Less than a month ago, Indian Prime Minister Narendra Modi announced the demonetization of Rs. 500 and Rs. 1000 notes and as expected, the entire country went into a tizzy. While some took to social media singing praises of the move, many bitterly trudged up to their banks to stand in unending queues. With no concrete execution plans, this move by the Indian Government to curb tax defaulters and black money launderers has affected the common man more than its intended targets. The ramifications were felt across all sectors; stock markets crashed, the transportation industry came to a screeching halt, weddings were cancelled and farmer unions protested. With new rules implemented every day and deadlines extended to accommodate the domestic populace, little to no information was released regarding how our fellow Indians living outside the country would cope.
Since foreign branches of Indian banks were not accepting the old notes, a Non-Resident Indian (NRI) initially had two methods by which they could legalize their old notes – by personally travelling to India and exchanging them or authorizing someone else to do the same. The process was straightforward. Transfer the amount, sign the consent form and get your acquaintance to deposit your money. But with backlogged banks, overworked employees, and queues that circled around the block, the solution was soon becoming the problem.
Take the case of an expat who had transferred some money to a friend in need, through a third-party money exchange. What happened to this friend was not the much-needed money, but rather closed shutters and non-committal responses. Two weeks later, the situation was no better. The question on many an NRI’s mind would now be – “Where is my money?” While the transferee is still mired in their emergency, the transferor has no relief on the whereabouts of his hard-earned cash. This goes to prove that this demonetization is not as rosy as was envisioned initially. Immigrants from India have been quick to criticize the maneuver as it negatively impacts their way of life. The Russian Embassy has also been very outspoken critics of the plan citing a lack of funds available for their staff in India. There has been chatter that retaliatory action could be taken against Indian officials, currently residing on Russian soil with similar restrictions being enforced on the amount of funding being accessed.
A safer alternative to the above two solutions is available for NRIs who are Non-Resident Ordinary rupee (NRO) account holders. The only downside to this fix is the non-taxable cash limit. Any deposit amounts larger than 2.5 lakhs will be reported to the Tax Department by the respective bank and action will be taken against those whose IT returns do not match up. In a positive break, Vikas Swarup of the Ministry of External Affairs (MEA) has announced the setup of a specialized team that will be the official liaison with the Department of Economic Affairs (DEA) to address the many cash crunch issues faced by the Indian diaspora.
While opposition political parties and experts in the field of economics are criticizing the move, many hailed it as a revolutionary initiative. The International Monetary Fund (IMF) supported PM Modi’s efforts and so did the founder of Infosys, N. R. Narayana Murthy. Demonetization has received many a brickbat as well as bouquets, as is evidenced in conventional and social media. The Prime Minister has requested his citizens to extend their patience until the 30th of December. This date is crucial as it is the last day that private and public banks will deposit or exchange defunct notes to legal tender.
The way going forward looks tough, especially with the nation’s workforce having to make a choice between exchanging their money and making money. But the Indian Government is simultaneously doing everything in its power to address the cash concerns of its people, both domestic citizens and expatriates alike.
The rest, as they say; only time will tell.