| NEW DELHI
NEW DELHI Dec 30 Indians lined up outside banks
across the country on Friday, the last day for them to deposit
their savings or see them become worthless after large
denomination notes were scrapped in a bid to fight corruption.
Prime Minister Narendra Modi last month said 500 and 1,000
bank notes - worth a combined $256 billion and 86 percent of
cash in circulation - would cease to be legal tender after Dec.
30, disrupting the lives of hundreds of millions.
"I'm here to deposit a few old notes before the deadline
expires," said Rakesh Kumar, queuing outside a bank in New
"But I expect the government and RBI (central bank) to
quickly replenish banks and ATMs with new notes so that we can
withdraw without any trouble."
Only 35-40 percent of ATM machines were currently dispensing
cash, according to Ramaswamy Venkatachalam, managing director,
India and South Asia, Fidelity Information Services, a banking
Modi had said his government would end the chaos and restore
normality in 50 days. But analysts said the impact would last at
least six more months, with concerns about lower economic
growth, job losses and a fall in demand for goods.
"Economic growth, the obvious casualty, will tank to about
6.5 percent in the second half of the 2016/17 fiscal year
against an average 7.2 percent in the first half," said D.H. Pai
Panandiker, president of RPG Foundation, an economic policy
group in New Delhi.
Another cost would be job losses, especially in the informal
sector, where most poor people work, Panandiker said.
The informal sector accounts for 20 percent of gross
domestic product and more than 85 percent of total employment.
"I also believe that even after the 50-day deadline, people
will face immense difficulty in withdrawing money as
remonetising 86 percent of India's cash will take a long time,"
In an interview to India Today magazine, Modi on Thursday
said the demonetisation decision would give the economy a boost
and provide long-term benefits, including forcing the vast
shadow economy into the open.
"We took the demonetisation decision not for some short-term
windfall gain, but for a long term structural transformation,"
Modi was quoted as saying.
He has said the demonetisation action was needed to fight
corruption and cut off financing for attacks by militants who
Paranjoy Guha Thakurta, editor of Economic and Political
Weekly, said there was "a fair amount of evidence" to suggest
that economic activity had shrunk because of the move.
"The prime minister will have a tough time justifying his
action," he said.
(Additional reporting by Manoj Kumar and Sudarshan Varadhan;
Editing by Nick Macfie)