In early November, without warning, the Indian government declared the
two largest denomination bills invalid, abolishing over 80 percent of
circulating cash by value. Amidst all the commotion and outrage this
caused, nobody seems to have taken note of the decisive role that
Washington played in this. That is surprising, as Washington’s role has
been disguised only very superficially.
US-President Barack Obama has declared the strategic partnership with
India a priority of his foreign policy. China needs to be reined in. In
the context of this partnership, the US government’s development
agency USAID has negotiated cooperation agreements with the Indian ministry of finance. One of these has the declared goal to push back the use of cash in favor of digital payments in India and globally.
On November 8, Indian prime minster Narendra Modi announced that the
two largest denominations of banknotes could not be used for payments
any more with almost immediate effect. Owners could only recoup their
value by putting them into a bank account before the short grace period
expired. The amount of cash that banks were allowed to pay out to
individual customers was severely restricted. Almost half of Indians
have no bank account and many do not even have a bank nearby. The
economy is largely cash based. Thus, a severe shortage of cash ensued.
Those who suffered the most were the poorest and most vulnerable. They
had additional difficulty earning their meager living in the informal
sector or paying for essential goods and services like food, medicine or
hospitals. Chaos and fraud reigned well into December.
