India's
government has been accused of causing 'chaos' and wreaking havoc on
poor and working Indians as anger grows over the withdrawal of large
denomination notes.
Hundreds
of thousands of people have queued for hours outside banks after the
bank notes - which account for more than 80 per cent of the currency in
circulation - were abolished.
The government scrapped the notes in a bid to uncover billions of dollars in undeclared wealth.
Tempers frayed across the country, and critics claimed the wealthy have found new ways to get around the rules.
Tempers frayed across the country, and critics claimed the wealthy have found new ways to get around the rules
The government has been heavily criticised for abolishing 500 and 1,000 rupee notes in a bid to uncover undeclared wealth
Much of the cash-driven economy has been brought to a halt following the move.
Delhi Chief Minister Arvind Kejriwal - a rival of Prime Minister Narendra Modi - said: 'There's chaos everywhere.'
Nearly
half of India's 202,000 ATMs were shut on Friday and those that
operated quickly ran out of the new notes as scores of people descended
upon them.
Customers
argued and banged the glass doors at a Standard Chartered branch in
southern Delhi after security guards blocked the entrance, saying there
were too many people inside already.
Others turned on Modi, criticising his ongoing visit to Japan while ordinary people suffered at home.
'He
is taking bullet train rides in Japan and here you have old people
knocking on bank doors for cash,' said Prabhat Kumar, a college student
who said he had spent six hours in the queue. 'He has made a terrible
mistake.'
An outlawed note, which owners have until the end of the year to exchange under a move introduced by the Indian government
Large queues formed outside banks across India, including this one in Mumbai
Modi said he would pursue the fight against corruption and tax dodgers even if it meant scanning decades-old records.
'If
unaccounted money is found out during the current clean up drive,
accounts of tax evaders dating back to the country's independence in
1947 will be checked. If required I will hire people for this task,'
Modi told the Indian community in Kobe.
He
said he recognised people faced difficulties as the transition to the
new series of bank notes takes place but was confident they would stand
by the decision as part of the war against corruption and to rid India
of endemic poverty.
Finance
minister Arun Jaitley said ATMs had not been adjusted to handle new
currency notes prior to the announcement in order to keep it under
wraps. 'Recalibration of ATMs will be completed within two weeks,' he
added.
Referring
to inconvenience caused to public, Jaitley said there could be some,
short-term disruptive cost to the economy due to the demonetisation
drive but this would prove positive in the longer term.
Long queues have formed outside banks across India as the country descends into 'chaos'
Prime Minister Narendra Modi (left)
has been criticised for visiting Japan, where he is pictured with
Japanese counterpart Shinzo Abe, while the crisis unfolds
Traders
in Delhi's vegetable market said they were considering shutting down
the market as cash was running out and banks were dispensing a limited
amount.
'We
might have to close down until the situation stabilises,' said Metharam
Kriplani, president of the Chambers of Azadpur Fruit and Vegetable
Traders.
People in Mumbai said grocers were charging 10 times the price of salt in return for accepting the old cash notes.
The government has asked people to exchange the old 500 and 1,000 rupees notes by December 30.
People have been lining up outside
banks across India to exchange their currency, with the outlawed notes
accounting for 80 per cent of the currency in circulation
Millions of people face losing their savings because of the move
The
central bank said there was enough cash available with banks and that
it had made arrangements to deliver the new bank notes across the
country.
Modi's
move was aimed at shrinking the "black economy", the term widely used
to describe transactions that take place outside formal channels and
which could be as high as 20 percent of gross domestic product,
according to investment firm Ambit.
People
swapping old notes will have to present proof of identity and
depositors of abnormally large sums could be investigated by tax
authorities.
India
has unearthed 1.25 trillion rupees ($18.51 billion) of undeclared
"black" money, including 670 billion rupees in the recent income
disclosure scheme, since his government came to power in 2014, Modi
said.
Much of India's rural economy is powered by cash, with few people regularly using a bank account
Much of India's rural economy is powered by cash, with few people regularly using a bank account.
In
Dudko, about 75 kms (45 miles) from Delhi, villagers said they were
finding it difficult to pay for food and fuel four days into the cash
crunch.
"Bank
officials are saying they will give the money on Monday. How will we
make purchases?" said Sunita, a woman who was preparing for her
daughter's wedding later this month. ($1 = 67.5299 Indian rupees)
(Additional reporting by Delhi, Mumbai and Bengaluru newsrooms; Editing
by Helen Popper)
