Rupee note cancellation pushes India into panic

Sudden withdrawal of high-denomination notes from circulation pushes desperate customers to throng banks Indian government’s sudden announcement regarding withdrawal of high-denomination of currency notes pushed Indians to turn to Google for help. How to convert black money into white money’ was trending on the search engine, soon after ban on 500 rupee and 1,000 rupee worth around £6 and £12 notes, rendering 86%t of currency in circulation worthless. Most of the searches on Google were from Modi’s home state of Gujarat, Google Trends show, a region known for its entrepreneurial spirit, small traders and jewelers that form the power base of the ruling Bharatiya Janata Party.
Maharashtra, which includes the financial hub Mumbai, came in second followed by Haryana, which has been in the news over the past months for controversial real estate deals including some with alleged links to the main opposition Congress Party.
The property sector became the hardest hit from Modi’s move, brokerages including CLSA Asia-Pacific Markets, Credit Suisse Group AG and Nomura Holdings Inc. predicted. The S&P BSE India Realty Index, comprising 11 property stocks, plunged as much as 16.5% on Wednesday, the biggest drop since 2009.
In fact, if you amend the Google Trends query to “how to convert black money,” Haryana tops the list with Gujarat close behind. Other states asking the same question include Punjab, which is due to hold elections early next year, and the capital Delhi. Unexplained cash often crops up at election time to bribe voters.
Overall, Indians sought more information about the government’s planned new currency notes that include better security features. Questions on these were among the top five searched topics for Google from India on Tuesday. India has 277 million internet users, the world’s largest after China, according to the 2016 Internet Trends report by Kleiner Perkins Caufield & Byers. Google India didn’t immediately respond to an e-mail seeking comment.
Indians were urged not to rush to banks, as they would have until the end of 2016 to deposit cash in their accounts. But with the high-value notes withdrawn in an effort to combat corruption, black-market trade and tax evasion, many were left without cash for day-to-day expenses. ATMs remained closed, so currency was only available from the banks. Newspapers around the country reported long queues at branches, as people scrambled to exchange their high-value banknotes for 100-rupee bills.
At the Churchgate branch of the Bank of India, people queued in the midday heat, filling out deposit forms as a security guard barked instructions. Life was completely paralyzed as there was no money in the house and even the people were not able to buy a cup of tea and could not go to work for short of cash.
Shops, train stations, and taxis stopped accepting 500- and 1,000-rupee notes, interrupting normal trade. Even hospitals, which were exempt from the immediate demonetization, turned down payments in high-value banknotes. In rural areas especially, where around two-thirds of India’s 1.25 billion population live and access to banks is difficult, announcement caused chaos as people termed the decision as the worst saying they should have given us more time.
Analysts observed that the surprise move could hurt the Indian economy in the both the near-term and long term. By nature Indian shadow economy is hard to quantify; however, a2010 World Bank-sponsored study estimated it was equivalent to around a quarter of the country’s GDP.

Newsletter SignUp