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World

Ex-PM trashes Modi's cash crackdown plan

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World

Ex-PM trashes Modi's cash crackdown plan

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COMING UP:Ex-PM trashes Modi's cash crackdown plan

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Transcript

00:00:00
>>
FOREIGN]
> Organized loot and legalized plunder. The words of India's ex-leader Singh describing Narendra Modi's cash clampdown with the prime minister right there in the same room. Modi has yanked more than 80% of India's banknotes out of circulation, forcing people to deposit the cash by year's end or lose it.
00:00:21
The move's designed to fight corruption and forgery, but it's lead to a mass shortage of banknotes. And Reuters Breakingviews, Una Galani, says Modi needs to act fast, or it could cost him.>> Singh's comments point here to the potential for a major political backlash. He has called this a monumental mismanagement.
00:00:40
And you can see that impart. People have been queuing outside bank branches for days. Half of the country's ATM still remain empty. Modi's starting here from position of strength. He has a lot of public support for his crackdown on corruption in principle. In practice, he needs to get cash out into the real economy quickly, so that this scheme is not effecting people's livelihoods.
00:01:04
If it does, he'll pay the price in upcoming elections, and it has a potential to throw India's wider reform drive off track.>> Right now, India's economy is on a knife edge. Trucks are stranded, and workers left unpaid. Experts also say millions of jobs are at risk, because many businesses only profited by dodging taxes and hoarding cash.
00:01:25
>> Nobody in the world has tried anything on this scale, and this is a country where about 40% of the people still don't have formal access to a financial system. It's not that easy to get poor people to suddenly open bank accounts, and become digital-savvy individuals. So if you really think through the consequences of what he has done, it begins to get scary.
00:01:48
>> Analysts say even with printing presses working around the clock, it'll take six months to resupply the cash India needs. More than enough time to leave lasting economic scars.