Indian government holds firm amid chaos over scrapped notes

Bedlam endured for the ninth consecutive day across India on Friday as millions of people scrambled to cope with the shortage of high-value currency notes following their demonetisation by the government last week.

Opposition parties claimed that about 50 people, including a two-year old boy, have died as a consequence of prime minister Narendra Modi’s government de-recognising 500-rupee (€6.88) and 1,000-rupee notes on November 8th.

The infant, the son of an auto-rickshaw driver, died in Sambalpur in eastern Orissa state earlier this week as the clinic he was rushed to reportedly refused to accept the demonetised currency to treat him.

There were also reports of elderly men and women dying of exhaustion while waiting in queues to exchange their money, and of some people taking their own lives in response to the crisis.

Government spokesmen denied the opposition allegations, maintaining that many of the reported deaths were due to natural causes and had no connection to the demonetisation, which was introduced abruptly to combat corruption, money laundering, drug trafficking and terrorism.

The government says there will be no roll-back on demonetisation, and things will resolve themselves by the end of the December deadline to exchange the de-recognised notes.

Short supply

Hundreds of private hospitals turned away patients who had neither new currency – which remained in short supply – to pay for their treatment nor access to bank cash transfers or credit cards.

There were also reports of farmers giving away their fruit and vegetables and fishermen their daily catch for free, as they had no prospect of selling them before they rotted.

Normally crammed grain markets, teeming bazaars, cinemas, bars and liquor shops were deserted as the government scrambled to replace the demonetised currency, which made up 86 per cent of India’s circulating cash. Experts said the replacement process could take more than six months.

Millions of daily wage labourers, who constitute the bulk of India’s informal sector that keeps the country moving, but operate on cash, remained idle.

“There is no currency in the market nor is there work,” said painter Subhash Gupta. To punish India’s small percentage of tax dodgers, Mr Modi has hammered the poor and turned their lives upside down, he said. Numerous others said the government had “beggared” the working classes and small businesses by making them solicit the banks for their own money.

Even the Supreme Court, in response to a petition on Friday questioning the demonetisation, said the long queues outside banks and post offices to exchange the de-legalised currency was a “serious issue”. It warned of the potential for “riots on the streets” if the scramble for cash over the past nine days continued.

‘Surgical strike’

Some of Mr Modi’s MPs criticised the demonetisation, which they said had been initiated without any homework. “If demonetisation was a surgical strike [on unaccounted for money], the government should have prepared for post-surgical situations,” tweeted

Shatrughan Sinha

, an MP of the governing

Bharatiya Janata Party

.

As the crisis intensified the federal finance ministry continually changed the limits on the amount of cash that people could withdraw from banks or exchange; it has reduced this from 4,500 rupees per person last week to 2,000 rupees per day at present.

The demonetisation also coincides with India’s wheat sowing and wedding season, both of which are of critical importance to the bulk of the country’s rural populations and which now face an apocalyptic depletion of cash.

Hundreds of millions of Indians don’t have bank accounts and use cash to pay for everything from groceries to medicine to land purchases.

“This is a demonisation of cash, not demonetisation of currency,” said former federal finance minister PC Chidambaram.