Farmer suicide, banks call in police as India moves to ditch banknotes

A farmer in southern India committed suicide fearing she would be left penniless after the government’s shock decision to withdraw high denomination notes from circulation, police said Thursday. Indian banks called in thousands of police on Thursday to manage huge queues outside branches, as people tried to exchange bank notes abruptly pulled out of circulation by Prime Minister Narendra Modi in a crackdown on “black money”. Modi announced the shock move on Tuesday night to ditch Rs500 and RS1,000 notes - worth a combined $256bn - that he said were fuelling corruption, being forged and even paying for attacks by Islamist militants against India. Some people frustrated by the long wait got into arguments at Canara Bank near the parliament building in New Delhi, as people barged into queues that wound through the branch and on to the street outside. Economists and some businesses, especially those involved in cashless payments, have welcomed the “demonetisation” scheme as a vital step towards broadening the formal economy and improving tax compliance. But it has disrupted the daily lives of hundreds of millions of Indians who live in the cash economy that is estimated to account for a fifth of India’s $2tn gross domestic product and who have low confidence in banks or plastic cards.

Farmer commits suicide

A farmer in southern India committed suicide fearing she would be left penniless after the government’s shock decision to withdraw high denomination notes from circulation, police said Thursday. Kandukuri Vinoda, 55, had a large amount of cash at her home in Rs1,000 and Rs500 rupee notes and panicked that her savings had become worthless when she heard Prime Minister Narendra Modi’s surprise announcement on Tuesday. Vinoda from Mahabubabad district, east of Hyderabad city, had sold some land last month and was paid around Rs5.5m for it in cash. She used some of the money to pay for her husband’s medical bills and planned to use the rest to buy a new plot of land, local media reported. Many Indians living in rural areas keep large amounts of cash at home because of a lack of banks in remote areas and to avoid paying taxes.

Cash crunch

Although a few people were able to exchange their old money for new notes, there were strict caps on account withdrawals and most came away with bundles of lower-denomination bills. People were allowed to make a one-time exchange of 4,000 rupees in cash and one-time account withdrawals of Rs10,000, capped at Rs20,000 per week. Cash dispensers remained closed and were due to reopen on Friday.