Currency Chaos

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As Prime Minister Modi shocked India by reducing twin currency notes to mere pieces of paper, Tasavur Mushtaq details the turns and twists of the policy shift at Kashmir’s ground zero

People waiting in a queue in front of J&K bank to exchange their old Rs 500 and 1000 denominations, in srinagar on Thursday 11 November 2016 PHOTO BY BILAL BAHADUR

People waiting in a queue in front of J&K bank counter to exchange their old Rs 500 and 1000 denominations, in srinagar on Thursday 11 November 2016

Hajra Bano, 75, remains glued to corner of kitchen in her multi story house at Hyderpora.  Fighting infirmity and widowed from last many years, she skips her bedroom upstairs. On November 8, Prime Minister Narendra Modi’s TV announcement ‘panicked’ Hajra to the extent that she rushed upstairs, bolted the door from inside. Her daughter-in-law, Saba too ‘fled’ from to her room, leaving behind her husband Ajaz and two small kids. The two women belonging to two generations returned after two hours.

It surprised Ajaz. Prior to Modi speech, he said, Saba was seeking money for winter shopping. Ajaz says his mother was utter surprise. “She doesn’t go out often. I get medicines for her and at times when my kids ask her money for wafers, her reply used to be, do I earn?”

Hajra and Saba, both without bank accounts, handed Ajaz Rs 77000 and Rs 37000 respectively. Unlike Saba, Hajra was nostalgic. “These notes were given to me by my husband till he breathed his last,” Hajra said with moist eyes.  The notes carried signature of six RBI governors. “Memories are with these notes and not with what they will give in exchange.”

notes

Aimed at flushing out the black money and fight endemic corruption, Tuesday decision ruffled many feathers inside Kashmir’s modest homes as well. Secrets of many decades rolled over the floor.

Fayaz Ahmad had gone to fetch bread and milk but returned empty handed as he had only Rs 500 note. So he broke his son’s bigin (earthen piggy bank), recovered Rs 2700 and managed the show.

The decision will have larger impact. Realty prices could nosedive. In Pampore, a land deal worth Rs 6 crore took place before the midnight of the deadline. A dealer paid in cash the whole amount for 5 kanals of the land. In another case, a land broker refused to take back Rs 50 lakh paid as advance for a future deal.

A factory owner was shocked when one of his suppliers, normally claiming to be in cash-deficit, rang him up with one crore advance in cash. When the offer was rejected, the talk settled at a million rupees. “When he counted, it was Rs 10.5 lakh,” a source privy to the “deal” said. “When he rang him up, he laughed it away.”

A North Kashmir trucker cancelled his Delhi trip at the last moment because he lacked kharcha, the travel expense. He used to take a bundle of Rs 500 notes but its demonetization offered him no alternative. “Rs 500 was the main chai paani but my fellow drivers tell me the cops now seek Rs 400 and not a note of Rs 500,” the driver said. “Who will give me Rs 100 notes?”

When rupee tumbled and markets crashed, gold gained. From Rs 23400 per 10 gms to life-time high of Rs 32,300, Mushtaq Ahmad faced the crisis as he had to make the two purchases within three days for his daughter.

Unlike Jammu, Srinagar did not work much. “We have stopped selling,” one trader said, admitting they closed the bullion market. “But if you give in cash and that too in Rs 100 notes, we will sell the gold at old rates.”

demonetization

Termed as ‘master stroke’ by economic experts, the scheme is aimed at hitting multiple targets: hawala traders, terror sponsors, corrupt, black money marketers and political parties especially when elections are round the corner. Apart from improving the financial inclusion, the move will bring in more cash back to the system. It, however, will make the hundi system more acceptable and help the black money reduce the mass – now Rs 2000 note is the highest denomination.

Perhaps one of the biggest banking operations in recent years, all banks have cancelled holidays and added more hours to their daily routine. “We were grappling with the other major issues that currency shift came and it has taken us in a new direction,” a top executive in J&K Bank said. “Initial days are painful but the tensions shall remain till the process concludes by December.”

Banks remained over-crowded. “We had so much of rush that some miscreants felt as if it was a procession so they attacked our branch,” one banker from down-south said. “Part of the chaos is because apple growers have got all in cash from Azadpur because of the uncertain situation back home. They are in real panic.”

On the day 1, banks operating across J&K accepted an estimated cash of more than Rs 1500 crore in their vaults. J&K Bank was in real tension to manage cash: it got slightly more than Rs 1100 crore within J&K of which Rs 250 crore went directly into individual loan accounts, informed sources in government said. The highest came from central Jammu zone: Rs 274 crore. Kashmir coughed up only Rs 490 crore. Even the in-house branch of civil secretariat got Rs 4 crore. “We really had to beg them to take it,” one banker admitted, insisting “by afternoon, we had no space.”

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