Indian Banknote Crisis
India’s logistics industry has been left confused and concerned by Prime Minister Narendra Modi’s unexpected decision to ban the issue of 500 & 1,000-rupee banknotes. These denominations currently represent around £6 and £12 respectively.
According to the All India Motor Transport Congress, which represents 9.3m truckers, 70% of its members’ vehicles have been forced off the road as operators struggle to pay truck drivers their wages and find the petty cash needed to cover fuel and other costs.
The cash-crunch began after Modi’s shock 8 November announcement that India’s two largest denomination banknotes would be scrapped in a bid to counter corruption, money laundering and the “black economy”.
Three weeks later, businesses and individuals are reportedly struggling to exchange old bills for new, and have until 30 December before the old notes become obsolete. Withdrawal limits have reportedly been imposed at banks and ATMs as the government struggles to issue enough new bills.
“The logistics industry in India can be dependant on daily cash, as most of the drivers don’t have credit or debit cards, nor do villages through which they traverse have banking facilities,” says a senior industry spokesman.
He added: “The industry depends on daily bank withdrawals and handing over cash to the drivers for en-route expenses.
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