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India's Currency Crisis: Friday is the deadline to exchange old notes



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friday marks the deadline for people in

india to exchange old rupee notes for

nuance prime minister narendra modi band

high denomination notes in an effort to

eliminate corruption and tax evasion but

the key is outside banks remain long and

some economists say it's already having

a negative effect on the nation's

economy while the band 500 and 1000

rupee notes represented eighty-six

percent of the currency in circulation

the government says banks have received

about a hundred and eighty billion

dollars worth of rupees since the

process began the United Nations

estimates that there are 16 million

Indians living abroad many of them don't

have special accounts to deposit the

band currency and many international

branches of their banks no longer accept

it let's go to TRC wells as US secrete

now to get more on the story as I what

exactly is all this about I mean how

does Modi hope to eliminate corruption

by banning these notes yeah what you

have to remember Marlene is that a lot

of the transactions and found most of

the transactions that happen in India

take place with cash and that opens up

all sorts of avenues for people to not

declare you know taxable income to bribe

officials all that sort of thing before

we go on let me actually show you one of

the new two thousand rupee notes that

has come into circulation or that will

be coming into circulation this two

thousand rupee note is worth about

twenty nine US dollars but in fact most

people in India use you know one of

these a 100 or 50 rupee note which is

you know far more used and much more

commonly used and so you know what you

have to remember of course is that yes

this is having a major impact on the

economy Aaron Jaitley though the finance

minister saying that taxation direct and

indirect taxes have been have gone up

enormously and but earlier we spoke to

Aaron Kumar who's an economist and a

leading author on corruption in India

and he says that the Indian economy will

take a big hit let's have a quick lesson

to what he had to say actually it is the

wrong idea but black cash does not mean

black income and black eyes only one

person at wealth so therefore

conceptually it was incorrect and then

implementation what they should have

done is they should have had currency

available right from the start so they

should have been printing currency for

the last seven eight months before

implementing this step so without cash

what happens in circulation they call me

stocks and the entire economy starts

collapsing and that is what you see in

the last fifty days that the economy

especially of the poor people and the

unorganized sector in the informal

sector that economy has been hurt very

badly and that's why the rate of growth

of the economy is slowing down so the

unorganized sector with ninety-four

percent of the workforce and employed

they are being hit very badly and that

includes agriculture small producers

traders you know various people in the

services sector in the unorganized

sector they are hurting badly because we

don't have cash and that's why we are

not able to carry forward and that is

leading for unemployment amongst them

and that aggravates poverty and hunger

so in other words the prospects for the

unorganized sector as it is thought or

what you call the informal sector that

is rather poor at this moment other so

obviously short-term pain as a result of

this move I wonder what the situation is

going to be like long term I mean has

this sort of policy been used elsewhere

it's very rare historically speaking for

governments to do this and usually when

governments do this their economy it's

just already completely collapsed good

examples have been sim Bob way for

example a couple of years ago they tried

to do this their inflation rate was

running in the millions Venezuela

recently has tried to do this and it's

failed miserably because they hadn't

been able to get simply enough cash out

to people but India's in a completely

different situation it's one of the

best-performing emerging market

economies in the world right now it's

actually outperforming China

matter of fact so for the government to

try and do this at this stage of India's

development is quite alarming for a lot

of economists and a lot of investors

okay many thanks for that as I'll sorry

there for us