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Foreign missions in India are unhappy with the restrictions on cash withdrawals placed on them and want these removed, the dean of diplomatic corps in India said Thursday.

A weekly withdrawal cap of 50,000 rupees (about 742 dollars) had been placed on missions in India since Prime Minister Narendra Modi announced on November 8 that currency notes of the value of 500 and 1000 rupees would cease to be legal tender.

The weekly cap was inadequate for the daily operations of the missions and had to be lifted, Frank Hans Dannenberg Castellanos, the dean of diplomatic corps and ambassador for the Dominican Republic, said.

“There cannot be restrictions on accessing our own funds,” Castellanos said, adding that it went against the Vienna Convention.

“We have been very patient so far, but now we need solutions,” Castellanos said, as the cash crunch caused by the sudden demonetization showed no signs of abating a month after it was announced.

India’s Foreign Secretary Shiv Shankar Menon met Castellanos and had discussed the difficulties faced by the missions and how best to address them, Vikas Swarup, spokesman for the Ministry of External Affairs, said.

Swarup said the difficulties were temporary and a vast majority of the missions understood that the demonetization exercise was being conducted to combat so-called black money and tax avoidance.

Since the government’s decision to abolish high value notes, about 11.5 trillion rupees worth of the defunct currency had been received by banks by December 5, according to the Reserve Bank of India (RBI).

This is about 75 per cent of the scrapped notes estimated by the government to be in circulation as of November 8.

Finance Minister Arun Jaitley said at a briefing that the funds deposited with the banks were not all necessarily “white money” (as opposed to “black” or unaccounted-for money on which no taxes have been paid.

“What is deposited is being closely scrutinized to check … tax liability.”

Modi’s sudden move has evoked strong reactions, with most critics saying its cost to the economy and its impact on the poor may far outweigh the gains in weeding out unaccounted money and fake currency.

“The PM took a bold decision, but a bold decision can turn out to be a foolish decision,” Rahul Gandhi, vice president of the opposition Indian National Congress party said.

“It has devastated poor people – farmers, fishermen, daily wage labourers.”

The RBI on Wednesday downgraded its GDP growth forecast for the financial year April 2016 to March 2017 to 7.1 per cent from an earlier 7.6 per cent.

The RBI said banks had disbursed currency notes worth 3.81 trillion rupees including new 2,000 and 500 rupee notes between November 8 and December 5, about a third of the worth of old notes deposited.

The slow pace of replacement has led to unending queues at banks and empty cash machines across the currency in a country where over 90 per cent of financial transactions are in cash.

Jaitley said demonetization had given a push to digital transactions and announced a slew of incentives by state-run banks, petrol pumps and others for those using payment methods such as credit cards, debit cards and e-wallets.

Source: dpa/GNA/NewsGhana.com.gh

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