NEW DELHI: Prime Minister Narendra Modi in a televised address on New Year’s eve, said his abrupt decision to cancel high-denomination notes last month has dealt “a serious blow” to black money, terror-financing and tax evasion. Defending his demonetisation drive, PM Modi, in a 45-minute speech delivered first in Hindi and then English, said, “There is no precedent globally to what India has done” and thanked the people for “redefining the concept of sacrifice” with their willingness to brave long lines at banks to get cash, which has been in short supply since he abolished 500-and 1,000-rupee notes on November 8. Prime Minister Modi, through his speech, revealed a cluster of new schemes for cheap housing for the poor along with special financial programs for small business, women and farmers, all of which could boost his party’s chances of winning Uttar Pradesh, which will vote soon for its next government. Describing the demonetisation drive as “a purification drive”, PM Modi said he has instructed all officials to focus on returning banks, over-run with customers desperate for cash, to focus urgently on plans to return to normal. He said he has urged special attention for rural and remote areas, where access to banks is not easy.
The PM did not share any information on the amount of abolished currency that has been returned to banks. The deadline to turn in old notes ended yesterday. The cancelled notes added up to 86 per cent of the cash in circulation. Of the 15 lakh crores of abolished notes, nearly 14 lakhs had been returned as of a few days ago. That suggests that a vast amount of black money has not been wiped out with the notes ban.
The PM said that while the government is committed to respecting the autonomy of banks, he wants them to demonstrate a commitment to the middle class and poor. Indian banks have “never received such a large amount of money in such a short time,” he said. PM Modi announced a slew of schemes to help the poor, farmers and small traders, all groups that are perceived as hard-hit after the notes ban was announced. He said housing loans for the rural and urban poor will be made cheaper, with large chunks of interest being waived. Small traders and medium-sized business will now get double or 2 crores as credit guarantee, which helps them get collateral-free loans. Farmers have been given a 60-day interest waivers on loans taking for the winter or rabi crop. Pregnant women will have Rs. 6,000 deposited in their accounts and for the next ten years, senior citizens will benefit from a fixed interest rate of 8 per cent on deposits up to 7.5 lakhs. The PM did not indicate when the limits imposed on cash withdrawals will be relaxed or removed. Starting January 1, 2017, the daily limit on ATM withdrawals will go up to Rs. 4,500 rupees from Rs. 2,500, but the weekly cap on withdrawals from bank accounts stays capped at Rs. 24,000 rupees.
The deadline to exchange or deposit devalued high-value currency bills expired yesterday. Till March 31, the outlawed notes can be turned in at the Reserve Bank of India but not other bank branches. The opposition, which has attacked PM Modi for plunging the country into a cash crunch and steering it towards an economic slowdown, is misrepresenting the facts and has failed to read the anger of the people against corruption, the PM said. He asked parties to relinquish their “holier-than-thou” approach and take urgent steps to reform political funding. He also continued to lobby for digital transactions and highlighted the new app – BHIM – that he launched yesterday which does away with the need an internet connection or smartphone to make or receive payments by linking to the Aadhaar or biometrics data base. Economists expect the economy to benefit in the long term due to an increase in tax revenues but only once there is a plentiful supply of those elusive new notes in circulation.