PM Modi scraps Rs 500 and Rs 1,000 notes: Shopkeepers worry left holding no Rs 100 note; people shop for gold. In picture: A shopkeeper shows the wad of Rs 500 notes he has been left with on Tuesday evening.IBTimes/Arkadev Ghoshal

Merely hours after Prime Minister Narendra Modi scrapped the Rs 500 and Rs 1,000 currency notes currently in circulation, many shopkeepers were left holding only Rs 500 notes as people made small purchases and took away Rs 100 notes in the form of change from them. Meanwhile, some people also reportedly resorted to buying gold to get rid of their stashes of Rs 500 and Rs 1,000 notes.

People were already queuing up at ATMs within minutes of the announcement, and soon the queues turned lengthy as people short on cash picked them up. Many of them seemed to be working on panic, despite Modi assuring people in his speech that ATMs would start working in some places by November 10.

Meanwhile, the situation on the streets was that people were anxious over having money to spend, with PM Modi having announced that the current Rs 500 and Rs 1,000 notes would not be legal tender from Tuesday midnight.

Armed with the knowledge that notes and coins of all other denomination — Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 — were still legal tender, these people visited as many shops as they could in order to ensure that they had enough currency of these denominations to last them the couple of days it might take for things to get back to normal.

A shopkeeper, on condition of anonymity, told International Business Times, India that he was fearful of what would happen on Wednesday. "Things will be especially difficult if they look to buy some daily-needs product but cannot provide currency notes of the current denomination," he said.

He, however, pointed out one way in which people can tide over this crisis, but that would require that the buyer be a regular customer. "I am ready to give some credit to my regular customers, and they can pay me back in a day or two, when things return to normal," he said.

Others, like the shop employee from Lucknow in the video, said they were helpless and were having to turn away people because neither party had Rs 100 currency notes.

Shops, meanwhile, are accepting meal passes, Sodexo coupons and similar food coupons, allowing at least a small fraction of people some respite from the current hardship.

People buying gold

Meanwhile, people in Rajkot reportedly flocked to gold showrooms to buy the precious metal, often considered a safe investment, after Modi announced the ban on the current tranche of Rs 500 and Rs 1,000 currency notes.

Now, the PM may have taken the step to curb black money, but people in cities like Vadodara and Bharuch in Gujarat buying gold can mean only one thing, they were converting their black money from currency to the yellow metal, thereby defeating the purpose of the entire exercise.