Prime Minister Narendra Modi promoted digital payments at a special event in the Indian capital on Dec. 30, 2016.
Addressing the nation on New Year’s Eve, Prime Minister Narendra Modi defended the scrapping of high-value banknotes in November in a crackdown on untaxed wealth, corruption, and counterfeit currency, and said that a lack of cash causes difficulty but too much “is even more troublesome”.
A day after the expiry of the 50-day deadline to deposit the banned 500- ($7.35) and 1000-rupee denominations in banks, Modi used a televised speech on Saturday night to thank India’s 1.25 billion people for their patience, discipline, and resolve. He said these “will play a critical role in shaping the future of the nation for years to come”.
Modi’s unannounced demonetization on Nov. 8 sucked 86% of the currency in circulation — some 15.4 trillion rupees — out of the economy. The move was especially drastic for India because about two-thirds of the country’s gross domestic product, or 90 trillion rupees, is transacted in cash.
For weeks, millions of people across the country lined up at banks for hours to deposit old banknotes and draw new ones. The queues have now shortened with replacement currency being released and the government urging people to conduct more transactions digitally, but it is expected to take a few more months before everything is back to normal.
Opposition parties severely criticized Modi for the cash crunch which he promised to ease by Dec. 30. According to the Reserve Bank of India, banknotes worth 5.92 trillion rupees — about 38% of the amount invalidated — went into circulation between Nov. 10 and Dec. 19.
“My effort is to take the banking system to normalcy as fast as possible in the new year,” Modi said in the 45-minute address, promising particular attention for remote areas.
The prime minister depicted the demonetization drive as a tussle with dishonesty. “It is historic that both the people and the government are on the same side in this battle against evil,” he said.
Modi said that only 2.4 million people in India have admitted to annual income of more than a million rupees. “Can we digest this?” he asked. “Look at the big bungalows and big cars around you.”
Help for the needy
Modi also rang in the New Year by announcing a number of incentives to benefit the country’s poor, farmers, small traders, elderly citizens, and women.