Money Matters in India Post Demonetization for International Travelers

Starting midnight on 8^th of November, all currency denominations of Rupees 500 and 1,000 ceased to be legal tenders in India in a surprise move by the government of India. The move is supposedly a part of a crackdown on black money.

The purpose of demonetization is purportedly to restrain the shadowy economy of India i.e. a parallel economy, counterfeit currency in circulation and terror financing. Although I agree that this is a good move and a bold one at that by our Prime Minister Narendra Modi, one needs to consider the fact that it is not cash where bulk of the black money is stashed. Most of the black money – over 95% – is kept in the form of land, buildings or gold or kept abroad.

However in this post, I won’t comment on the politics or economics of it or will this move will bring out the intended result. This post is intended to illumine to fellow travelers – especially the travelers from overseas on how to cope with money matters if you are traveling to or traveling in India.

Many stories have emerged recently of international tourists facing currency problems. Many measures were announced by the government of India to allay their fear and inconvenience faced by the international travelers. One was that archaeological survey of India (ASI) – which take care of the protected monuments like Taj Mahal in India and charges entry fees – will accept the older currency note of 500 and 1000 denomination.

However, even as I writing this the date of acceptance is now over. Only new notes of 500 and 2000 denominations and the older valid denominations of 100, 50, 20, and 10 will now be accepted. Government also announced that airports as well as railway stations will accept the older notes.

As I am writing this, things have stabilized with the re-introduction of new 500 rupees note. New notes are also available but not all ATMs are functioning. It is because the ATMs needs to be re-calibrated to dispense the newer denomination currency notes. This is a cause of inconvenience to not just Indian citizens but also to international travelers.

So how do you cope up with demonetization in India if you are an international traveler?

Not all businesses in India accept cards. If you are a budget traveler than this is truer for you as guest houses, home stays, buses and taxis/auto rickshaw don’t normally accept app or plastic payment. Even if you decide to withdraw money from ATMs, it will take hours in the queue before you get to withdraw cash. If the queue is longer, more chances are that ATM will run dry before your turn.

Another thing to note is that currently the withdrawal limit set by the government is Rupees 20,000 per week which works out to $300 per week. It is supposed to last for fifty days from the date of announcement of demonetization that is 08^th of November.

Note: From today onward (24^th Nov 2016), the discontinued currency notes of rupees 500 and rupees 1000 denominations cannot be exchanged but can only be deposited.

Tips for money matters in India post demonetization for international travelers

One could bring in up to rupees 25,000 of Indian currency notes issued by the government of India and Reserve Bank of India.

One could also exchange the foreign currency they are carrying at the airport or at authorized forex counters. However, tourists arriving in India can only exchange their foreign currency up to a value of rupees 5000.

Use plastic money as much as you can at the restaurants, for transportation and to pay for accommodation. It is widely accepted in all major cities especially if they are popular tourist destinations.

Recently, many small businesses – even chaiwallahs – have started accepting money through apps like PayTM. With PayTM, you could make instant mobile recharge, bill payment, data card recharge, utility bill payment and even metro card recharge in Delhi.

Whenever shopping or buying anything or even paying for bills in hotels or restaurants, insist on rupees 100 or the newly introduced rupees 500 currency note. You might find it difficult to dispose of rupees 2000 currency notes for small purchases

Withdraw as much as you can while you are in city. Also remember that daily limit is just rupees 2000 which might be increased to rupees 4000 in coming days.

Try to make most of the payments in cities using cards. That will help you accumulate some cash before you head out for remote or rural areas or the Himalayas where there is much lesser ATMs and banks connectivity.