The world wants to get rid of cash, but India has made a radical step - abruptly canceled a bunch of banknotes. Not going well
No one has gone away as the Indian prime minister, the country is now fighting

Jerko Mihaljevic
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Earlier this month, Indian Prime Minister Narendra Modi called on the members of his cabinet in the room, instructing them to leave their cell phones at the door and told them the surprising news: it is planned to go on national television and announce that 90 percent of paper money in the country will soon be legal tender , writes the WSJ.

The move, which Modi and his advisers prepared in secret, has launched a radical experiment of control of the state and India put at the forefront of the global campaign directed against cash.
230 billion dollars of cash thrown from the use

The European Central Bank is, for example, announced that within two years to stop printing bill of 500 euros. Canada and Singapore have stopped printing large bills, a legislator in Denmark and the Philippines rewrite laws to citizens directed toward electronic payments.

But no one has gone away like Mr. Modi. With the objective of combating tax evasion, terrorism and corruption, the largest and most used Indian currency notes, which are equivalent to 20 and 100 US dollars overnight knocked out of service. Indians worthless bank notes to the bank may be submitted until the end of the year. Will be issued less notes, no new money will form only a quarter of the value of nearly 230 billion dollars in cash that was thrown out of use.

Quite a huge risk

India is not alone in the aspirations of the money in the black market moves in the banking system, but the scale and speed Modijevih moves are great and painful test of an idea that has so far largely theoretical topic of discussion. In a country where relatively few families pay income tax, and in which even large transactions are often carried out in cash, Modi's move sparked a huge distrupciju and a favorite meeting huge risk for the world's fastest growing large economy and Modi's popularity.

Real estate sales fell significantly from Modi publication on November 8th. Rebellion opposition parties froze the work of Parliament. Tourists who have sought refuge in the country can not buy souvenirs and giving tips for services, and queues at ATMs are long and often full of tensions.
The poor are most affected

The lives of the poor, who often depend on irregular jobs on the black market, which are paid in cash, are endangered. After weeks of unsuccessful job search after his straw in Delhi, a former factory worker Vijay Bhardwaj thinking about how to return to his native village and engaged in agriculture. No, not there, not waiting for great odds. "Yes, there is work in the countryside, would not come into the city," he told reporters Wall Street Journal.

In the western city of Morbi, known for its large number of manufacturers of ceramic tiles, production has fallen by 30 percent. No cash with which to pay laborers and drivers, nearly a third of the 650 tile manufacturers in the city closed the door. Mr. KG Kundariya, the owner of three factories tiles employees began partially paid in rice, grain and oil, to have something to eat. Local food shops do not have enough cash to pay vendors, as well as manufacturers of tiles began to issue certificates only to basic foods like sugar and flour continued to distribute.
The whole thing performed overnight

Rohit Talwar, whose company in Moradabad in the north of the country manufactures candles and other handicrafts for American brands, welcomed Modi's move, and he has no problems paying workers. "In India, unfortunately at some point involves cash. You want the whole country to move to electronic payments, but you can not do it overnight, "says Talwar.

Modi's plan to announce a radical move carefully Coordinated. His ministers were unable to leave the room while Modi's address to the nation was not over. Subsequently, the government ordered all banks to close branches until the end of the day to prepare for the rush of customers. But the unthinkable logistical difficulties forced the authorities to adapt the way.
The banking system is difficult to cope with the changes

Citizens are first shut down the banknotes to replace the banknotes of 500 and 2,000 rupees. This proved to be quite clumsy solution, but the decision is suspended. Crowds in banks at some places were so large that they were required security battalions. Indians who have a bank account (and many have) now a week can draw 24,000 rupees (about 2500 million) a week. The banking system is difficult to cope even with these limits.

Navroz Dastur, director of one manufacturer of ATMs has learned the news on television. Nearly half the ATMs in India produced his company, but Mr. Datsur new banknotes that its ATMs should share he saw only three days after the publication of Modi. The new notes are slightly smaller than the old, which meant that engineers will have to open every ATM in the country so that they can be reprogrammed to spew new banknotes. It is estimated that this will take two months. "I think that not realize the amount of work to be done before such a move," says Datsur.
Paper money is becoming increasingly vulnerable

The central bank said the economy has already suffered a stroke. Economists worry that the recovery could take longer than a year. Modi government insists that it will be a great benefit, and the greatest among them should be more effective tax collection, better control of organized crime and more accurate monitoring of commercial activities. Defenders of cash in the same areas to see the risks.

Paper money, on the other hand looks more vulnerable. China and Sweden are considering the issue of digital currency and the ECB announced the elimination of 500 euro banknotes that have earned the nickname Bin Ladenice because of its popularity among criminals and terrorists.
Getting used to pay the cell phone

The case against cash are easier to defend because of advances in technology. Credit card failed to penetrate to all parts of the global economy, no transaction over the phone consists of male non-cash transactions feasible.
Less than a third of Indians has a smartphone, a problem with the signal could make bulky digital transactions.

Regardless of millions of Indian craftsmen who have never introduced a credit card payment is accustomed to paying over the phone. "All this is happening because of the development of technology. Technology is a great ally to governments, "says Kenneth Rogoff, Harvard ekonomis.

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That is rather a large test base, about 1.300.000.000 inhabitants who do not like islamists.

IZAKOVIC