The 8th November 2016, the Prime Minister of India, Narendra Modi, in an unshedudled live televised adress at 20 pm (Indian Standrad Time), annouce that the ₹500 (±7€) and ₹1000 (±15€) banknotes would be invalid past midnight. He annouced also the issuance of new ₹500 and ₹2000 banknotes in exchange of old notes. The other banknotes of ₹100, ₹50, ₹20, ₹10 remained legal tender and were unaffected by the policy.
The prime minister Modi took this decision to fight against the black money and also to accelerate demonetisation in India. The gouvernment claimed that the demonetisation was also to reduce corruption, the use of drugs and smuggling.
Following this announcement, all Indian people (1,3 billion) went to the bank to change their old notes. It was totally crazy. People seeking to exchange their notes had to stand in lengthy queues in front of the bank, and several deaths were linked to the inconveniences caused due to the rush to exchange cash. There were also very long queue, in front of each ATM to withdraw money, but there were a limit from the 17th Novemver: only ₹2000 per personn and per day. People have to wait between 3 and 7 hours or more to change or withdraw money. They took turns in family, the mother very early in the morning around 5am and when she had to go to work, the grand-mother took the place, and her grand-daughter after her … And very quickly, ATM were out of cash, leaving families without money for the day. Around half the ATMs in the country were non-functional in few hours the 9th November.
For the foreigners, it was very difficult to because most of them didn’t have an account in India, and Banks allawed only their clients to exchange money. In the currency exchange office, there were out of cash too and all means of transfer from abroad were useless : there were not enough new banknotes in India to regain the money supply in circulation before the announcement of Modi.
It was a very difficult time in city and in country side for every people because in India most of the shop accept only cash and it was the time for farmer to purchase seeds, fertilisers and pesticides neened for the plantation of rabi crops. Because of the demonetisation, there are more than 100 death attributed to lack of medical help due to refusal of old banknotes by hospitals and from standing in queue.
About the Stock market cash, the day after the demonetisation announcement, BSE SENSEX crashed nearly 1,689 points and NIFTY 50 plunged by over 541 points.
Gold purchases, donations and multiple bank transactions are the best evasion attempts for people who have black money. In many major cities, sales of gold increased on 9 November, with an increased 20 to 30% premium surging the price as much as ₹45,000 from the ruling price of ₹31,900 per 10 grams (0.35 oz). An other exemple, authorities of Sri Jalakanteswarar temple at Vellore discovered cash worth ₹4.4 million from the temple hundi.