Hyderabad: Andhra Pradesh Chief Minister N. Chandrababu Naidu has hailed the demonetisation of Rs1,000 (Dh55) and Rs500 currency notes by Indian Prime Minister Narendra Modi.

The chief minister claimed he had made the demand for the premier to take such an action in a letter to him.

“It is a revolutionary decision,” he said. “It will strengthen our financial system”.

“It will go a long way in the eradication of corruption and black money,” he told the media in Vijayawada.

Naidu said he was happy the centre had taken his letter into consideration.

Incidentally the issue of cancellation of the higher denomination notes had come up at the press conference of Chandrababu Naidu with the Niti Ayog Vice-Chairman Arvind Panagariya hours before Modi’s announcement.

A journalist sought the reaction of Panagariya to Naidu’s letter demanding the scrapping of the notes and on the reports that the Centre was planning to introduce Rs2,000 denomination notes.

Panagariya said that the issue was under discussion for a long time and even American economist Kenneth Rogoff had also suggested that the American government scrap larger currency notes.

Intervening on the issue, Naidu said, “Rs500 and Rs1,000 notes were being used only by the upper classes and they were the biggest cause of rise in corruption.”

Naidu suggested that even the masses should do cashless transactions through banks, adding that he had conducted a successful experiment of it in the Krishna district.

All hell broke loose following Modi’s announcement on Tuesday night.

Not knowing the alternative, panic stricken people rushed to petrol pumps and the nearest ATMs to change their big currency notes, but without any success.

Though the new order was supposed to come into effect from midnight, hotel and grocery stores and even medical stores has already started refusing the Rs500 and Rs1,000 currency notes.

“I don’t have change,” an agitated shop owner said when a customer insisted that he should accept the Rs500 note as it was before midnight.

Things were threatening to turn violent at petrol pumps and toll plazas as people could not find smaller currency denominations.

The closure of banks and the ATMs on Wednesday only worsened the situation for the common folks. Markets were deserted and shops and hotels, eateries and grocery stores without credit card facilities had lesser footfalls, as ordinary people sat tight waiting for the banks to reopen.

Thursday was likely to see unprecedented rush at the bank doors as millions were expected to queue up all over India to get their currency exchanged.

The sudden decision of the Prime Minister to scrap the higher denomination notes has opened a new window of opportunity for some.

As the worried people lined up at the ATMs in Hyderabad to draw money hoping to get Rs100 notes some people out to make fast bucks started offering Rs300 for Rs500 and Rs600 for Rs1,000 note making up to 40 per cent commission.

People unaware that they can legally exchange their money at the banks from Thursday or the people with pressing Reddy were falling prey to the road side currency exchange agents.

This was happening under the nose of Reserve Bank of India’s office at Lakdi Ka Pul not far from the state headquarters of the police and intelligence.