Modi defends cash ban, announces incentives

-File photo -File photo

Indian Prime Minister Narendra Modi on Saturday defended his government’s decision to demonetise the country’s highest-value currency bills last month in an unusual New Year’s Eve message to the nation.

Modi called India’s massive demonetisation drive, which withdrew 86 percent of the country’s currency bills from the system, a move necessary to to cleanse the system of tax evasion and corruption.

The prime minister went on to laud the people of his nation for their “infinite patience” in bearing with the upheaval.

The prime minister on 8 November announced to the nation that the government was withdrawing 500- and 1,000-rupee bills as legal tender in order to crack down on the country’s massive amounts of “black money”, or untaxed wealth.

The deadline for exchanging or depositing the old currency in bank accounts passed on Friday.

When the government announced its demonetisation plans, it also announced a cap on the amount of money people could withdraw from cash machines and bank accounts, while the central bank printed new currency bills to fill the gap created by the erasure of a majority of the country’s notes.

At that time, Modi said that by 30 December, normalcy was likely to return.

However, the Reserve Bank of India on Friday announced that it would continue to control how much money people can withdraw for now.

Since the announcement that the old high-value bills were no longer legal tender, banks and cash machines saw massive lines of people.

A majority of Indians earn and spend in cash, either due to habit or because they’re too poor to have access to banks.

In his speech on Saturday, Modi said that his government hoped that banks will get back to normal business as soon as possible, but gave no deadline for that.

He also announced rebates on home loans for low income earners and tax incentives for small and medium business owners.