NEW DELHI/MUMBAI, November 10 (Reuters): 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 500 and 1,000 rupee notes - worth a combined $256 billion - that he said were fuelling corruption, being forged and even paying for attacks by Islamist militants against India. Lines formed before banks reopened after being shut on Wednesday to prepare for the change, as people tried to swap the worthless cash for smaller bills or new 2,000 rupee notes being rushed into circulation and made to be harder to counterfeit. 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. “Why is there no-one here to manage anything?” shouted one man, as he jostled with others in the line. Branch manager S.K. Verma, unable to get through to the local police station, called an emergency hotline for help. “I want two policemen deputed outside my branch!” he said. Twenty police stood outside a nearby outlet of the Reserve Bank of India, the central bank, letting in customers a few at a time. 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 10,000 rupees, capped at 20,000 rupees per week. Cash dispensers remained closed and were due to reopen on Friday. It was the same story for senior bureaucrats in the capital’s government district and daily labourers in Old Delhi, where youths reserved places in lines to earn some cash. Trading of farm commodities around the country was disrupted for the second day on Thursday and in many markets farmers were struggling to sell their produce. Prices of perishable fruit and vegetables have fallen by up to a quarter as traders were unable to sell them to vendors, who pay in cash. “Most transactions of farm commodities are conducted in cash and since cash is not available we are not able to sell,” said Rohan Ursal, a trader based in Pune in the western state of Maharashtra. CLEANER SYSTEM In television interviews, Finance Minister Arun Jaitley defended the switch, saying India was moving to a “cleaner system”, and rebutting criticism that the government was resorting to arbitrary and authoritarian methods of running the economy. But he said it would take two or three weeks for new 500 and 2,000 rupee notes to be put into circulation, replacing old notes worth 17 trillion rupees ($256 billion) that can be exchanged until December 30. One economist said that Modi, by fixating on black money in the form of physical cash, had failed to recognise how tax evasion and financial crime works - for example by under-invoicing to create illicit wealth, using informal hawala networks to move offshore or buying gold and real estate. “This very conception of ‘black money’ is absurd,” left-leaning economist Prabhat Patnaik wrote in The Citizen, an online daily. Deposits above Rs 2.5 lakh to face tax plus, 200 per cent penalty on mismatch New Delhi, November 10 (PTI): Further dangling the stick, government on Wednesday night warned that cash deposits above Rs 2.5 lakh threshold under the 50-day window could attract tax plus, a 200 per cent penalty in case of income mismatch. “We would be getting reports of all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account. The (tax) department would do matching of this with income returns filed by the depositors. And suitable action may follow,” Revenue Secretary Hashmukh Adhia said on Wednesday night. Any mismatch with income declared by the account holder will be treated as a case of tax evasion. “This would be treated as a case of tax evasion and the tax amount plus a penalty of 200 per cent of the tax payable would be levied as per the Section 270(A) of the Income Tax Act,” he said. ‘New Rs 50, Rs 100, Rs 1,000 notes soon’ New Delhi, November 10 (IANS): After demonetisation of Rs 500 and Rs 1,000 banknotes, the government on Thursday said new Rs 50 and Rs 100 notes, having new design and security features, will soon be issued without withdrawing the existing ones. “Design of Rs 50 and Rs 100 notes will also be changed. These notes with new design features will be slowly infused (into the system),” Economic Affairs Secretary Shaktikanta Das told reporters at the two-day Economic Editors’ Conference that started here on Thursday. “The existing Rs 50 and Rs 100 notes will continue to be legal tender,” he added. Das said new Rs 1,000 denomination notes having new design and security features will also be issued soon. New notes of Rs 500 and Rs 2,000 denomination are being issued starting Thursday in banks and post offices. No new Rs 1,000 notes are being issued immediately. All banks have been directed to work for 12 hours on Thursday, Friday, Saturday and Sunday to clear the rush of desperate customers for exchange transactions and, if required, remain open even next Sunday (November 20). Old Rs 500, Rs 1,000 notes can be used for utility payments New Delhi, November 10 (IANS): Old Rs 500 and Rs 1,000 notes can be used by people towards making payment for utility services like water and electricity till November 11 midnight, the Finance Ministry said on Thursday. “Such old notes to be accepted for payment of utility charges like water and electricity till November 11 midnight. Records to be maintained,” Economic Affairs Secretary Shaktikanta Das said in a tweet. The old Rs 500 and 1,000 notes will also be accepted for payment of fees, charges, taxes, and penalty to central and state governments, including municipalities and local bodies, Das tweeted. A government notification had earlier said that the old Rs 500 and Rs 1,000 notes can be used for making payments in government hospitals, pharmacies in government hospitals, at railway ticketing counters, ticket counters of government or public sector undertaking buses and airline ticketing counters at airports for purchase of tickets till November 11. The notification specified that all establishments allowed to carry transaction till November 11 will have to maintain a complete account of record of stock and sale of transactions made with old Rs 500 and Rs 1,000 banknotes.
