeed a very thought out and clever decision taken by the Modi’s government. The decision is widely appreciated by the nation and marks yet another significant achievement of Modi’s government.
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