Indian villagers hit by banknote switch

Villagers in India are swarming to banks to exchange notes which have now been banned to thwart black marketers. Paul Chapman from Reuters reports. Reporter, Reuters, Paul Chapman .. The bank in the Indian village of Dudko isn't used to this much business. Most of the villagers don't have an account, and those who do rarely use it. The bank's got very busy since India's prime minister banned 500 and 1, 000 rupee notes to flush out cash from the black market economy. The villagers, whose entire economy is mostly in cash, are flocking to exchange their now-worthless notes for new 500 and 2, 000 rupee bills. Some say they couldn't find the cash to pay medical bills right now if they had to. Others are desperate to get their currency changed for family reasons. SUNITA … "My daughter's getting married on the 16th of this month and we're really worried about how to arrange the money for such a big occasion. The bank officials are saying they will give the money on Monday, how will we make our purchases?"

Some estimates say India's black economy is worth around a fifth of the nation's gross domestic product. One of the former heads of this village says the crackdown by Prime Minister Narendra Modi will be worth it in the end. FORMER VILLAGE HEAD, CHAND SINGH .. "I think this is a great step. It will put a lid on black marketeering. Those people whose warehouses and beds are stuffed with large currency notes, they will face problems exchanging it. To gain something you have to lose also. For a few days there is some hardship but these a tolerable problems. On the whole we're happy with this move." 

Some economic experts say the move could raise $30 billion in extra taxes while bringing black market transactions into the formal economy.