I thought I would give a brief, first hand account of what life is like in India after demonetization. For those who haven’t been kept up to date, three weeks ago the government declared all 500 and 1000 rupee notes (about 85% of the country’s currency) void as legal tender, making a population of over 1 billion people almost completely penniless overnight. Businesses and stores closed, but the ones that remained open immediately (even though a deadline of Dec 30 was set)refused to accept the old currency. This made the 100 rupee note, about 1.5 US dollars the largest note of Indian currency! Riots began and many people, stranded with only 500 and 1000 notes, couldn’t buy anything because their money was essentially worthless.
How and why did this happen? Well there was and is a lot of talk about tax evasion and counterfeiting in the newspapers and on the streets but I don’t think anyone really knows why. Personally, from my experience with Indian culture, my guess is that someone up at the top in government made a mistake and now everyone has to suffer. But as to what really is going on, I am not sure anyone really knows.
Immediately after, a state of panic ensued and overnight select banks started stocking large quantities of smaller denominations and a new 2000 rupee note. As news quickly traveled millions of Indians que’ed in long lines to exchange their worthless currency.The thousands of ATM machines around the country would offer no hope as these too were filled with the void currency. Banks, not being able to stock enough money for the demand, quickly closed and thousands of people could do nothing but wait.
It was about this time, when things couldn’t get any worse that my brother and I entered India from Bhutan. I had read a headline from a newpaper article a day or two before but was completely unaware of the chaos which we were about to be engulfed in.
At the border everyone was trying to get rid of their 500 and 1000 notes, so we ended up entered India with no rupees. Luckily we found a local Bhutanese driver who would take us to the nearby train station, accepting payment in Bhutanese nultrums. My brothers first impression of India was remote country farms and small cities filled with people waiting in long lines at the bank. When we arrived at the train station, it was already afternoon and after seeing the lines at the bank I wasn’t sure if we could get money in time for our departing train. I decided to tell our driver to take us all the way to our planned destination, the states capital, Guwahati.(This move would save both my brother and I from being stranded for many days at the train station). (Not completely aware of the extent to which the demonetization situation had affected banks and ATMS, I told the driver that I would pay him in rupees once we found an ATM at a large bank).
Hours later, in our small minivan almost out of gas because the driver also didn’t have any money, we arrived in Guwahati. The lines at the banks were worse than in the countryside but being a foreigner I was able to cut to the front and ask the teller where I could find an ATM. The man almost laughed in my face and told me that; all ATMS countrywide were closed for the next 3 days (while they were removed of the void currency) and that no banks would exchange USD for rupees. With no money and almost no gas I asked the drive to take us to the nearest 4 star hotel, thinking that maybe they could help us. Luckily they accepted credit cards, so we were able to get a room and eat in the restaurant. They did not however exchanged USD and even if they did the hotel also did not have any money!
The driver was completely stuck, he had no money to buy gas and I had no rupees to pay him.He kept telling me that he was tired and wanted to go home so I asked him what he wanted to do. No response! There was an ATM down the street that had a line as long as I had ever seen so I told them to wait in line and if we were lucky he could call me when they got to the front and I would withdraw cash for him. He didn’t want to do this, and instead wanted to wait in the lobby for something to happened. Eventually I got annoyed and paid them off in USD; I felt bad but had to turn my back on him because he didn’t seem to have a clue what to do, and I was tired. Somehow he made it back the the Bhutanese border, because later I was told by reception that he had left.
My brother and I would then spend the next 3 days in Guwahati staying in the hotel, search out ATMS and waiting in long lines hoping that the cash would last. On several occasions we waited for hours only to be turned away close to the front by a machine out of money. Several times we witnessed heated arguments as people tried to use several cards to withdraw more money. The working machines were set to a withdrawl limt of 2,000 rupees, and with the new 2,000 rupee note not yet in full circulation the machines dispensed denominations of 100 which were quickly depleted. We were lucky though, we had a place to sleep and could by food at a nearby super market with a credit card. Many others would not be so lucky and each morning I read accounts of paitents who died in the hospital because the doctors wouldn’t accept the old currency.
The newspapers were also full of corrupt stories where days before the demonetization was announced people started buying up large stock piles of I-phones and computers. One article told of how, the day before the demonetization occured, a man paid his employees a year’s advance salary in soon to be void currency. I can only imagine the impact this is having on the country, as farmers complain that they can’t buy seeds to plant next years crop.
After three days my brother and I were finally able to get enough money from ATMs and exchange through our rental car company to depart on our journey to Arunachal Pradesh. We had a great trip and learned how to drive a car Indian style! Absolute madness!!
I am slowly making my way south and will be flying back to the states for Christmas. Will post again soon with current details, I just wanted to get this one out while the inconvenience of demonetization is still part of daily life in India.