How PM Narendra Modi Cash Ban Was Planned and Executed
PM Narendra Modi :
Tuesday night, when PM Narendra Modi announced the shock withdrawal of 500 and 1,000 rupee notes flow, just a thought of people were not surprised.
As part of a group of advisors they had used up six months carefully planning the biggest effort ever in India to check black money.
The Prime Minister had become prove to in the spring that he needed a headline-stealing move to underline his assign to check unlimited tax evasion and settled on scrapping the two highest denomination bills.
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Only the Reserve Bank of India Governor, Finance Minister Arun Jaitley and some close officials were in the know until the very last minute, according to newspaper reports.
If confidentiality had failed, people would have invested lots of their cash in gold or real estate, Hawala rackets before the announcement, increase the black money issue,” said Paras Savla of Mumbai-based investment management firm Associates & KPB.
The Times of India reported that many ministers were only briefed on the plan at a cabinet meeting in New Delhi just before he addressed the nation.
They were then not allowed to leave till he had finished his speech to prevent any unwanted leak, the paper said.
Meantime, over 1,000 kilometers away at a meeting in Mumbai, the RBI was meeting bank heads about the plan.
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They had been called to the RBI in the morning to receive a locked currency chest which they were told contained notes of the new 2,000 rupee order. They were under strictly instructions not to open the mouth or speak about it till later that night, according to the Mint newspaper.
It was when they opened it, as PM Modiji was speaking, that they learnt about the latest 500 rupee note, the media added.
RBI chief Urjit Patel has said production of the new notes had been build up to meet requirements but Pradip Shah, who helped set up India’s HDFC bank, said it would be a “bad dream” getting money to some rural areas.
A lot of people are going to be trouble, he told news agency AFP.
With the shine of the world on the US election, PM Modi chose to deliver his suddenness announcement in a rare address to the nation hardly three hours before the order to close banks and ATMs came into force.
Once the queues had walk slowly away from the millions of ATMs around the country with now rich 100-rupee bills, the task began of refilling the machines with the new currency.
Trucks landing with cash started delivering the notes the breadth and length of the country.
Almost 90 percent of transactions in India are finish with cash while 500 and 1,000 notes currently account for more than 85 percent of the cash in circulation, according to search firm Capital Economics.
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Last week, the RBI had ordered banks to issue more 100 rupee notes but no one seemed to have seen what was coming.