India PM’s mother exchanges defunct currency

Indian Prime Minister Narendra Modi’s mother exchanged money at a bank in Gujarat state on Tuesday after the country banned high-denomination currency notes.

Heeraben Modi, 97, arrived at the bank in the village of Gandhinagar, accompanied by her relatives.

She exchanged 500-rupee notes (7 US dollars) for a new 2,000-rupee note (29 US dollars).

In total, she exchanged 4,500-rupees (66 US dollars), which is the maximum amount a person can exchange.

Additionally, Indians can deposit old currency bills into their bank accounts before 30 December.

Last week, Narendra Modi announced in a surprise night time TV address that all 500 and 1,000-rupee notes, worth about 7 US dollars and 15 US dollars, would be withdrawn immediately from circulation.

Modi says the move is designed to fight corruption and target people who have been dodging taxes by holding immense stockpiles of cash, known in India as “black money”.

In a nation hobbled by corruption, and where less than three percent of people file tax returns, the plan at first earned widespread approval.

But as the days ticked by, it became increasingly clear that the government was ill-prepared for a plan that suddenly pulled 86 percent of the country’s money supply out of circulation.

Families began hoarding small-denomination currency, merchants reported plummeting business and salaries went unpaid.

Many businesses were refusing to accept the only new note rushed into circulation, worth 2,000 rupees, because they were unable to make change for it.

The government says it’s also trying to get new 500-rupee bills into circulation, but they remain rarities. -AP