NEW DELHI —
Asserting that his crackdown against corruption will not end, Indian Prime Minister Narendra Modi announced a series of financial incentives for poor people, farmers, small businesses, women and senior citizens.
Modi addressed Indians on New Year’s Eve, 50 days after he banned high denomination currency in a bid to root out illegal money. The measure led to huge paper money shortages among citizens that hurt poor people the hardest and caused widespread disruption in the informal sector.
Defending his move to scrap 86 percent of the country’s currency overnight, he said, “Corruption, black money and counterfeit notes had become so rampant in India’s social fabric that even honest people were brought to their knees.”
An Indian woman, who had come to deposit money, argues with a bank officer in New Delhi, India, Dec. 29, 2016. On Nov. 8, India yanked most of its currency bills from circulation, delivering a jolt to the country’s high-performing economy.
Although many in the country initially supported the move, patience has worn thin in recent weeks as the government has not been able to meet the demand for new currency, resulting in snaking lines outside banks since the November 8 announcement.
Those lines are likely to continue into the New Year. Although the prime minister had asked for 50 days to restore normalcy, cash shortages have not eased and limits on the amount people can withdraw from banks remain in place.
Modi sought to address some of those concerns, saying efforts would quickly be made to restore normalcy to the banking sector. He said the focus would be on rural and remote areas, which have suffered the most from the cash crunch.
Acknowledging that the ban had led to hardship, the prime minister said people had shown patience, discipline and resolve in helping the government tackle corruption.
Among the promises Modi made were a discount on interest rates for home loans in rural and urban areas for poor and middle class people, doubling credit guarantees for small businesses, steps to help pregnant women and senior citizens and financial support for farmers.
Observers said the incentives are meant to alleviate growing anger among millions of poor people.
He promised tough action against the corrupt but promised to help law abiding citizens. “The law will take its own course with its full force, but the priority is how to help the honest and protect them.”
Modi also called on all political parties to come together and take steps to ensure transparency in political funding, which many say is one of the major factors that fuels corruption.
Modi swept to power in 2014 promising to end graft, and while the currency ban aims to do that, political analysts have called it a risky gamble.
They say whether the move establishes his credentials as a strong leader who is meeting his promise or whether it loses him goodwill will be tested in crucial elections to be held in Uttar Pradesh province early next year.
Many economists have questioned the benefits of the currency ban and warn that it will hurt the economy while not achieving its objective of ending tax evasion. Modi however asserted that there is no precedent globally to what India has done.
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