India cash ban slims down big fat weddings

NEW DELHI — Jatin Pal’s wedding was just days away and his family were finalizing plans for an extravagant multi-day celebration — then Indian Prime Minister Narendra Modi banned high denomination notes overnight, casting a dark shadow over the festivities. Within hours of Modi’s surprise November 8 announcement, 500 and 1,000 rupee ($7.25, $14.50) notes — some 85 percent of all cash in circulation — were withdrawn, leaving millions across the vast country out of pocket. The move — described by the prime minister as a “surgical strike” against corruption and tax evasion — coincided with the start of India’s annual wedding season, when thousands marry during a three-month period deemed auspicious in the Hindu faith. “We marry once and you try to make it memorable in every possible way. But the cash crunch is proving otherwise,” said Pal. “This has soured the happiness and left a bad feeling.” Life savings are ploughed into weddings in India, with a typical urban family spending up to $75,000 on celebrations, according to an estimate by Goldman Sachs. Traders say almost all wedding-related purchases are traditionally made in cash from savings put aside over years — even decades — but that the currency ban means many families are being forced to cut back. “Indian parents start planning and saving for the wedding as soon as a child is born,” Priyanka Gupta, owner of a bridal store said, adding that she had seen a significant drop in business since the demonetization. Delhi-based wedding planner Shrawan Kumar said most of his clients spend between 1.5 million and 2 million rupees, but that some had scaled back plans by as much as 40 percent. Others have simply decided to postpone or even cancel. “I can’t pay the waiter, photographer, transport, florist, vegetable seller through checks. We are at a loss,” Kumar said. Another casualty has been one of Delhi’s oldest gold markets, which has temporarily closed after tax officers raided jewelers across the country on reports of a gold buying spree following the currency ban as people tried to turned their cash into gold. Almost 50 percent of gold sales in India are linked to weddings, according to the World Gold Council, with most purchases made in cash. Stubbornly long queues outside banks have become a ubiquitous sight across the country as the new rupee bills have been slow to get into circulation. The government has put temporary restrictions on the amount of cash people can exchange or withdraw in an attempt to wean the country off cash and bring more into the formal — and taxable — banking sector. — AFP