Take noteThe Indian government’s sudden announcement last week to demonetise Rs500 and Rs1,000 Indian currency (IC) notes has been hailed by many in India as a “masterstroke” against rampant corruption, terror financing and counterfeit currency.
The Indian government’s sudden announcement last week to demonetise Rs500 and Rs1,000 Indian currency (IC) notes has been hailed by many in India as a “masterstroke” against rampant corruption, terror financing and counterfeit currency. Fighting these crimes were part of the ruling BJP’s campaign promises in the 2014 Indian general election. Critics, on the other hand, argue that the decision lacked adequate preparation and needlessly created panic, especially among the rural poor who are not part of the electronic economy.
Nepal has had to face collateral damage. As there is a high circulation of IC in Nepal, the move continues to have ripple effects here. Prime Minister Pushpa Kamal Dahal on Monday urged his Indian counterpart Narendra Modi to make arrangements such that Nepalis holding the banned Indian notes can swap them with legal bills in Nepal. Modi is said to have assured Dahal that he would immediately resolve the issue and ask his finance minister to hold talks with his Nepali counterpart. Our government should continue working closely with the Indian government to minimise the difficulties that the decision has created here.
Immediately following the Indian government’s announcement, the Nepal Rastra Bank (NRB) also banned the use of those bank notes in Nepal. IC 500 and 1000 bills were illegal in Nepal until two years ago. But current Nepali law allows its citizens to hold up to IRs25,000 in the denominations of 500 and 1000. Now there is IRs33.6 million in those denominations within Nepal’s financial system, according to the NRB.
This amount, however, does not include the scrapped Indian notes held by hundreds of thousands of Nepalis who use Indian markets to buy daily essentials, engage in cross-border trade, earn a living by working as
daily-wage labourers in India or visit the southern neighbour for medical treatment or for a pilgrimage.
The Indian government has said that those with accounts in Indian banks do not have to worry as the financial institutions will provide them with a currency exchange facility. But the fact of the matter is that many Nepalis who own the banned notes do not have bank accounts, let alone in Indian banks. Many migrant workers carry Indian notes back to Nepal, as they cannot remit more than IRs50,000 a year. It is primarily for this underprivileged constituency hard hit by the decision that the Nepal government should ensure trouble-free currency-exchange facilities.
It should accord due urgency to the task as the Indian government has set a deadline of December 30 to deposit the scrapped notes at banks. It would be a tragedy if ordinary people lost their savings because the two governments could not make the necessary arrangements to exchange currency.