Modi losing friends

A leading political ally of Narendra Modi has abruptly distanced himself from the Indian prime minister's move to scrap high-value banknotes, as broad initial support for the radical monetary reform showed signs of crumbling.

The shift by N Chandrababu Naidu, chief minister of the southern state Andhra Pradesh, came six weeks after Modi announced to a stunned nation that he would scrap 86 percent of the cash in circulation.

While Modi remains by far India's most popular politician, any crack in his authority could have negative implications in state elections next year that will set the tone for his expected bid for a second term in 2019.

Naidu's regional party is allied to Modi's nationalists and he heads a federal committee set up to find ways to soften the impact on ordinary people of the crackdown against tax evaders, racketeers and bribe takers who rely on so-called "black cash".

"I am breaking my head daily but we are unable to find a solution to this problem," Naidu told party workers on Tuesday in the city of Vijayawada.

Modi, announcing the reform on Nov 8, cautioned that people would face temporary hardship. He promised to restore normalcy by the end of the year, when a deadline to deposit old 500 and 1,000 rupee banknotes expires.

His announcement enjoyed popular support at first, with many people prepared to endure hardship as long as others are forced to give up their ill-gotten wealth or pay tax.