India scraps high currency notes to fight corruption
NEW DELHI (AP) — India's highest-denomination currency notes are being withdrawn immediately from circulation, the country's prime minister said Tuesday night, a surprise announcement designed to fight corruption and target people who have stashed away immense amounts of cash.
As of midnight Tuesday, 500- and 1,000-rupee notes, worth about $7.50 and $15, will have no cash value, Prime Minister Narendra Modi said in a televised address.
"A few people are spreading corruption for their own benefit," he said in the speech. "There is a time when you realize that you have to bring some change in society, and this is our time."
People holding the discontinued notes will be able to deposit them in bank and post office savings accounts before the end of the year - but anyone making large deposits will find themselves the target of Indian tax authorities. The government will shortly be issuing new 500- and 2,000-rupee notes, the prime minister said.
India's economy - and its tax base - has long been hobbled by a culture of what is known here as "black money," with business people using cash to avoid paying taxes. Raids on corrupt politicians and businesses regularly turn up people holding millions of dollars' worth of rupees, with cash sometimes filling dozens of boxes.
The government has been urging people over the past year to declare the money they are holding in cash.
Across the country Tuesday night, people rushed to bank ATM machines where money could be withdrawn in 100-rupee notes, trying to avoid being caught without cash over the next few days.
Anuj Mathur, a banker, was among more than two dozen people lined up outside a south New Delhi ATM machine at about 10 p.m. Tuesday. It will be an inconvenience for the next few days, until the new notes are in circulation, he said, but he applauded the government's decision.
"It's a good measure," he said. "This will clean up the system.
The sudden change, though, will be difficult for India's millions of poor people, many of whom don't have bank accounts and who may not have cash available in lower-currency notes to keep themselves financially afloat for the next few days.
"It will cause some hardship to you," Modi said in his speech. "Let us ignore those hardships."
In an indirect reference to rival Pakistan, Modi also accused a neighboring country of circulating fake Indian currency to damage the Indian economy.