India (MNN) — December marks the end of a race in India — one that many will lose. John Sparks of India Partners spoke with us about the implications of an announcement made earlier this month.
“The Indian government, in an attempt to reduce the amount of ‘black money’ in the marketplace, has decided to demonetize the 500 and 1000 rupee note. They’ve given the people until the end of December to change their money at the bank.”
This means after December 31, any money left in these note amounts will disappear.
Life savings at stake
The 500 and 1000 notes equate to about $7.30 and $14.60 USD respectively. Sparks says the overwhelming majority of transactions that take place in India are done in cash. Even worse, these are the most commonly used bills.
“By taking the 500 and 1000 rupee notes out, they’ve identified 87 percent of all the value of rupees in the marketplace,” Sparks says.
Not only do people use this money for their daily business, but for people with less economic means, and especially those living in rural areas, this is what their life savings are made of.
The ban went into effect hours after the demonetization announcement was made. People stopped trading these notes quickly, not wanting to compound liability if they couldn’t switch their money over in time. That meant day-to-day transactions have become much more difficult.
“The lower end of the economy has sort of ground to a halt in many different places. It’s hard to do trade, hard buy vegetables in the market, pay for your auto-rickshaw. All of these things have put a real hindrance on the people,” Sparks says.
Barriers at the bank
There are a number of reasons why it is difficult for people to change all of their rupees out for smaller notes. The obvious barrier is time. Just over a month and a half was given between the ban announcement and the exchange deadline.
Another barrier is the daily withdrawal restrictions. According to the BBC News, the limit on withdrawal amounts has changed a few times. The latest allowed amount comes to just over $36 USD — such a small number for the hours spent waiting in line.
The long lines are caused by another difficulty. There aren’t enough banks. Sparks says even in areas where banks are close by — cities and coastlines — the ratio of banks-to-people is terribly low. In other areas, the banks are just too far away.
“In rural areas, about 60 percent of the population has to travel at least five miles to find a bank. If you are walking, of course, this five miles is a long distance and for about 30 percent of the population, there is no banking relationship. They don’t have ID, they don’t have a bank account, and so they’re unable to change their money by common means.”
Often, people resort to other methods of getting their money. Sparks says that in desperation, people are turning to the Black Market. They’ll get a significant cut taken out of their money to have someone exchange it for them, but at least they’ll keep some of it.
Future without security
“The people who are hardest hit by this are probably rural women. They’ve used cash to save money for many years. And they’ll save it, of course, in 500 and 1000 rupee notes because it’s a larger amount. So they have all of their savings…in these notes that they are now unable to do business with, unable to go and change at the market place.”
Among the rural women, the elderly and widowed will be the most vulnerable to poverty. Many times they are uneducated, illiterate, and without family. Their options are few.
Sparks says unfortunately, there is no good short-term solution. However, there is a great way for you to help right now and into the future.
Through India Partners, you can sponsor a widow on a monthly basis. Not only will they receive the food they need to survive, but they will also learn about Jesus.
Sparks says it’s an example of pure religion that James 2 talks about. “Ultimately, sharing concern for the widows is a huge demonstration of God’s love.”
Please pray that as these widows receive this food, they would have an open heart to the Gospel.
“Transformation leads to transformation. So, transformation through economic means [and] caring for them leaves an open door to transformation in their heart.”
If you’d like to sponsor a widow, click here.