Both in Assam and North Bengal, business and trade activities somehow continued under new conditions at areas bordering Bhutan, during the past few weeks. Officially the Bhutanese currency Ngultrum (Nu) trades at par with the Indian rupee, although in normal times a sum of Rs 90 is considered equivalent to 100 Nu.

The present situation being hardly normal, the Bhutanese side is making a killing, accepting old Rs 500 and Rs 1000 notes from Indian businessmen as before ---but charging a 30/35% commission on every transaction. Local media reports suggest that Rs 1000 now fetch about Nu 700/750. Despite taking a hit, Indian traders feel that by getting their Nu deposits exchanged with the Indian rupee at par later, they would be able to continue their business until the situation becomes more favourable.

As for Bangladesh, the major gain has been the parity of the Rupee with Bangladeshi Taka, in border trade and other transactions. However, relative to other countries, the Taka has never been too far behind the Rupee in official exchange terms. There are reports that some Indian businessmen have used up their old scrapped notes to build up Taka deposits to be exchanged later at official rates, minus a certain commission for Bangladeshi operators. However, neither government seems to have attempted to quantify such activity.

While Indian have suffered financial losses on account of its continuing demonetisation blues, Bangladeshis have suffered physically. Thousands of Bangladeshi patients who turn up for routine as well as advanced treatment for their ailments in Kolkata, Chennai or Bangalore medical facilities, the situation has changed post Nov 8. Many patients along with their relatives became stranded and faced severe liquidity problems in a foreign country. Hardly anyone is arriving for treatment these days, resulting in a loss of earnings in Indian hospitals and nursing homes.

In Nepal, it is feared that the annual rate of economic growth would be down to 2.2% in 2015-16 as against 2.5% estimated earlier. Nepalese authorities initially were reluctant to accept Indian Rs 500 and Rs 1000 notes in official transactions, but were persuaded to do so after Indian Prime Minister Mr, Narendra Modi visited the country for the first time. As India announced the scrapping of a part of its currency notes in circulation, Nepal-based businessmen and traders reported a reserve of nearly Rs90 crore of Indian rupees. Nepalese Prime Minister Mr.Pushpa K Dahal immediately rang Mr. Modi to address the issue and received certain assurances. But so far no official announcement or action has followed from New Delhi.

The outcome has been a near total absence of Indian tourists to Nepal, about 800,000 of whom normally visit the country in and out of season. Media reports also suggest that as currency shortages bit into India, a reverse migration of Nepalese workers from India began occurring and the exodus continues. Nepal earns an annual $640 million by way of remittances from its workers based in India, says one report. Their return might affect the country’s GDP stats.

India’s Northeastern states too have been hit, although the situation seems to have improved now with the Centre improving its supplies of new currency notes. In Assam, the centre made arrangements to ensure payment for the 1 million tea plantation workers in 900 tea gardens, while border trade with Bhutan continued almost normally. But in neighbouring Manipur, newspapers stopped publishing for a time because of the cash crunch. In Mizoram, paper instead of currency took over, with most people resorting to using IOU notes to tide over the situation. There were also reports that trade and daily transactions with Myanmar and Sri Lanka, too were negatively impacted.

However, there was are reports that over time, the situation was improving as more money reached the nationalised banks and other outlets. (IPA Service)