As per media report Indian Prime Minister Narendra Modi has declared these notes on Tuesday as no more legal tender asking people to replace them from banks establishing the source of the money. Lacking such legal source one can however take the replacement paying two hundred percent tax over the normal tax on such income.
Scrapping big currency notes is a rare but highly effective weapon in the hands of government to discipline black money. But it has to be put in action without letting anybody to know about it. Ever since Narendra Modi came to power he was trying to rein in the black money within the country and bring back billions of illegal cash that Indian businessmen were holding abroad, however without much success. So the new initiative will screen out big money in the hands of wealthy businessmen and corrupt persons. India used such instrument once several decades ago and the action this time may also be seen as a milestone to discipline Indian black money market. We may also recall that Bangladesh government scraped Pakistani currency notes after the Liberation War and then in 1976 it scraped big currency notes again to rein in black money that looters and hoarders amassed in the previous years.
The India move as we see will surely affect many business houses in Bangladesh having huge Indian currency in cash in their hands. As much of the money illegally possessed and used in illegal trade, its replacement chance is almost zero. Many exchange houses are also in the line to suffer. Thousands of Bangladeshi nationals now visiting India and holding cash in big currency notes also stand to lose. This is unfortunate but question remains whether or not the black money will subside.
