The Prime Minister said, “All of us have to work shoulder to shoulder and create a prosperous, inclusive and corruption-free India." Modi on Tuesday night announced that high denomination notes of Rs500 and Rs1,000 will no longer be legal tender to fight against black money and corruption.
On Wednesday, reactions flowed in thick and fast on the government’s demonetization move.
Allow high denomination currency for wedding expense: UP CM
Uttar Pradesh chief minister Akhilesh Yadav on Wednesday asked the Centre to allow high denomination currency for expenditure in upcoming marriage season, even as the state police has been asked to keep vigil near banks to maintain law and order after the decision to scrap Rs500 and Rs1000 notes. The chief minister also urged the Centre to ensure that the decision did not have any adverse impact on the poor, farmers and villagers.
Akhilesh, who is heading the Samajwadi Party government in the poll-bound state, said the Centre should arrange special camps in villages for exchanging existing currency notes saying banks were not easily accessible in the rural areas. The opposition has termed the Centre’s step as hasty and ill-timed coming in the season of harvest and marriages.
Uttar Pradesh police was alerted to maintain strict vigil near banks and other places to maintain law and order. Director general of police (DGP) Javeed Ahmad has issued directives to all district police chiefs stating that there may be serious law and order issues after the announcement. “Patrolling and visibility (of force) should be there at market areas, near banks, post offices," additional superintendent of police in DGP’s office Rahul Srivastava said.
He said police officers have been directed to talk to traders bodies and petrol pumps and keep an eye on situation in rural areas. The situation became difficult for commuters this morning with many petrol pumps closing down claiming that they were out of stock, while in shops, customers were turned away by traders, who were not ready to accept notes of Rs500 and Rs1,000 denominations. Police has been deployed at petrol pumps to control the crowd. After the announcement caught people by surprise, long queues were seen at ATMs and petrol pumps last night.
Bihar CM supports Modi’s decision
Bihar chief minister Nitish Kumar “welcomed and supported" Centre’s decision to withdraw ₹ ,000 and ₹ 500 currency notes saying it would help country’s economy in the long run
Deposits of old notes in banks won’t enjoy tax immunity: Arun Jaitley
Union finance minister Arun Jaitley on Wednesday said deposits of now-defunct old Rs500 and Rs1,000 currency notes in bank accounts will not enjoy immunity from tax and law of the land will apply to unearth the source of such money. A day after the government announced the withdrawal of Rs500 and Rs1,000 banknotes in the country’s biggest crackdown against black money, corruption and counterfeit currency, Jaitley said old higher-denomination currency notes have to be deposited in bank accounts to get newer or smaller denomination currencies.
“But it should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. The law of land will apply (on source of fund)," he said. “If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about," Jaitley said. But if it is illegal money, source will have to be disclosed and if it is a crime money, or bribe money, then it is trouble, he told DD News. He added that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.
“The small amounts that people will deposit like Rs25,000, 30,000 or 50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks," he said. The finance minister said for first one or two weeks replacements may be less but after 2-3 weeks as more currency notes come in market then normal replacement will be available. The move would help make more and more transactions become digital, he said, adding now people will disclose income and pay taxes. “India will become a more tax compliant society." Jaitley said that people who have accumulated black money, crime money or bribe would suffer after this. “There is a premium now that this decision has created on honesty and dis-premium on dishonesty," he added. “Obviously there are some inconvenience for a couple of days or couple of weeks but those inconvenience cannot be alibi that India continues to live (with black money and parallel economy)," he said.
The decision would bring more transactions under tax net and both direct and indirect taxes would move up. Reduction in parallel economy would increase the size of formal economy, Jaitley said.
Stating that the decision would have its ramifications on politics as well, he said that some political funding has started by cheques and if this step can do some cleansing, it would be a great move.
Move to withdraw Rs500, Rs1000 notes master stroke: Murthy
Terming the decision to demonetize Rs500 and Rs1,000 currency notes as a “master stroke", IT czar N. R. Narayana Murthy said on Wednesday the move will address issues like black money and corruption and also help the economy become more digital. “Prime Minister is working hard to reduce corruption. Black money is a scourge on any developing economy. He (Narendra Modi) has been a great supporter of digital economy. So when he made the announcement on Tuesday, I thought it was a master stroke," he said at an event . Murthy added that this hopefully will help reduce corruption and black money and also accelerate the move towards digital economy.
An important step by govt to curb blackmoney: CBDT chief
The demonetisation of Rs500 and Rs1,000 currency notes is a “very good step" to curb the menace of black money and will help check stashing of funds to a large extent, the CBDT chief on Wednesday said as the department prepares to keep an eye on any suspicious transcation. “This is a very important step. This decision shows that the government has no tolerance for black money," Central Board of Direct Taxes Chairman Sushil Chandra told PTI.
He said “at this moment", the annoucement made by Prime Minister Narendra Modi in this regard on Tuesday night will help in curbing the menace to a “large extent". He said the I-T department and the CBDT are working out modalities of the role that they will “specifically" play in the aftermath of the decision made wherein Rs500 and Rs1,000 currency notes are not a legal tender from Wednesday. Sources in the department said the taxman would be keeping an eye on remittances made using the two currency notes, beyond a certain threshold. The department would work in close coordination with banks and the Financial Intelligence Unit to keep an eye on suspicious transactions resulting after the de-monetization of the two big currencies, they said.
Demonetizing Rs1,000 & Rs500 notes bold step: Soli Sorabjee
Eminent jurist Soli Sorabjee on Wednesday hailed the government’s decision to demonetise high denomination notes, calling it “bold and innovative". “It’s a bold innovative move and honest tax payers have nothing to worry about. Though their may be initial discomfort and inconvenience which should be borne in the larger interest of the society and the nation," Sorabjee, former Attorney General of India, told PTI.
Notes withdrawal a big leap towards e-payments: Nasscom
Government’s decision to scrap Rs500 and Rs1,000 notes will accelerate the push towards electronic payments system, which currently has relatively little penetration in India, IT trade body Nasscom said. “If most of the black money is brought into bank accounts or into the tax net, there will be far less reason to deal only in cash, and far more reasons to transact through electronic payments," Nasscom president R. Chandrashekhar said.
In a statement issued, Nasscom noted that electronic payment has relatively little penetration in India, where cash accounts for 78% of all transactions by value according to the Reserve Bank of India. The move will make a major dent on unaccounted or ‘black money’, rendering it valueless unless it is taken to a bank to get exchanged, potentially bringing it into the tax net, it said. Nasscom further said it is also a welcome move for the e-commerce industry, where a large number of deliveries in India are ‘COD’ or cash on delivery, raising logistics costs and risks.
“While other reasons for use of cash, such as trust, may take longer to alleviate, the present announcement could mitigate a significant factor driving COD, the availability of unaccounted cash," it said. The IT body, however, pointed out that replacement of old ₹ 500 and ₹ 1,000 notes with new high denomination notes in due course could be a “potential dampener" as high value currency notes constitute the foundation of black money and the cash economy. “This historic step by the government could, if optimally leveraged, hugely accelerate the migration to a digital economy," it added.
Meghalaya CM criticizes Modi’s decision
Meghalaya chief minister Mukul Sangma on Wednesday termed Prime Minister Narendra Modi’s surgical strike on black money by demonetisation of ₹ 500 and ₹ ,000 currency notes, as an “insensitive" move. “What we do and how we do things are very important. It may be for the larger good, but the way they are doing things shows their bankruptcy of ideas in implementing this decision," Mukul said in response to the move of the NDA Government’s decision to scrap ₹ 500 and ₹ ,000 notes last night. “This is insensitive," he rued. “In this country of 125 billion people, how many are glued to the television set, social media or the internet? How will they know their ₹ 500 and ₹ 1,000 notes are invalid? What will happen to students who are travelling? Not everyone uses plastic money," he said.
Bollywood hails PM Modi’s step
Celebrities such as Rajinikanth, Amitabh Bachchan, Karan Johar and Anurag Kashyap too have praised Prime Minister Narendra Modi’s decision to abolish Rs500 and Rs1,000 currency.
“Hats off @narendramodi ji. New India is born #JaiHind," Rajinikanth tweeted. Megastar Bachchan wrote, “The new 2000 ₹ note is PINK in colour...The PINK effect!!!" Kashyap, who tweeted to Modi amid the controversy surrounding ban on the release of films with Pakistani artistes, also hailed the step taken by the PM. “Ballsiest move I have ever seen from any leader.. It will cause a lot of heart ache but Kudos..Super way to make the black money redundant." Madhur Bhandarkar wrote, ““Congratulations to @PMOIndia @narendramodi for this bold move to ban 500 and 1000 notes to counter #BlackMoney and strengthen our economy."
“A welcome bold&courageous step by PM Modiji towards nation building. Each one of us shld cooperate in d larger interest of d nation #BlackMoney," Anushka Sharma tweeted.
Southern superstars Kamal Haasan and Nagarjuna thanked the PM for rewarding the tax payers. “Tweeting frm Paris/congrats @narendramodi Ji!!for rewarding us tax payers/india on the way to become a super economy #IndiaFightsCorruption," Nagarjune wrote. “Salute Mr Modi. This move has to be celebrated across political party lines. Most importantly by earnest tax payers," Haasan tweeted.
Johar called the step a ‘masterstroke,’ “This is truly a masterstroke move!!!! @narendramodi hits it out of the stadium!!!!" Rishi Kapoor tweeted, “PM Modi ji. Ball out of the stadium. Wohaaaaaa!!!! De monetisation is the right answer. Congratulations!"
Riteish Deshmukh said it is a bold move. Riteish Deshmukh said it is a bold move. “Bold move by PM @narendramodi ji as the #1000rs #500rs notes become invalid/redundant. #NewIndia" he wrote.