Indian Money Troubles….

I have been learning a little about why the government here withdrew Rs500 and Rs1,000 notes so abruptly (overnight – with no notice.) I can also tell you about the impact we have seen so far on normal people.

So, last week, with no warning, the rupee notes which are most used, were demonetised. That is, everyone was told they now had no value. Cashpoint machines closed, and the only way to change old notes for the new currency was through the banks. This meant that 100 rupee notes soon became scarce, as people needed them. So, even if people had the new bank notes, no one would give them change if they bought something with a higher value note. (Eg. You could buy some apples using a $10 note, but no one would give you any change.)It also meant that no one received tips – which when you’re very poor, matters. So, why did the goverment do this?

There are a whole host of rumours on social media in India, most of which seem to be untrue. There seem to be several different reasons, but two main ones are often mentioned: to stop tax evasion, and to stop money that terrorists/criminals are printing.

India is largely a cash based society. Lots of people have no bank account, they are paid in cash, store their wealth in cash and pay others in cash. This means there is huge potential for tax evasion. A high proportion of the poorest people in India run shops or market stalls. These are automatically taxed ( you pay a ‘market tax’ to have your stall in the street.) So, the poor people are paying tax, even though their income is very low. However, the richer people, those who own businesses, often deal only or partly, in cash ( a bit like plumbers in the UK!) so they have the ability to pay no tax. Which means the government is losing vast amounts of income. This isn’t fair. The vendors who I listened to, approved of the government’s decision, even though in the short term, it made their lives very difficult. It was forcing people to open bank accounts, which enabled the authorities to track cash and stop tax evasion.

India also has a lot of ‘black money’. This is counterfeit money, produced by terrorists and criminals, which has begun to flood the market. One report I read said that terrorists are using counterfeit money in India to fund their campaigns. By withdrawing the currency quickly, with no notice, the government stopped these people from converting their money into gold or other assets. The only way to exchange old currency for new money is through the banks, which criminals and terrorists don’t want to do as they are more likely to be caught.

One report I read said that in India, property is also bought partly for cash. The current currency crisis ( bit of alliteration there) means house prices will probably drop, making them more affordable for the less wealthy. This will lead to an increase in building work, which will produce more work for labourers. Not sure if that’s true, or wishful thinking…

For normal people, this is a difficult time. When we visited the slums in the East of New Delhi, the women were complaining (and laughing) because all their secret cash had now been exposed. They told me that wives tend to hide money, so their husbands cannot drink it. They have now had to reveal all this hidden money, so it can be changed by the banks, which means their husbands now know they have it and can take it from them.

People are not buying cheaper goods, they are not giving money as tips, which impacts the poor people. They also complained that while they are queuing at the banks, they are not working, so are losing pay. Some people pay others to stand in line for them, but this caused disputes too, with those people who were losing work saying it wasn’t fair. If they needed money, people would exchange it for them, but at a bad rate, so they made a loss they couldn’t afford.

The queues outside the banks are getting longer. We saw one line begin to disintegrate, with people at the front trying to push past the guards and shouting. It could so easily turn to riots. Every bank has a guard on the door, holding at least a stick, sometimes a gun. It’s tough to be poor in India. I hope this doesn’t make life even harder.

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Thank you for reading.

I will write more about our trip tomorrow. Why not sign up to follow my blog, so you don’t miss it? We have a day of tourism, then venture into the slums…..

Arriving in New Delhi


Arrived in Delhi. Had booked hotel car from airport, which was good, as taking a taxi would’ve taken hours. The government has withdrawn all 500 and 1,000 rupee notes, so paying for fare would have been difficult. The money exchange places at the airport had huge queues, they circled the baggage hall, round and round, full of tired people needing money.

I used the washroom at the airport. A young woman came into the cubicle with me, wiped the seat, then waited outside to turn on the tap and pass me a towel. I had no money to give her, none at all. Felt bad. I thanked her, but that won’t feed her family. Not sure how she will cope for the next few days, as even 100 rupee notes are now rare, she isn’t going to be collecting any tips for a while.

As we left carpark, I noticed a sign saying, ” No Sitting. No spitting. No cooking.” A group of men sat below it.

Delhi is noisy. All the tuktuks are green and yellow ( unlike Sri Lanka, where they were multicoloured.) Everyone honks whenever they overtake, which is often. Traffic is chaotic. We saw men in scrumpled shirts, scrubland with tents where people were living, cyclists pulling loaded carts, signs written in both Hindi and English. Street sellers walked between the cars whenever we stopped. There were old scooters with dented number plates, gated communities, and dusty trees in flower. The pollution here is severe, several people wore masks and there was a thick haze. You felt it at the back of your throat.

Arrived at hotel. The car was stopped at the entrance, and the boot and bonnet opened by guards. Then we drove up the driveway to the guards at the door. Our bags went through x-ray machines and we had to walk through metal detectors.

We checked in, and discussed the cash problem with the man at the desk. We had no small currency for tips (no one has.) He was very positive about the situation. He told us that everything in the hotel, including food and cars, could be paid for with credit cards, so it was no problem. He said everything would be sorted out in a few days, so it was no problem. He agreed that it meant no one could really shop in smaller shops, as even if we used high value notes to pay, they couldn’t give us any change, and there was now a shortage of the legal 100 rupee notes ( equivalent to £1.20 in UK money.) However, he said, it was nice for people to take a break from shopping for a few days, so really, it was good, not a problem at all. I began to feel like I was in The Exotic Marigold Hotel. Perhaps the culture here is like in Zambia, when they will always try to tell you what you want to hear ( so if you ask how far away somewhere is, you will be told ” not far”, even if it’s miles away.)

After a quick shower, we went for a walk, to try and change our worthless currency for new notes. The streets were busy, but not as chaotic as in Mumbai. We didn’t see any children beggars, and people didn’t touch us. Though they did stare. I got used to this in China, it’s not rude, it’s simply a different culture. There were lots of men hanging around. I wouldn’t feel comfortable walking around on my own (I would be tempted to wear a burka, like I did in Dubai, just to hide from their watching.) We were approached many times by people offering to help us. Where did we want to go? Did we want a tuktuk or a taxi? Could they help us find our way? It was hard to make them leave us alone. I think not many foreigners walk around – but we had been on a plane for hours and wanted to walk.

The path went through a covered walkway, which we walked through. As we left it, we realised it was the edge of a mosque. A man approached and told us we should have removed our shoes. Apologised, and explained we hadn’t realised what it was. He said if we didn’t know, that was fine, people would understand, but we should be more careful in future.

Found bank. Every bank we passed on the way had huge queues outside. We went to the Delhi branch of our own bank. We told the guards that it was our bank, and were shown to a different entrance. They needed to see passports – I didn’t have mine. They took copies of our visa and passport, and said they could exchange up to 4,000 rupees per person (£40). I waited while D changed his money – he was taken to near the front of the queue. Which was nice for us, but not really fair for the people who had waited in line for many hours. We can only exchange money once a fortnight. So we can return tomorrow and I can change some money, then we will have to wait until we’re back in UK. Hope they will exchange the old notes, have a feeling it might be difficult.

I am also concerned about what the lack of spending money means for the poor people here. At the moment, all the bank queues are peaceful. Can that continue when people run out of food?

Back to hotel (managed to avoid walking through any mosques). Dinner (spicy) and sleep.

I will tell you tomorrow what I have learned about why the money has been withdrawn so abruptly.


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