Today is the last day to turn in the banned 500 and 1,000-rupee notes.
New Delhi:
There were lines at banks across the country on Friday, the last day to deposit the old 500- and 1,000-rupee notes or see them become worthless after the bills were scrapped by Prime Minister Narendra Modi in a bid to fight corruption.
The cancelled notes - a combined $256 billion and 86 percent of cash in circulation - have created a large currency shortage, which PM Modi had said would end by the end of the year when he announced demonetisation about 50 days ago.
Only 35-40 percent of ATM machines are currently dispensing cash, according to Ramaswamy Venkatachalam, managing director, India and South Asia, Fidelity Information Services, a banking technology provider.
Analysts say the impact of the cash shortage will last at least six more months and have expressed concerns about lower economic growth, job losses and a fall in demand for goods. All those claims have been disputed by the government.
The PM has won much goodwill for pledging to check corruption, end terror financing and move the country into the age of digital payments. But there just aren't enough new currency notes, and some in the ruling BJP are concerned about how that could affect elections in key states like Uttar Pradesh.
"There is no doubt that it is difficult to convince voters that everything will be fine," said Santosh Gangwar, the junior Finance Minister who is leading the BJP campaign in western Uttar Pradesh, to news agency Reuters.
"Every candidate who will be contesting polls is nervous because they feel people may not vote for the BJP...There is tension and we cannot deny it," he said.
Of the BJP's 71 MPs from Uttar Pradesh, 28 have been to BJP President Amit Shah and Finance Minister Arun Jaitley's office to seek solutions for the cash crunch, said a senior Finance Ministry official who was not named by Reuters.
"Party cadres are highly enthused about a big victory in upcoming elections, and if a few are apprehensive, they will realise the reality soon," said BJP spokesman GV Narasimha Rao.
The opposition, led by the Congress, has joined forces, mocking the government for being ill-prepared for the cash crunch and blaming it for hardships faced by the poor as a result.
A senior RSS official from the BJP's ideological parent, the Rashtriya Swayamsevak Sangh (RSS), who was not named by Reuters, said they had counselled the PM days before the move to take time to prepare the ground for such a massive exercise, including setting up two new mints and expanding the banking network, and to roll it out in phases.
Last week, more than three dozen BJP lawmakers, many of whom came from states that go to polls next year, met with the BJP president to demand that the government sends more cash to their constituencies, and quickly.
The MPs told Mr Shah about severe cash shortages and hardship to local businesses and ordinary people, according to several lawmakers who attended the meeting.
"The situation is grim, and we cannot ignore it," Jagdambika Pal, a BJP lawmaker from Uttar Pradesh who attended the meeting, told Reuters. "It is a challenge for every BJP lawmaker to manage the situation, but we cannot do anything if there is no money in the banks."
The cancelled notes - a combined $256 billion and 86 percent of cash in circulation - have created a large currency shortage, which PM Modi had said would end by the end of the year when he announced demonetisation about 50 days ago.
Only 35-40 percent of ATM machines are currently dispensing cash, according to Ramaswamy Venkatachalam, managing director, India and South Asia, Fidelity Information Services, a banking technology provider.
Analysts say the impact of the cash shortage will last at least six more months and have expressed concerns about lower economic growth, job losses and a fall in demand for goods. All those claims have been disputed by the government.
The PM has won much goodwill for pledging to check corruption, end terror financing and move the country into the age of digital payments. But there just aren't enough new currency notes, and some in the ruling BJP are concerned about how that could affect elections in key states like Uttar Pradesh.
"There is no doubt that it is difficult to convince voters that everything will be fine," said Santosh Gangwar, the junior Finance Minister who is leading the BJP campaign in western Uttar Pradesh, to news agency Reuters.
"Every candidate who will be contesting polls is nervous because they feel people may not vote for the BJP...There is tension and we cannot deny it," he said.
Of the BJP's 71 MPs from Uttar Pradesh, 28 have been to BJP President Amit Shah and Finance Minister Arun Jaitley's office to seek solutions for the cash crunch, said a senior Finance Ministry official who was not named by Reuters.
"Party cadres are highly enthused about a big victory in upcoming elections, and if a few are apprehensive, they will realise the reality soon," said BJP spokesman GV Narasimha Rao.
The opposition, led by the Congress, has joined forces, mocking the government for being ill-prepared for the cash crunch and blaming it for hardships faced by the poor as a result.
A senior RSS official from the BJP's ideological parent, the Rashtriya Swayamsevak Sangh (RSS), who was not named by Reuters, said they had counselled the PM days before the move to take time to prepare the ground for such a massive exercise, including setting up two new mints and expanding the banking network, and to roll it out in phases.
Last week, more than three dozen BJP lawmakers, many of whom came from states that go to polls next year, met with the BJP president to demand that the government sends more cash to their constituencies, and quickly.
The MPs told Mr Shah about severe cash shortages and hardship to local businesses and ordinary people, according to several lawmakers who attended the meeting.
"The situation is grim, and we cannot ignore it," Jagdambika Pal, a BJP lawmaker from Uttar Pradesh who attended the meeting, told Reuters. "It is a challenge for every BJP lawmaker to manage the situation, but we cannot do anything if there is no money in the banks."
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