Rs 500, Rs 1,000 banned: Mumbai shifts to credit mode as major cash turns trash

A day after Prime Minister Narendra Modi suddenly announced the ban on Rs 500 and Rs 1,000 notes effective 12 am on 9 November 2016, the country’s business capital Mumbai was ushered into a territory of utter chaos. [caption id=“attachment_3096124” align=“alignleft” width=“380”]  PM Modi decided to discontinue the existing Rs 1,000 and Rs 500 currency notes with effect from midnight on 8 November. PTI[/caption] Petty traders dealing with flowers, fruits, dairy products, bakery goods, vegetables and other perishable goods particularly at the wholesale markets in Dadar and Vashi literally junked cash transactions and opted for the credit mode to tide over the crisis rather than accept void denominations of Rs 500 and Rs 1,000. Mumbai had faced a similar situation in 1978 when the then government at the Centre under prime minister Morarji Desai took the same sudden steps to battle the menace of black money. Talking to Firstpost, flower shop owner from Jogeshwari Guru said, “I am doing business since the last 40 years. I have dealt only in cash so far but for the first time today I received my consignment of flowers and other things worth Rs 5,000 completely on credit. I purchase flowers from the same farmer and the agent has not asked for money today. He will give me credit for next three days as well.” Andheri milk vendor Sunil Rasam was forced to run his business by offering stuff to his customers on credit. “Many customers in the morning came with Rs 500 note. I had no choice but to give milk to my regular customers on credit to manage the cash crisis,” he said. But many people who were travelling were caught completely unaware by the sudden abolition of Rs 500 and Rs 1,000 notes. “I had withdrawn Rs 5,000 from an ATM yesterday. Today the situation is such that I can’t even buy a cup of tea. All I have is Rs 500 currencies,” Satyawan Shinde, who is on holiday at Pandharpur from Mumbai, said. Earlier in the day the sudden scrapping of Rs 500 and Rs 1,000 led to serpentine queues in toll booths on highways across the country as the staff was unwilling to accept any denomination beyond Rs 100. Contrary to the Prime Minister’s announcement, the petrol pumps in Mumbai were not keen to accept the abolished currencies. In Mahim, the main petrol pump remained closed. “We have sufficient fuel but to avoid accepting invalid currency notes the owner put out a board saying we are out of stock,” said an employee of the petrol depot. Major traffic logjams were noticed in the entry and exit points to the city as the octroi tax collection almost came to a standstill due to the paucity of Rs 100 notes. “The repair shops, loading and unloading charges and all transports across Mumbai and the state are affected due to this. All operations are in a standstill and huge losses are occurring at the same time. The deliveries have been affected,” said Bal Milkhit Singh, the former president of All India Motor Transport Congress. He said that there are 80 lakh loaded trucks and tempos in the country out of which only 20 percent are on the road. The expenses like toll, diesel, food and other expenses are usually done on cash basis. “There is no online facility in the transport section. Mostly, the drivers and cleaners are illiterate. They can easily use the cash for their daily transaction,” he said. Following the chaos, the National Highways Authority of India chairman had initially instructed all toll plazas to accept old Rs 500 and Rs 1,000 notes till 11 midnight. However, Union Minister Nitin Gadkari reversed that order and said that no tolls would be collected till 11 November midnight. The government also said that the banks would remain open on Saturday and Sunday.