The central government has withdrawn existing 500 and 1000 rupee notes and asked everyone holding the same to get them exchanged with new notes from their nearest banks.
The move is seen as a reaction to the pinch felt by the trading class, arguably one of the worst affected by the crackdown.
The reason given by the ‘Kerala Vyapari Vyavasayi Ekpana Samiti’ or Kerala Traders’ and Industrialists Coordination Union is that there is a dearth of cash in consumers’ hands, which has affected their turnover.
With not enough consumers turning up with cash, it makes no sense to keep the shops open, the union said.
The decision was conveyed by President T Naseeruddin and Secretary Joby Chungath.
Update — Strike has been withdrawn following pressure from political parties.
The union said cooperative banks should be supplied with new notes directly by the RBI, so that they can issue the notes without having to depend on commercial banks.
It may be noted that cooperative banks have been directed to ascertain and audit the details of everyone who is holding money in their accounts.
A big chunk of the ‘liquid’ black money in Kerala is estimated to find their way into cooperative banks, which are controlled by local politicians and do not insist on PAN numbers and other formalities for taking deposits and conducting transactions.
It is estimated that there are around Rs 30,000 cr worth of illegal money in the cooperative sector. The Income Tax department has started scrutinizing the deposits even as the currency exchange program was kicked off.
Since co-operative banks do not have the new currency, the depositors are essentially locked in and cannot withdraw the money. The Department has, in other words, trapped the illegal funds within the cooperative banks sector.
The Vyapari Vyavasayi Samiti said giving money to cooperative banks and allowing them to directly swap currency for their depositors will ease conditions in Kerala.
The Kerala Vyapari Vyavasayi Ekopana Samithi is the single largest trade organization in the world. It has over 10 lakh members, 4000 units and over 1400 Vyapar Bhavans.
Much of the day-to-day retail trade in Kerala happens without any form of paper or electronic trail.
The Left front government has been trying to bring the merchants to book, but with little success. In order to force merchants to issue true bills and declare their income, the Kerala government has even opened a Facebook page where any consumer from the state can upload their bill.
The uploaded bill is then checked against the billbook presented by the merchant. If the bill is not found, punitive action is taken against the merchant.