Prime minister Narendra Modi’s shock decision last month to scrap most of India’s currency has been praised as a masterstroke against endemic corruption, but signs are emerging that it may hit the economy hard – at least in the short term.
Last month’s overnight abolition of all high-value Rs 500 and Rs 1,000 bank notes was supposed to bring billions in so-called “black”, or undeclared, money back into the formal system.
In addition, India’s finance minister Arun Jaitley on Monday (November 28) unveiled a plan to give tax dodgers another chance to come clean, as he sought to bring billions of dollars worth of undeclared income into the country’s mainstream economy.
Under the proposed scheme, a person making the declaration would have to pay 50 per cent in taxes and surcharges. The individual would also have to park a quarter of the total sum in a non-interest bearing deposit for four years.
India runs largely on cash, but that is still in short supply, nearly three weeks after Modi’s announcement that 86 per cent of its currency would be withdrawn from circulation.
Modi’s move is an attempt to encourage more people into formal banking, which will also increase taxable income in a country where only around three per cent of Indians pay any income tax.
Several ATMs remain empty and banks have been forced to ration cash as they face huge queues. Many people have still not been able to change their old currency.
Experts are warning the ensuing cash crunch could have a dramatic impact on growth just as the economy was beginning to take off.
Last Thursday (24), former prime minister Manmohan Singh, a respected economist, told parliament the surprise decision would shave at least two percentage points off growth and slammed the government for what he said was shoddy implementation.
“The GDP of the country can decline by about two percentage points as a result of what has been done, and this is an underestimate, not an overestimate,” said Singh, who headed the Congress-led government until it was ousted from power in 2014.
India’s gross domestic product expanded 7.1 per cent year-on-year in the three months from April-June, making it the world’s fastest growing major economy.
The rupee shake-up had been a “a monumental management failure” and “a case of organised loot and legalised plunder”, said Singh.
The former prime minister and previous finance minister under whom the Indian economy was liberalised in the 1990s, launched a broadside on Modi, urging him to find pragmatic ways to ease the distress caused by the cash crunch.
“What has been done can erode our people’s confidence in the currency and banking system,” said Singh. “In fact, it’s a case of organised loot and legalised plunder.”
With a small stock of smaller notes available and people struggling to get hold of scarce new Rs 500 and Rs 2,000 rupee bills, consumers are holding back spending and businesses are suffering.
Delays in replacing cancelled notes and restrictions on cash withdrawals “reflect very poorly” on Modi’s team, the finance ministry and the Reserve Bank of India, Singh said.
In the first week after India’s so-called “demonestisation” drive, banks received $74.2 billion (£59.4bn) in fresh deposits. Analysts at HSBC expect the deposits to swell by $164bn (£131bn) by end December.
Most experts agree it is too early to say what the impact will be on India’s gross domestic product, which expanded 7.1 per cent year-on-year in the three months from April-June, outpacing China.
“The fall-out of the policy is unfolding now. So the next month will be critical to determine what people finally think of this move,” political analyst Devdan Chaudhuri told reporters.
But ratings agency Fitch has already said it is revising down its India growth forecast for the fourth quarter of the calendar year, saying it would “almost certainly” be weak.
In the year to March 2017, the cash crunch is expected to pull down economic growth from last year’s 7.6 per cent by as much as 4.1 percentage points, brokerage Ambit Capital reckons.
Moody’s Investors Service last Thursday warned the persistent cash crunch could worsen asset quality at Indian banks.
More worrying still for the prime minister, some experts including former US treasury secretary Larry Summers have questioned whether the scheme will even achieve its core aim of cutting tax evasion.
“Without new measures to combat corruption, we doubt that this currency reform will have lasting benefits,” said Summers in a blog post denouncing the move. “Corruption will continue albeit with slightly different arrangements.”
Yes Bank chief economist Shubhada Rao said it would take until the middle of next year for growth to recover.
“We are seeing disruption to growth in the near term, but once liquidity is restored, demand will return. By the second quarter of the next financial year, GDP will return to normalcy,” Rao said.
Experts say the move was a contributing factor to the rupee hitting an all-time low of 68.8625 against the dollar last Thursday, although the main reason was an expected US rate rise next month.
The uncertainty has contributed to huge outflows of foreign capital from India, although NS Venkatesh, a currency specialist at IDBI Bank, said this could reverse in time.
“Foreign investors are waiting to see how the demonetisation drive will play out in the near term. If it stabilises, all the cash could come back to the Indian economy,” he said.
Modi, who won a landslide election victory in 2014 on a promise to tackle endemic corruption, has strongly defended his move, which still enjoys widespread popular support.
In a speech last Friday (25), the prime minister urged ordinary Indians to stick with him, promising “the new notes will come” and saying the scheme would root out corruption and tax evasion.
“This black trade is eating away our country like termites,” he said, comparing tax evasion to the “exploitation of the poor”.
Citing a survey he launched via a smartphone app, Modi said 90 per cent of people expressed their support for the ban on old banknotes. The survey was not representative, but drew half a million responses.
Many ordinary Indians say they support the scheme if it forces the rich to pay their taxes by making them bank undeclared income.
The new scheme comes barely a month after a similar drive managed to unearth $9.5bn (£7.6bn) in undeclared income and assets. But with cash estimated to make up just six per cent of illicit wealth, the disclosures might not be of the same proportion.
Last year, an amnesty aimed at unearthing foreign assets fell short as fewer than 700 people availed of it, paying about $364 million (£291m) in taxes.
Last Thursday (24), India stopped the over-the-counter exchange of old bills as the government said it wanted to encourage people “who are still unbanked, to open new bank accounts” and deposit their old bills. People with old notes will be allowed to deposit them into their bank accounts until December 31.
Opposition parties, led by Congress, have stalled parliament, demanding a reply from Modi and compensation for the families of dozens of people reported to have died while queuing at banks to swap old money for new.
On Monday, they took to the streets protesting against Modi’s decision to cancel Rs 500 and Rs 1,000 banknotes as legal tender.
Around 25,000 people took to the streets of Kolkata, capital of West Bengal state, whose left-wing chief minister Mamata Banerjee has warned of “riots and epidemics” if the ban continues.
Protester Sumit Sen said he had been forced to close his grocery shop after business slowed to a trickle. “Running my grocery shop became impossible,” the 45-year-old said.
An estimated 6,000 rallied in Mumbai, India’s western commercial hub, police said.
“We are protesting against the undeclared financial emergency imposed by the government and the hardships people across the country are facing because of this illegal decision,” said Manish Tiwari of the opposition Congress party.
“The decision to demonetise high-value currency was done without any authority and legislation and is clearly illegal.”
Modi, meanwhile, urged Indians to switch to non-cash methods of spending.
“Every person has a right to spend his or her money. No one can take anyone’s money. Now people can also spend through mobile technology,” he said, mentioning that the country had around a billion mobile handsets and 60 per cent of its population was under 35 years.
On Monday the government proposed introducing a penalty of 85 per cent for anyone caught with undeclared money, but said it would charge anyone who comes forward voluntarily a lower rate of 50 per cent.
Parliament has yet to approve the proposal, which is contained in an amendment to the existing tax laws.
The Met Office has issued an amber weather warning for thunderstorms across parts of eastern and south-eastern England, in effect from 20:00 BST on Friday to 05:00 on Saturday. The affected area spans from Eastbourne in East Sussex to Cromer in north Norfolk.
The warning indicates a high risk of disruption, with flash flooding, power cuts, and hazardous travel conditions expected. The Met Office warns that flooding of homes and businesses is likely, and delays or cancellations to bus and rail services are possible due to surface water and lightning strikes.
Heavy rain and strong winds forecast
According to the forecast, some locations within the amber zone could see between 30mm and 50mm of rainfall, accompanied by wind gusts exceeding 40–50mph. There is a heightened risk of frequent lightning and intense downpours, leading to flash floods and dangerous driving conditions.
The affected area spans from Eastbourne in East Sussex to Cromer in north NorfolkGetty Images
The Met Office said fast-flowing or deep floodwater could pose a danger to life. People are advised to remain indoors during the worst of the weather and avoid unnecessary travel. Where travel is essential, extreme caution is urged.
Public urged to prepare
Residents in affected areas are being encouraged to check on vulnerable neighbours, especially those who may require assistance with food or medication. The Met Office recommends staying updated with local forecasts, charging electronic devices in advance, and securing outdoor furniture or loose items.
Yellow warnings cover wider region
Alongside the amber alert, several yellow thunderstorm warnings have also been issued:
South-west England and Wales: 14:00–23:59 on Friday
Eastern and south-eastern England: 19:00 on Friday to 06:00 on Saturday
Wales, western and northern England, and Scotland: 00:00–18:00 on Saturday
Heavy rain and thunderstorm warningBBC
Although yellow warnings indicate a lower risk than amber, the severity of thunderstorms could still be high in isolated areas. The warning for Saturday covers more of the UK as the storm system moves westward.
Heatwave peaks before storms arrive
The weather alert comes as Friday could become the hottest day of 2025 so far, with temperatures possibly hitting 30°C around the Norwich area. This would surpass the previous high of 29.3°C recorded at Kew, London, on 1 May.
Elsewhere across East Anglia and south-east England, temperatures are expected to reach the mid to high twenties, which is about 7–10°C above the seasonal average.
Cooler weekend ahead
With rising humidity and atmospheric instability, the thunderstorms are expected to mark the end of the hot spell. Saturday will bring cooler conditions, with temperatures dropping to the low to mid-twenties in the east and the high teens across other parts of the UK.
The Met Office continues to monitor the situation and has advised the public to follow the latest forecasts and travel updates.
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Shergill and his accomplices were arrested on different dates in 2020
THE head of an organised crime group who claimed he was a male escort while masterminding an international operation to import cocaine into the UK has been sentenced to 21 years and three months in jail.
Kulvir Shergill, 43, from the West Midlands, told National Crime Agency (NCA) investigators he made a living through male escort bookings, teaching martial arts and working as a personal trainer.
However, an NCA investigation showed Shergill’s crime group imported around 250kg of cocaine with a street value of £20 million between February 26 and April 24, 2020. The gang used the encrypted communications platform EncroChat in order to arrange the drugs deals.
Shergill and his accomplices are “directly responsible for the horrendous consequences Class A drugs (banned) have among our communities,” said Rick Mackenzie, NCA operations manager. “Proceeds of crime proceedings have been started and all identified assets owned by the defendants have been frozen and are currently under restraint. The NCA will work with our partners at the CPS [Crown Prosecution Service] to ensure that any money made from their drug enterprise is recovered.”
Shergill arranged premises for class A drugs to be delivered to in the UK using the EncroChat handle “orderlyswarmer”, the investigation found. He would liaise with contacts in the Netherlands over impending deliveries, before his group distributed them around the country.
Shergill and his accomplices were arrested on different dates in 2020. He initially denied smuggling class A drugs, but eventually admitted the offence.
On September 20 last year, Shergill was jailed at Birmingham crown court. The news can now be reported after the last member of his gang, 43-year-old Jagdeep Singh, was jailed for the same offences last week.
Singh was an electrician by trade, and was tasked with taking receipt of drug deliveries and acting as a warehouseman. At the time of his arrest in April 2020, he was in possession of 30kg of high-purity cocaine.
He has now been sentenced to six years and eight months behind bars.
Three other gang members were also sentenced last September – Khurram Mohammed, 37, jailed for 14 years and four months was Shergill’s second-in-command and a trusted worker.
Shakfat Ali, 38, who travelled around the UK on behalf of the group and is believed to have delivered drugs, was jailed for 16 years and nine months; while Mohammed Sajad, 44, a trusted member of the group, was jailed for 16 years.
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Motorists are being advised to expect significant disruption
Drivers are facing long delays on the M62 following a lorry crash near Warrington that led to a significant fuel spill on the carriageway.
The incident occurred when the lorry struck railings on a bridge on the A49 Newton Road, causing fuel to leak onto the motorway below. As a result, the M62 has been closed in both directions within junction 9, and the junction 8 eastbound entry slip road is also shut.
Cheshire Police said the motorway could remain closed for several hours. Fortunately, no injuries have been reported.
National Highways confirmed that traffic is being diverted via exit and entry slip roads. The agency is working to install a new barrier and repair damage caused by the fuel spill. No clear timeline has been provided for when the road will reopen.
Motorists are being advised to expect significant disruption. There are currently delays of up to 60 minutes eastbound and 20 minutes westbound, with congestion building in both directions.
Drivers are urged to avoid the area if possible and allow extra time for journeys while the clean-up and repairs continue.
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A view shows Air India flight AI 379 that had to make an emergency landing back at Phuket Airport, due to a note of a bomb threat discovered mid-air, in Phuket, Thailand, June 13, 2025. (Photo: Reuters)
AN AIR INDIA flight from Phuket, Thailand to New Delhi returned to the Thai island on Friday after a bomb threat was discovered on board, according to Thailand’s airports authority.
The flight had taken off from Phuket and was en route to India when the pilot reported a possible threat and made an emergency landing.
Airports of Thailand stated on its Phuket Facebook page that the pilot of the Airbus A320 informed air traffic control after a message indicating a bomb threat was found inside the aircraft.
"We received a report of a bomb threat written inside the aircraft's bathroom, so the pilot informed the control tower and decided to divert the flight to Phuket International Airport after circling to burn off fuel," said Monchai Tanode, director of Phuket International Airport, at a press conference.
"Police have brought in several suspects, but have not yet been able to identify who wrote the message," Monchai added.
According to flight tracking website FlightRadar24, the aircraft made a U-turn over the Andaman Sea shortly after takeoff, then circled repeatedly off Phuket’s coast before landing back at the airport.
The website showed that the flight departed again at 4:28 pm (0928 GMT), more than seven hours after its scheduled departure.
The incident took place a day after another Air India flight, bound for London, crashed in Ahmedabad, killing at least 265 people both on board and on the ground.
(With inputs from agencies)
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Debris of Air India flight 171 is pictured after it crashed in a residential area near the airport in Ahmedabad on June 13, 2025. (Photo: Getty Images)
INVESTIGATORS have recovered the black box from the site of Thursday’s Air India crash in Ahmedabad, where a Boeing 787-8 Dreamliner bound for London’s Gatwick airport went down shortly after takeoff, killing at least 265 people, including those on the ground.
The aircraft issued a mayday call shortly before crashing into a residential area around lunchtime. The plane had barely lifted 100 metres from the ground before it came down, with its tailpiece left protruding from the second floor of a hostel for medical staff from a nearby hospital.
Air India said the flight carried 242 people, including 169 Indian nationals, 53 British citizens, seven Portuguese nationals, one Canadian and 12 crew members. According to police, 265 bodies have been counted so far, including at least 24 on the ground. Authorities warned that the death toll could rise as more remains are recovered.
Deputy commissioner of police Kanan Desai confirmed the body count on Friday. Home Minister Amit Shah said in a statement that the official death toll would be announced after DNA testing is completed. Samples will also be collected from family members living abroad, he added.
A formal investigation has been launched by India’s Aircraft Accident Investigation Bureau (AAIB), aviation minister Ram Mohan Naidu Kinjarapu said. The probe will follow International Civil Aviation Organization (ICAO) protocols. He said a high-level committee comprising experts from multiple disciplines was also being set up to examine the incident and improve aviation safety.
Visited the crash site in Ahmedabad today. The scene of devastation is saddening. Met officials and teams working tirelessly in the aftermath. Our thoughts remain with those who lost their loved ones in this unimaginable tragedy. pic.twitter.com/R7PPGGo6Lj — Narendra Modi (@narendramodi) June 13, 2025
Prime minister Narendra Modi visited the crash site on Friday and met survivor Vishwash Kumar Ramesh, a British national, at the hospital. Ramesh, who was injured in the crash, said, “Initially, I too thought that I was about to die, but then I opened my eyes and realised that I was still alive.”
“Everything happened in front of me, and even I couldn’t believe how I managed to come out alive from that,” he added. “Within a minute after takeoff, suddenly... it felt like something got stuck... I realised something had happened, and then suddenly the plane’s green and white lights turned on.”
Eyewitnesses said the nose and front wheel of the aircraft landed on a canteen where students were having lunch. Search and rescue teams worked through the night to locate the black box flight recorders, which are expected to provide vital information about the plane’s final moments.
The UK’s Air Accidents Investigation Branch has offered assistance to India, and the US National Transportation Safety Board will also help with the investigation. Boeing said it was supporting Air India and was “working to gather more information” on the crash.