India touts note ban, opposition fumes and Nepal short-changed

Delhi/Mumbai, November 8

Indian officials extolled last year’s shock ban on high denomination banknotes as a success today, while opponents staged protests and Nepal said its citizens were still stuck with billions of Indian rupees in old money.

Prime Minister Narendra Modi withdrew INR 500 ($7.5) and INR 1,000 ($15) notes from circulation on November 8 last year in a bid to flush out cash hidden from the tax man and push the country towards digital transactions.

Modi got broad support for the move and his party scored a landslide win in a crucial election that followed. But an economic slowdown and job losses that resulted have given the opposition ammunition to attack his administration.

In recent days, government ministers have come out in full force calling demonetisation a success, celebrating the anniversary as ‘anti-black money day’. Finance Minister Arun Jaitley said on Facebook that

India’s dependence on cash had fallen by nearly INR 3.89 trillion. Cash-to-GDP ratio is now near nine per cent of gross domestic product, compared with nearly 12 per cent before demonetisation.

About 5.6 million new taxpayers had been added to the tax net, the finance ministry said. And Reserve Bank of India data shows transaction volumes through mobile wallets, such as PayTM and MobiKwik, jumped after demonetisation to a high of 320.87 million in April, from 99.57 million in October.

But the move is widely blamed for contributing to a broad slowdown of the economy, which has hit its lowest

level in three years. The Centre for Monitoring Indian Economy, a Mumbai-based think-tank, estimated that about 1.5 million jobs were lost in the first four months of 2017 due to demonetisation.

Today, the opposition Congress party held protests in major cities.

“It has ruined the lives of millions of hard-working Indians,” Congress Vice President Rahul Gandhi said on Twitter.

The pain from demonetisation is also being felt in neighbouring Nepal, where thousands of migrant workers still have old currency notes that they could not exchange before the window to do so closed.

Chinta Mani Siwakoti, deputy governor of Nepal’s central bank, Nepal Rastra Bank, said they were still waiting for

Indian authorities’ response to exchange nearly 55 million Indian currency notes held by its citizens. Business associations estimate the value of the notes at INR 10 billion.

“This will gradually lead to the erosion of trust of the Nepali people in Indian rupees,” Siwakoti told Reuters. “Indian silence over the exchange of old notes is an injustice to Nepali people.”

An Indian finance ministry spokesman declined to comment.