Indian Prime Minister Narendra Modi has announced that the 500 ($7.60) and 1,000 rupee banknotes will be withdrawn from the financial system overnight.
The Prime Minister said that the Rs 500 and Rs 1,000 denomination notes can be deposited in banks and post offices, and also exchanged across the bank counter by showing government-issued ID proof. He also said that ATM withdrawals will be restricted to Rs 2,000 per day till November 11, when this limit may be increased slowly.
Withdrawals from bank accounts will be limited to Rs 10,000 for the first few days.
Just two days back we were debating whether those pretty pink currency note pictures on Twitter were real or not, and then to be hit with the news that let alone those notes coming into circulation, but the yellow and red banknotes stashed in our wallets, cupboards and drawers (not to mention those secret stashes in sugar jars and under the bedspread) would all be reduced to mere paper within a matter of hours was more of a shock than what most us can handle.
There was a range of emotions that followed, disbelief was first and foremost, followed by confusion, dismay, anger and jubiliation (depending on whether you were rooting for such a #surgicalstrike on black money) and then a mad dash towards wherever it is that the cash is stashed.
International Monetary Fund (IMF) has supported Prime Minister Narendra Modi's
efforts to fight corruption by demonetizing 500 and 1000 rupees notes
but cautioned that the move has to be managed prudently.
IMF
spokesman Gerry Rice told reporters in Washington that the global body
supports Modi government's measures to fight corruption and illicit
financial flows in India. [1]
An op-ed in the state-run tabloid Global Times on
Monday lauded Prime Minister Modi for being “truly up for a fiercer
fight against black money and corruption” following his decision last
week of invalidating currency notes of Rs. 500 and Rs.1000 denomination.
“Modi
means well and his decision was made based on the reality in India,
since most illegal business in the underground economy is cash-only and
500 and 1,000 rupee notes constitute over 80 per cent of all cash
circulation in India.” It added that the “new policy to scrap India's
two largest denomination rupee notes is considered a risky, but a bold
and decisive step”.
China and India are the two leading sources of international students coming to the U.S. As at November 2016, American universities and colleges enrolled over 202,000 students from India and 314,000 from China , according to the latest data released by the Student and Exchange Visitor Program (SEVP), part of U.S. Immigration and Customs Enforcement (ICE).
Any major shift in the number of students coming from these two countries can have serious implications for international enrollment at many American institutions. With the increase in concerns about the China slowdown, institutions have been banking on India as the next big source country to meet enrollment goals.
However, a recent change in the Government of India policy can negatively affect the growth of Indian students going abroad. On November 8, the Prime Minster of Indian announced a demonetization policy which made 86% of the currency in circulation invalid as a legal tender.
One of the key motivations for demonetization was to flush the black money generated through tax evasion and corruption and take India towards a “cashless economy.” However, cash was also the mechanism of short-term borrowing for many Indian students.
Visa approval processes for international students requires showing proof of availability of funds for the first year of tuition and living expenses. Given that total annual expenses can range from US$ 30,000 to US$ 70,000, many Indian students were using short-term borrowing for visa approvals and education abroad.
The timing of demonetization could not have been worse for many institutions who were still making sense of the implications of the American Presidential elections on international students. The deadlines of most institutions range from November to February creating further time pressure as there is a lot more uncertainty about the external environment.
Clearly, in this context demonetization is likely to affect the willingness and ability of Indian students to study abroad, however, the impact will differ by the level of education.
Capitation fee is widely accepted in two segments of the education system—nursery admissions and professional higher education. “For the first time, it is going to get impacted in a big way,” said Madhavi Lokhande, dean, Welingkar Institute of Management.
“This move is expected to make education affordable to meritorious students akin to what it will do with the real estate market,” said Lokhande, a professor specializing in finance and entrepreneurship. She said that institutions will find it difficult to sell the so-called management quota seats.
“The key takeaway from this demonetization move is that there is a formal plan to curb the Indian theory ‘you can buy everything for cash’ and education sector was not immune to it,” she added.
Raju Davis Perepadan, chairman of the Kerala-based Holy Grace Academy that runs a chain of professional colleges, said the government move will impact the sector.
He said seats are being sold for Rs2 lakh to Rs2 crore, depending on the streams and specializations.
t
Capitation fee is widely accepted in two segments of the education system—nursery admissions and professional higher education. “For the first time, it is going to get impacted in a big way,” said Madhavi Lokhande, dean, Welingkar Institute of Management.
“This move is expected to make education affordable to meritorious students akin to what it will do with the real estate market,” said Lokhande, a professor specializing in finance and entrepreneurship. She said that institutions will find it difficult to sell the so-called management quota seats.
“The key takeaway from this demonetization move is that there is a formal plan to curb the Indian theory ‘you can buy everything for cash’ and education sector was not immune to it,” she added.
Raju Davis Perepadan, chairman of the Kerala-based Holy Grace Academy that runs a chain of professional colleges, said the government move will impact the sector.
He said seats are being sold for Rs2 lakh to Rs2 crore, depending on the streams and specializations.
“While an MBBS seat goes for between Rs40 lakh to Rs60 lakh, in some medical colleges, a MD (doctor of medicine) seat has a price that ranges up to Rs2 crore. Similarly, engineering and management stream seats have a rate between Rs2 lakh and Rs10 lakh each,” he said.
He, however, said that “some in the education sector believe that there is a cost to what has happened but its impact may be temporary - may be for a year or two.”
And after that? “Those who believe in black money will find some other means. Gold may replace cash in the capitation fee market,” he said. Overall, the sector will feel the heat—fee control by states and no capitation fee may create a situation where the quality of institutions may suffer, he said.
China and India are the two leading sources of international students coming to the U.S. As at November 2016, American universities and colleges enrolled over 202,000 students from India and 314,000 from China , according to the latest data released by the Student and Exchange Visitor Program (SEVP), part of U.S. Immigration and Customs Enforcement (ICE).
Any major shift in the number of students coming from these two countries can have serious implications for international enrollment at many American institutions. With the increase in concerns about the China slowdown, institutions have been banking on India as the next big source country to meet enrollment goals.
However, a recent change in the Government of India policy can negatively affect the growth of Indian students going abroad. On November 8, the Prime Minster of Indian announced a demonetization policy which made 86% of the currency in circulation invalid as a legal tender.
One of the key motivations for demonetization was to flush the black money generated through tax evasion and corruption and take India towards a “cashless economy.” However, cash was also the mechanism of short-term borrowing for many Indian students.
Visa approval processes for international students requires showing proof of availability of funds for the first year of tuition and living expenses. Given that total annual expenses can range from US$ 30,000 to US$ 70,000, many Indian students were using short-term borrowing for visa approvals and education abroad.
The timing of demonetization could not have been worse for many institutions who were still making sense of the implications of the American Presidential elections on international students. The deadlines of most institutions range from November to February creating further time pressure as there is a lot more uncertainty about the external environment.
Clearly, in this context demonetization is likely to affect the willingness and ability of Indian students to study abroad, however, the impact will differ by the level of education.
The
centre’s decision to withdraw high-value bank notes to curb unaccounted
cash will hurt education institutions that charge capitation fees for
admissions.
Accepting capitation fees will become difficult because of the demonetization drive, industry insiders and experts said. Capitation fee is widely accepted in two segments of the education system—nursery admissions and professional higher education. “For the first time, it is going to get impacted in a big way,” said Madhavi Lokhande, dean, Welingkar Institute of Management.
“This move is expected to make education affordable to meritorious students akin to what it will do with the real estate market,” said Lokhande, a professor specializing in finance and entrepreneurship. She said that institutions will find it difficult to sell the so-called management quota seats.
“The key takeaway from this demonetization move is that there is a formal plan to curb the Indian theory ‘you can buy everything for cash’ and education sector was not immune to it,” she added.
Raju Davis Perepadan, chairman of the Kerala-based Holy Grace Academy that runs a chain of professional colleges, said the government move will impact the sector.
He said seats are being sold for Rs2 lakh to Rs2 crore, depending on the streams and specializations.
t
The
centre’s decision to withdraw high-value bank notes to curb unaccounted
cash will hurt education institutions that charge capitation fees for
admissions.
Accepting capitation fees will become difficult because of the demonetization drive, industry insiders and experts said. Capitation fee is widely accepted in two segments of the education system—nursery admissions and professional higher education. “For the first time, it is going to get impacted in a big way,” said Madhavi Lokhande, dean, Welingkar Institute of Management.
“This move is expected to make education affordable to meritorious students akin to what it will do with the real estate market,” said Lokhande, a professor specializing in finance and entrepreneurship. She said that institutions will find it difficult to sell the so-called management quota seats.
“The key takeaway from this demonetization move is that there is a formal plan to curb the Indian theory ‘you can buy everything for cash’ and education sector was not immune to it,” she added.
Raju Davis Perepadan, chairman of the Kerala-based Holy Grace Academy that runs a chain of professional colleges, said the government move will impact the sector.
He said seats are being sold for Rs2 lakh to Rs2 crore, depending on the streams and specializations.
“While an MBBS seat goes for between Rs40 lakh to Rs60 lakh, in some medical colleges, a MD (doctor of medicine) seat has a price that ranges up to Rs2 crore. Similarly, engineering and management stream seats have a rate between Rs2 lakh and Rs10 lakh each,” he said.
He, however, said that “some in the education sector believe that there is a cost to what has happened but its impact may be temporary - may be for a year or two.”
And after that? “Those who believe in black money will find some other means. Gold may replace cash in the capitation fee market,” he said. Overall, the sector will feel the heat—fee control by states and no capitation fee may create a situation where the quality of institutions may suffer, he said.
2016 Indian
banknote demonetisation
From Wikipedia,
the free encyclopedia
This article is
about the 2016 decision to demonetise 500- and 1000-rupee banknotes. It is not
to be confused with The High Denomination Bank
Notes (Demonetisation) Act, 1978.
 |
This article may
contain an excessive amount of intricate detail that may only interest a specific
audience. Please help
by spinning off or relocating any relevant information, and removing excessive
detail that may be against Wikipedia's inclusion policy. (December 2016) (Learn how and when to remove this template
message)
|
2016 Indian banknote demonetisation
|
|
Queues outside a bank to exchange ₹500 and ₹1000
banknotes in Salt Lake City, Kolkata
|
|
Time
|
20:15 IST
(14:45 UTC)
|
Date
|
8 November
2016
|
Location
|
|
Casualties
|
|
33 dead as of
18 November 2016[1]
|
|
On 8 November
2016, the Government
of India announced the demonetisation of all ₹500 (US$7.40) and ₹1,000
(US$15) banknotes of the Mahatma
Gandhi Series.[2] The government claimed that the action
would curtail the shadow economy and crack down on the use of illicit and
counterfeit cash to fund illegal activity and terrorism.[3][4] The sudden nature of the
announcement—and the prolonged cash shortages in the weeks that
followed—created significant disruption throughout the economy, threatening
economic output.[5][6] The move was heavily criticised as
poorly planned and unfair, and was met with protests, litigation, and strikes.
Prime
Minister of India Narendra Modi announced the demonetisation in an
unscheduled live televised address at 20:00 Indian
Standard Time (IST) on 8 November.[7][8] In the announcement, Modi declared
that use of all ₹500 and ₹1000 banknotes of the Mahatma
Gandhi Series would be
invalid past midnight, and announced the issuance of new ₹500 and ₹2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.
The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on
the day after the announcement.[9] In the days following the
demonetisation, the country faced severe cash shortages with severe detrimental
effects across the economy.[10][11][12] People seeking to exchange their bank
notes had to stand in lengthy queues, and several deaths were linked to the
inconveniences caused due to the rush to exchange cash.[13][14]
Initially, the
move received support from several bankers as well as from some international
commentators. It was heavily criticised by members of the opposition parties,
leading to debates in both houses of parliament and triggering organised protests
against the government in several places across India.[15][16][17] The move is considered to have reduced
the country's GDP and industrial
production. As the cash
shortages grew in the weeks following the move, the demonetisation was heavily
criticised by prominent economists and by world media.
The Indian
government had demonetised bank notes on two prior occasions—once in 1946 and
then again in 1978—and in both cases, the goal was to combat tax evasion by
"black money" held outside the formal economic system.[18] In 1946, the pre-independence
government hoped demonetisation would penalise Indian businesses that were
concealing the fortunes amassed supplying the Allies in World War II.[18] In 1978, the Janata Party coalition government demonetised
banknotes of 1000, 5000 and 10,000 rupees, again in the hopes of curbing counterfeit money and black money.[19]
In 2012, the Central Board of Direct Taxes had recommended against
demonetisation, saying in a report that "demonetisation may not be a
solution for tackling black money or economy, which is largely held in the form
of benami properties, bullion and jewellery."[20][21] According to data from income tax
probes, black money holders kept only 6% or less of their wealth as cash,
suggesting that targeting this cash would not be a successful strategy.[22]
On 28 October
2016 the total banknotes in circulation in India was ₹17.77 trillion
(US$260 billion). In terms of value, the annual report of Reserve Bank of
India (RBI) of 31 March 2016 stated that total bank notes in circulation valued
to ₹16.42 trillion (US$240 billion) of which nearly 86% (around ₹14.18
trillion (US$210 billion)) were ₹500 and ₹1,000 banknotes. In terms of
volume, the report stated that 24% (around 22.03 billion) of the total
90266 million (9026.6 crore) banknotes were in circulation.[23]
In the past,
the Bharatiya
Janata Party (BJP) had
opposed demonetisation. BJP spokesperson Meenakshi Lekhi had said in 2014 that "The aam
aurats and the aadmis (general population), those who are illiterate
and have no access to banking facilities, will be the ones to be hit by such
diversionary measures."[24][25][26][27]
In June, the
Government of India had devised the Income Declaration Scheme, that lasted till 30 September 2016,
providing an opportunity to citizens holding black money and undeclared assets to avoid litigation
and come clean by declaring their assets, paying the tax on them and a penalty
of 45% thereafter.[28]
Government ordinance
The Specified
Bank Notes (Cessation of Liabilities) Ordinance, 2016 was issued by the
Government of India on 28 December 2016 ceasing the liability of the government
for the banned bank notes, and also imposing a fine upto ₹10,000 or five times
the amount of the face value of the bank notes, whichever is higher, for people
transacting with them after 8 November 2016; or holding more than ten of them
after 30 December 2016. The ordinance also provided for the exchange of the
bank notes after December 30 for non-resident citizens and others on a case by
case basis.[33][34]
However,
Petrol, CNG and gas stations, government
hospitals, railway and airline booking counters,
state-government recognised dairies and ration stores, and crematoriums were
allowed to accept the banned ₹500 and ₹1,000 bank notes until December 2, 2016.[35]
Exchange of old notes
People gathered
at ATM of Axis
Bank in Mehsana, Gujarat to withdraw cash following
deposit of demonetised currency notes in bank on 15 November 2016.
The Reserve
Bank of India stipulated a window of fifty days until 30 December 2016 to
deposit the demonetised banknotes as credit in bank accounts. The banknotes
could also be exchanged over the counter of bank branches upto a limit that
varied over the days:[2]
- Initially, the limit was fixed at ₹2,000 per person from 8 to 13 November.
- This limit was increased to ₹4,500 per person from 14 to 17 November.[36][37]
- The limit was reduced to ₹2,000 per person from 18 November.[38]
All exchange of
banknotes was abruptly stopped from 25 November 2016.[39]
International
airports were also instructed to facilitate an exchange of notes amounting to a
total value of ₹5,000 for foreign tourists and out-bound passengers.[40]
Facts and figures
Up to 97%[41][42][43] of the demonetised bank notes have
been deposited into banks which have received a total of ₹14.97 trillion ($220
billion) as of December 30 out of the ₹15.4 trillion that was demonetised. This
is against the government's initial estimate that ₹3 trillion would not return
to the banking system.[44]
Of the ₹15.4 trillion demonetised in the form of
₹500 and ₹1000 bank notes of the Mahatma Gandhi Series, ₹9.2 trillion in the
form of ₹500 and ₹2000 bank notes of the Mahatma Gandhi New Series has been
recirculated as of 10 January 2017, two months after the demonetisation
A State
Bank of India branch
remained open at night, and a long queue of people waited outside the ATM to
withdraw money
In the first
four days after the announcement of the step, about ₹3 trillion
(US$45 billion) in the form of old ₹500 and ₹1,000 banknotes had been
deposited in the banking system and about ₹500 billion (US$7.4 billion)
had been dispensed via withdrawals from bank accounts, ATMs as well as
exchanges over the bank counters. Within these four days, the banking system
has handled about 180 million (18 crore) transactions.[36] The State
Bank of India reported to
have received more than ₹300 billion (US$4.5 billion) in bank deposit in
first two days after demonetisation.[161][162][163] A spike in the usage of debit card and
credit card post demonetisation was also reported.[164]
Between
November 10 and November 27, banks reported exchange and deposits of
demonetised banknotes worth ₹8.45 trillion (US$130 billion) (exchange of
₹339.48 billion (US$5.0 billion) and deposits of ₹8.11 trillion
(US$120 billion)). During this period, an amount of ₹2.16 lakh crore (US$32 billion) had been
withdrawn by people from their accounts.[165]
In Malda, a district believed to be a
transit-point for fake Indian currencies,[166] a large sum of cash deposits in
dormant accounts were also reported. According to The
Economic Times, more than 80
percent of fake currency in India originates from Malda district in West Bengal.[167]
The scarcity of
cash due to demonetisation led to chaos, and most people holding old banknotes
faced difficulties exchanging them due to endless lines outside banks and ATMs
across India, which became a daily routine for millions of people waiting to
deposit or exchange the ₹500 and ₹1000 banknotes since 9 November.[13][10][11][190][12] ATMs were running out of cash after a
few hours of being functional, and around half the ATMs in the country were
non-functional.[11] Sporadic violence was reported in New Delhi, but there were no reports of any
grievous injury,[191] people attacked bank premises and
ATMs,[192][193][194][195][196][197] and a ration shop was looted in Madhya Pradesh after the shop owner refused to accept
₹500 banknotes.[198][199][200][201]
The CMD of Punjab
National Bank said that
panic after demonetisation started fading on 19 November 2016.[202] As of 18 December 2016, there were
still long queues at banks and ATMs.[203][204] Three months after the withdrawal of
banknotes, a quarter of the ATMs were still short of cash.[205]
