India's Modi urges patience on bill swap amid cash crunch

Modi surprised the country Tuesday night when he announced that 500 and 1,000 rupee notes would no longer be legal

Prime Minister Narendra Modi Sunday made an emotional appeal to people to make India graft-free, as chaotic scenes erupted outside banks nationwide after high denomination notes were pulled from circulation.

Modi surprised the country Tuesday night when he announced that 500 ($7.50) and 1,000 rupee notes would no longer be legal tender, in a design to tackle widespread corruption and tax evasion. Customers can exchange their old bills for new ones or deposit them in their accounts until December 30.

But even after five days of the announcement, desperate people continued to line up Sunday for hours outside banks and ATMs, with many running out of cash by the afternoon and prompting anger against the government's latest anti-corruption measure.

"People are going through great pains. I feel that pain. This scheme is not born from arrogance. I have seen such adversities up close. I understand the trouble everyone is facing," Modi said at an event in western Goa state.

"But this hardship is only for 50 days," he added.

"Please, 50 days, just give me 50 days. After December 30, I promise to show you the India that you have always wished for."

Modi also vowed to pursue his fight against corruption and tax evaders even if it meant scanning records dating back to India's independence in 1947.

Since coming to power in 2014, Modi has pledged to crack down on so-called black money -- vast piles of wealth kept hidden from the tax authorities -- with new measures including 10-year jail terms for evaders.

Analysts have broadly welcomed the latest initiative, saying consumer spending would likely dip in the short term as the new notes made their way into circulation but that the move would boost GDP in the long term.

The government has said only tax dodgers will lose out from the bill-switch, but the move has left millions scrambling to withdraw cash for daily expenses at local grocers, vegetable markets or even for rickshaw fares which are largely cash-driven.

To add to their woes, India's finance minister said Saturday that cash machines could only dispense the newly-designed 500 rupee and 2,000 notes after several weeks because of a technical issue.

Many low-income people including maids, drivers and local traders, without access to bank accounts and who store cash at home, complain that their savings have been completely wiped out.