It had also hit the consumption from unaccounted income.
Banks were crowded as people gathered in large numbers. Especially not one carrying a club.
Economic Affairs Secretary Shaktikanta Das said there have been reports of "unscrupulous people" who have organized groups of innocent people and sent them from bank to bank to swap old notes. "But I don't see anything good happening".
Eight days since Modi's announcement there was no sign the government had managed to print enough notes to replace its withdrawal of 86 per cent of currency in circulation.
India announced a week ago that it was withdrawing 500- and 1,000-rupee notes as legal tender to fight corruption and tax evasion.
The government's ban on big bank notes first received widespread approval because less than 3% of Indians file tax returns.
Currency notes are distributed to bank branches from the 4,000-odd currency chests in the country - of which, more than 2,600 are owned by the State Bank of India and its associate banks. Published as Bloomberg View, the editorial arm of the top media company headquartered in Midtown Manhattan, the commentary says, the step has plunged the Indian economy "in chaos", even as pointing out that Modi appears to be increasingly getting nervous.
Despite Modi's assurance, Guruswamy is skeptical: 'The Prime Minister says that the poor are sleeping happily while the rich are sleepless. Jaitley asked individuals not to hurry to banks instantly and sit tight for a couple days and to lead monetary exchanges utilizing electronic exchanges, checks and credit and debit cards. That was also the day when people realized the value of money and simultaneously the truth that there are many things more precious than money in this world, such as love, knowledge, peace and joy.
The new notes, for example, are slightly smaller than existing ones and thus don't work with an estimated 200,000 ATMs now in operation across the country. The rationale of the government was to attack counterfeit cash in the system (which allegedly being used to fund terror activity) and clean up the system, off "black" money. One luxury watch outlet in north-west Mumbai saw 45 units of Rolex watches sold on a single day, according to a representative of a watchmaker, who was present when the sales took place. "Who else is suffering?" Take into account that India's economy relies heavily on cash, as 90 percent of transactions are completed this way.
Stronger laws and monitoring could help curb phoney export deals, and money-laundering in stocks. Some are presumably using corrupt bureaucrats or banking officials.
One of the biggest drivers of India's growth is the consumption story of its 1.2 billion people.
If she can not find a place to exchange or use the bills, she'll "just have to throw it away", Desai said. That means more than 23 billion notes totaling Rs.15 trillion.
The old currency must be exchanged - but there are limits.
People expressed frustration and disappointment over the long waits. "For an Indian rupee, I don't think there's any bank that does that here". He eventually gave up waiting after more than four hours in line. India uses the same system during elections, to stop people from voting repeatedly.
"There's no work. I can't even charge my cell phone because I don't have any change", the 38-year-old from Aligarh said. Huge fines will be levied on anyone found to have been illegally avoiding taxes.
People have been reeling under severe cash crunch situations in banks and ATMs across the nation since November 9.
The government, meanwhile, insisted all was well. The national bank's presses are printing banknotes at full ability to guarantee accessibility, Reserve Bank of India said on Saturday. "Cash is available when they need it".