In what could be termed as an unprecedented move, Prime Minister Narendra Modi on Tuesday added a lethal edge to India's fight against black money by announcing that the currencies in the denominations of Rs 500 and Rs 1,000 will be invalid when the clock strikes 12 midnight of 8 November.
The move was announced in a sudden address at 8 pm that was televised across all news channels when the frenzy was otherwise with the US presidential polls.
The demonetisation of Rs 1,000 and Rs 500 notes is a major assault on black money hoarders, fake currency, and corruption.
In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1,000 "will not be legal tender from midnight tonight" and these will be "just worthless piece of paper."
However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid.
He also announced that new notes of Rs 2000 and Rs 500 will be introduced.
ATM withdrawals will be restricted to Rs 2,000 per day and withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week.
Banks will remain closed on Thursday and ATMs will also not function tomorrow and day after, Modi said.
He expressed confidence that the staff of banks and post offices will rise to the occasion to introduce the new order within the available time.
He also expressed confidence that political parties, workers, social organisations and the media will go further
than the government in making it a success.
The prime minister said that black money and corruption have not only been affecting the Indian economy but has also helped finance terror activities been helping finance terrorist activities, and the new rule will help bring down both.
Modi, however, clarified that the citizens will be able to deposit old notes of Rs 500 and Rs 1,000 at post offices and banks of their choice.
"The public will have 50 days time between 10 November and 30 December to deposit old notes of Rs 500 and Rs 1,000 after showing a proof of identity," he said. The accepted POI documents include Pan Card, Aadhaar Card, Voters ID Card, Driver's License and Passport.
The exchange of old notes, however, will be limited to Rs 2,000 between 10 and 24 November, and it will be increased up to Rs 4,000 between 25 November to 30 December.
However, government hospitals, pharmacies in government hospitals, airline ticket counters, bus ticket counters, railway ticket counters and petrol pumps will accept old notes for the next 72 hours, ie, till midnight 11 November.
Besides depositing money in bank accounts, the Rs 500 and Rs 1,000 notes can also be exchanged with lower denomination currency notes at designated banks and post offices on production of va id government identity cards like PAN, Aadhaar and Election Card from 10 to 24 November with a daily limit of Rs 4000.
Those unable to deposit Rs 1,000 and Rs 500 notes till December 30 this year can do so in designated RBI offices till 31 March next year after filling a declaration form along with proof and reasons, the Prime Minister said.
Rs 500 and Rs 1,000 notes will be valid for transactions related to booking of air tickets, railway bookings,
government bus ticket counters and hospitals till the midnight of 11 and 12 November.
"Banks will be closed tomorrow. It will cause some hardship to you....Let us ignore these hardships... In
country's history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life," Modi said.
The government has also implemented a daily limit of Rs 2,000 on ATM withdrawals, which will be increased to Rs 4,000 at a later stage.
The Prime Minister emphasised that there is no restriction on any kind of non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.
In his address, PM Modi shared the insight into how the magnitude of cash in circulation is linked to inflation and how the inflation situation is worsened due to the cash deployed through corrupt means. The Prime Minister added that it adversely affects the poor and the neo-middle class people. He cited the example of the problems being faced by the honest citizens while buying houses.
The very first decision of the Modi-led NDA government was the formation of a SIT on black money.
A law was passed in 2015 on disclosure of foreign bank accounts. In August 2016, strict rules were put in place to curtail benami transactions. During the same period a scheme to declare black money was introduced.
PM Modi in course of his address said that over the past two and a half years, more than Rs 1.25 lakh crore of black money has been brought into the open.
Prime Minister Narendra Modi has time and again raised the issue of black money at the global forum, including at important multilateral summits and in bilateral meetings with leaders.
While focussing on the greener spots on the Indian economy, the Prime Minister said that the efforts of the government have put India as an emerging country to grab a bright spot in the global economy.
Soon after the address by PM Modi, in another press conference the Department of Economic Affairs, secretadry Hasmukh Adhia said, "New notes of Rs 500 and Rs 2,000 with greater security features and design will be circulated from 10 November."
"Rs 500 notes circulation up 76% from 2011 to 2016 and Rs 1,000 notes by 109 percent as against 40 percent rise in all currency notes," he said.
With inputs from PTI