1/ Exact words from Mr Jaitley today:
The Government does not consider Cryptocurrencies "as Legal Tender or Coin" and will take all measures to eliminate the use of these Crypto Assets in Financing "Illegitimate Activities or a Part of the Payment System". (emphasis mine)
2/ Wrong interpretation by media: Bitcoin is illegal.
Correct interpretation: Bitcoin cannot be used as legal tender. Bitcoin cannot be used for illegitimate activities.
Nothing New. Media FUD. Business as usual.