The Indian government is reportedly taking steps to address diplomatic missions over the cash crunch they have been facing post demonetisation.
The Foreign Secretary of India, S Jaishankar issued an assurance to diplomatic missions by aiding embassies with “practical measures” to ease the cash crunch caused by the demonetisation of high-value notes announced by Indian Prime Minister Narendra Modi in early November. After reports of citizens queuing up in serpentine lines and small businesses facing severe losses, foreign embassies have become the latest set of sufferers post the move that was initially aimed at tackling black money, fake currency and cross-border conspiracy.
Jaishankar held a meeting with the Dominican Republic Ambassador, Frank Castellanos, who is the Dean of the Diplomatic Corps, last week. In his meeting with the Dean, who represents more than 150 missions in India, Jaishankar explored options to address the issue. As a consequence of the meeting, the Ministry of External Affairs (MEA) asked the Finance Ministry to step in. “With a view to avoid inconveniencing their operations, the ministry has been in discussion with concerned authorities in the government on this matter. The finance ministry, as a consequence, is being asked to issue directives to banks to allow embassy officials with identity cards to withdraw money on a priority basis,” stated Vikas Swarup, Spokesperson for the MEA.
Since demonetisation of high denomination currency notes, the upper limit of withdrawal for both business entities and foreign missions has been placed at approximately EUR 702 per week. The limit has been problematic for embassies, with diplomats from Indonesia, Kazakhstan and Ukraine complaining, alongside the vocal protest of the Russian embassy and the Dean of Diplomatic Corps. Diplomats have reported inconvenience caused during local payments, organising of functions, short-term official and medical visits due to the restrictions. Claiming that the withdrawal ceiling violates the Vienna Convention, Castellanos addressed the Minister of External Affairs, Sushma Swaraj, seeking an uninterrupted supply of facilities and resources to diplomatic missions.
Russia had lodged a protest, demanding a quick resolution of the issue. “We are awaiting a reply from the MEA and hope that this is resolved quickly. Otherwise, we will be forced to explore other options which may include raising the issue in Moscow with your Embassy by summoning Indian Minister Counsellor,” a senior Russian embassy official said in New Delhi. As per local reports, some Central Asian and European offices also kept open the provision of tightening the withdrawal limit for Indian missions in their countries, in case of persistence of the problem.
The MEA has maintained that that by and large the diplomatic community is supportive of Modi’s demonetisation drive and most of them use electronic transfers and card payments. “We appreciate learning from the dean that the vast majority of foreign missions understand that the demonetisation exercise is being conducted to combat the menace of black money and tax avoidance. We are confident that the missions would bear with the temporary difficulties that arise in that process, even as we seek to address their concerns,” said Swarup.
However, the diplomatic missions are yet to find a solution even with assurances. The situation of foreign tourists has worsened, with many rendered without cash as they travel through India. The tourism sector is visibly affected in states such as Goa that sees a high number of foreign tourists who are now unable to acquire cash. With redressal measures from the government yet to come in place and action, the cash crunch persists in India.