Invalidity of 500 and 1000 rupee notes -7 things you should know
So long, there was a perception that the Government’s response to address the issue of Black Money was piecemeal and inadequate. There is no doubt that manifestation of Black Money in social, economic and political space of our lives has a debilitating effect on the institutions of governance and conduct of public policy in the country.
This wealth may consist of income generated from legitimate activities or activities which are illegitimate per se, like smuggling, illicit trade in banned substances, arms trafficking, terrorism, corruption etc. However, generation of Black Money is through some of the methods such as out of book transactions, under reporting of production, manipulation by way of international transactions through associate enterprises, also generation is through some vulnerable sections of the economy added with land and real estate transactions domestically.
Prime Minister Mr. Narendra Modi’s announcement on the 8th November 2016 declaring the invalidity of the high denomination notes of Rs.500 and Rs.1000 is a brave measure in curbing black money. High denomination notes are known to facilitate generation of black money. In this connection, it may be noted that while the total number of bank notes in circulation is stated to have risen by 40% between 2011 and 2016, the increase in number of notes of Rs.500/- denomination was 76% and for Rs. 1,000/- denomination was 109% during this period. 1
The following are the major highlights of the Press Release dated 08.11.2016 of the Department of Economic Affairs:
- All ATMs, Cash Deposit Machines, Cash Recyclers and any other machine used for receipt and payment of cash will remain shut on 9th and 10th November, 2016.
- Withdrawals from ATMs would be restricted to Rs. 2,000/- per day per card up to November 18, 2016. The limit will be raised to Rs. 4,000/- per day per card from November 19, 2016 onwards.
- In case of medical emergencies etc. For first 72 hours from November 8 midnight i.e. till 11 November midnight government hospitals will accept these old notes, pharmacies in government hospitals will accept these notes with Doctor’s prescription.
- For first 72 hours, old notes will be accepted at petrol, diesel and CNG stations authorized by public sector companies, milk booths, crematoriums, and government co-operative stores.
- Cash withdrawals from a bank account, over the counter will be restricted to Rs. 10,000/- subject to an overall limit of Rs. 20,000/- in a week for the first fortnight, i.e., until the end of business hours on November 24, 2016.
- Old High Denomination Bank Notes may be deposited by individuals/persons into their bank accounts and/or exchanged in bank branches or Issue Offices of RBI till the close of business hours on 30th December, 2016.
- In case old notes are not deposited by 30th December, there is a possibility of exchanging old notes at designated offices of the RBI after submitting a declaration form and showing individuals/persons ID cards until 31st March 2017.
- Press release dated 09.11.2016, Department of Economic Affairs ↩