FOREIGN tourists in India have resorted to busking on the streets to raise money due to the shortage of banknotes following the administration’s controversial demonetization exercise, according to reports.
A report by the Hindustan Times said two groups of tourists from Germany, Australia and France were seen on Saturday performing along the streets in popular tourist towns Puskhar, Rajasthan, looking for aid from the locals.
The tourists claimed they were forced to do so after they were unable to withdraw money from their accounts due to the ATMs running out of cash.
In its November 8 policy, the Indian government declared all Rs500 (US$7) and Rs1,000 (US$15) notes of no value as part of its effort to tackle corruption and tax evasion. The exercise, however, created panic both inside and outside India, as the mad scramble began to exchange the invalidated notes.
The Times of India reported that as of November 21, about two weeks after the drive began, over 82,000 ATMs had been recalibrated to dispense the new notes for currency denominations of Rs500 and Rs2,000.
The newly calibrated machines are now stocking 50 to 60 lakh (US$73,000 to US$88,000) cash and are supposedly able to cater to the higher demand stemming from the demonetization exercise.
But reports said many industries were negatively impacted by the sudden move. The tourism sector, for example was hit hard, with hotels reportedly seeing a 60 percent decrease in bookings in what is usually peak travel season.
The Times of India said quoting sources that the exercise has also had a huge effect on the food and beverage business as well as transportation, as of mid-November.
In its Frequently Asked Questions section, the Reserve Bank of India said foreign citizens will be permitted to exchange foreign currency for Indian notes up to a limit of Rs5,000 (US$73) per week.
The Economic Times of India, however, says currency exchange companies claim the allowed amount is much lower than what tourists typically ask for at the airport.
The website adds that tourists leaving India who want to re-exchange rupees into their own currency are also facing problems, especially those carrying the now-obsolete Rs500 and Rs1,000 notes. The cap stands at Rs5,000 (US$73) per tourist.
Lines at banks can sometimes last the entire day as people in the country continue in a desperate attempt to exchange their devalued notes for new ones. Banks do not see this situation getting any better.
According to the Economic Times of India, banks have received a message from the Reserve Bank of India saying supplies may not get any easier in the near future. They called for the financial institutions to push digital transactions instead of cash ones.
“Reserve Bank has asked us to push the use of digital channels to all our customers and ensure that we bring down use of cash in the economy,” said a banker told the website.
The exercise is to come to an end on December 30 and the Indian government is not considering extending the deadline as it believes the Reserve Bank of India and banks have sufficient cash to deal with the situation.
This post first appeared on Asian Correspondent.