Almost all banned notes deposited in banks

Indians have deposited nearly all the currency bills outlawed at the end of the deadline last year, dealing a blow to Prime Minister Narendra Modi’s drive to unearth unaccounted wealth and fight corruption, reports Bloomberg.

Banks have received Rs14.97 lakh crore as of December 30, the deadline for handing in the old bank notes. The government had initially estimated about Rs.5 lakh crore of the Rs.15.4 lakh crore rendered worthless by the sudden move on November 8 to remain undeclared as it may have escaped the tax net illegally.

A full validation of the banknotes is a setback for Modi who had been relying on this move to burnish his administration’s corruption fighting credentials and boost its popularity ahead of key state elections. The anti-corruption measure has dented economic growth and forced millions into lengthy bank queues, though it remains broadly popular.

Private indicators published over the past week signal that the $2-trillion economy will be hurt by the cash clampdown, raising fears that a continued slowdown will strip India of its position as one of the world’s fastest-growing major economies.

Banks have disbursed about Rs.8 lakh crore in new currency bills. The figures of banknotes deposited are provisional and may change.

Although Modi’s credibility has been dented, the jury is out on the long-term economic and political fallout. So far his public support remains strong, with some standing in lines waiting to access cash still voicing their approval of his decision to target unaccounted wealth.

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