In a last-minute press conference on Tuesday, Indian Prime Minister, Narendra Modi, announced that the Indian government would de-monetize the ₹500 ($7.40) and the ₹1,000 ($14.80) rupee notes to prevent the rise of the corruption and tax evasion the country had been facing. New ₹2000($30) notes and ₹500 notes have been issued.
Overnight, throngs of people lined up at crowded banks to exchange their notes, which caused mayhem in an already on-edge Delhi, facing severe pollution for weeks since the Diwali holidays.
There have been stampedes and reports of fights breaking out as the ATM's are running out of money. People are restless, staying for long hours in lines and angry. They only have until Dec. 30 to exchange all the notes, and are only allowed to exchange ₹4,000 per day, which is only $60.
So if you have more than that kept at home, which many people in India do, in order to avoid taxes and because of the many rural areas that Indians live in, which aren't near the banks, exchanging ₹4,000 a day for the total amount they could have is unrealistic.
The elderly and sick who have had cash saved up to pay bills avoid going to banks because of poor health. Now they can no longer use many of the notes.
Every time people exchange large amounts of cash they will have to declare it to tax authorities.
Banks are struggling to dispense money and many banks have run out of the new notes. Lines are so long that people have vandalized bank property and paramilitary troops have had to be stationed at banks across India.
Huffington Post India, reported that the Bollywood industry has been affected heavily by the new monetary funds. Films like "Saansein" and "30 minutes" have been postponed. Employees across the country who get paid in cash, haven't been paid on time, and are struggling to get by already.
In India, which has such a huge population living in poverty, many citizens don't have credit cards and don't even keep money in the banks. Imagine the thousands of impoverished people who have notes saved and now, overnight, they're no longer accepted. Many are saying the sudden change has left them with without anything to eat. Many stores and restaurant owners are refusing to take the old bills.
Rakesh of Lucknow, India said he needed to get to get medicines for his wife, with money he had saved up, and pharmacists are refusing to take the old currency, too.
Foreigners visiting the country, who exchanged their currency before the news, are now stuck encountering the long lines, and struggling to exchange, as well.
Black money is said to account for 20% of India's GDP. The 500 and 1000 rupees notes make up 80% of cash circulation.
According to Sky News, Prime Minister Modi said another reason for the change was that the old rupee notes were being forged and used to pay for attacks by Islamist militants.
Although economists say the new development will have a positive effect on the Indian economy over time, people who rely on a few notes day to day are having a hard time getting by. They're broke and hungry because shop owners are refusing to take the old notes.
Imagine you have a big bill to pay in two weeks, you won't be left with enough cash to pay it, and now there's a monetary drought.
Modi's administration said that the demonization needed to be kept a secret for the reason that they didn't want to give money launderers any time to save themselves if they were illegally hoarding money.
Tensions are continuing to get worse. The more time that passes by, the less money there is for distribution within the cut-off time.
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