The Prime Minister of India Narendra Modi made an unscheduled live televised address at 20:00 Indian Standard Time on November 8, 2016. The declaration was that of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series would be invalid after midnight. The Indian rupee (sign: ₹) is the official currency of the Republic of India. Currently 1000 rupee is worth $15 (U.S.)
Modi also declared that new ₹500 and ₹2,000 banknotes of the Mahatma Gandhi New Series would be issued. A timescale was announced to allow people to exchange the old banknotes for new banknotes. This was only allowable in certain banks. The two notes represented 86 percent of the currency in circulation. A very short period was given for Indian citizens to exchange the notes: November 24, 2016.
This activity, termed demonetization (the act of stripping a currency unit of its status as legal tender), was implemented to stop counterfeiting of the current banknotes (some of which were allegedly used for funding terrorism). The act caused a degree of chaos with people flocking to banks to exchange notes and cash machines being emptied. Shops, train stations, and taxis stopped accepting 500- and 1,000-rupee notes from the day following the announcement, interrupting normal trade. With the wider economy, the BSE SENSEX and NIFTY 50 stock indices crashed for the next two days.
Despite the deadline for exchanging the notes now having passed, the BBC reports long queues of people outside banks on New Year’s Eve, attempting to trade in their now worthless banknotes. This adds to the continuation of unrest and anger with the government felt by many of the population. Going forwards, the Indian parliament is preparing laws that will make it a criminal offence to hold the old notes from 1 April 2017 onwards.
As to what is happening to the worthless banknotes, the Reserve Bank of India is shredding the notes and making briquettes of them. The resulting briquettes will be then dumped in India’s vast landfills.
