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Sudden Currency Switch
Causes Problems in India 百科知识
CNN Student News - November 15, 2016
Sudden Currency Switch Causes Problems in India
Moving from the Middle East to southern Asia. The problem: India struggles with counterfeit money and tax evasion. It`s also a country where almost all consumer transactions are made with cash.
A potential fix: last week, the government said it would replace Indian currency, switching out its two largest bank notes. Those account for more than 80 percent of the country`s rupee notes. The current ones were suddenly banned.
So, the complications: the country`s banking infrastructure isn`t good and banks have been overwhelmed. The new notes are of different size than the old ones, so India`s ATM`s will have to be reset. The currency change might help solve some problems, but it`s created others.
RAVI AGRAWAL, CNN CORRESPONDENT (voice-over):
A crackdown on counterfeiters and tax evaders.
At mom and pop stores like this one here that sell a whole range of products, there are no credit card machines. Every single transaction is in cash and that`s not usual across the country. In fact, experts say that 90 percent of all transactions in India are in pure cash.
So, even if it`s expensive jewelry, people paying cash, and that`s what the government wants to change. One reason is taxation. Only 3 percent of Indians actually pay income tax. That`s in part because the tax barrier is high, but also because it`s difficult to keep track of so many off the books cash payments.
The government`s main target is rich tax evaders, people literally stockpiling hidden cash. But this week, the middle class is feeling the pain as well. We walked around a few banks in New Delhi, long queues of men and women lined up to replace old money with new. For now, they can only exchange the equivalent of 4,000 rupees, just $60.
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