As he laid the foundation stone for a new airport in Goa on Sunday, Prime Minister Narendra Modi sought the country’s patience for 50 more days to ease the liquidity crunch caused by his government’s sudden decision to invalidate high-value currency notes. But on the streets and shore outside, a crisis of sorts has been unfolding in one of the country’s most popular tourism destinations.
On Wednesday, travellers to the state’s beaches suddenly found that the Rs 500 and Rs 1,000 notes they had brought with them were no longer legal tender. Some spent hours of their vacation in long queues outside ATMs and banks hoping to get enough change to tide them over the rest of their trip. Currency exchange counters have stayed shut too, leaving foreign tourists stranded. Even as tourism minister Dilip Parulekar told local media that tourists would have to “adjust” to the situation, some have cut short their holidays.
Though the immediate volume of departing tourists is difficult to gauge, people in the hospitality industry said this could cause a dent in the state in which the tourism sector contributes about 18% of the GDP. An estimated 40% of the state’s workers are associated with tourism.
The long haul
The problem isn’t going to ease up anytime soon. Finance Minister Arun Jaitley on Saturday indicated that it would take at least two-three weeks for ATMs to be reconfigured so that they can dispense the new notes.
Aware of the ramifications of this liquidity crunch in the economy of the Bharatiya Janata Party-ruled state that goes to polls next year, Chief Minister Laxmikant Parsekar has addressed several late-evening press conferences since November 8 to reassure people that the government has a grip on the situation. He also appealed to the Reserve Bank of India to supply currency to the state.
However, with no let-up in the shortage of currency over the weekend, small businesses, the tourism sector and the domestic economy continued to bear the impact of the sudden demonetisation. Small vendors selling fish, vegetables, street food and other perishables and which accept only cash have seen a significant downturn in business. The local markets and cab services that flourish with the tourist economy have also seen business slacken.
Goa Pradesh Congress President Luizinho Faleiro charged the government with destroying the economy of the state.
Prabhakar Timble, convenor of Goa Forward, a regional political party launched in January, told Scroll.in that before it tried this demonetisation policy, the government should have brought back unaccounted wealth stashed in tax havens abroad.
Timble said that in the run-up to the 2012 assembly elections in the state, the BJP had made similar promises of tackling corruption and cracking down on illegal mining in the state. “Close to five years on, the government has failed in this matter and it seems it was just an election stunt,” he said.