Currency Demonetisation and Future course of Indian Economy

suryag · Post by **suryag** » 14 Nov 2016 21:14

That would be the next thing from opposition, where they will visit bank employees who pass away and say modi is behind this. Not mean to demean them, i know it is really hard work but this is not as if they are breaking stones in mid day sun.

suraj gaaru what will happen if we deposit old notes and get new notes from ATM and then again deposit old notes in bank.

Neela · Post by **Neela** » 14 Nov 2016 21:15

Supratik wrote:SBI deposit 80000 crores. Which means about 4 lakh crore has come back.

Dont understand.
Please can you explain how 4L crores has come back?

abhijitm · Post by **abhijitm** » 14 Nov 2016 21:15

Guys, please sign the petition and forward to as many as possible.

https://www.change.org/p/we-the-people-of-india-i-support-pm-narendra-modi-on-demonetisation-drive

PS: sorry, I am taking liberty here.

disha · Post by **disha** » 14 Nov 2016 21:15

shiv wrote:Suraj can you give me your take on this article
http://www.livemint.com/Opinion/uzvIE84 ... -move.html

A rona-dhona article with a #Blow2Modi start. I am surprised that the general field of economy did not commit suicide when Pronab Sen decided to write the article.

Several holes in his article., sometimes to logically counter such gaping holes - one has to spend lot of precious cpu cycles!

For example:

While there are certain criminal activities (such as smuggling, drug peddling, gun running, etc.) that follow this pattern, they collectively account for a minuscule fraction of what is commonly understood as “black money”.

Yeah., the drug peddler will show his P&L statements at the end of the year and will pay due taxes on his profits. All the cash on his hand is accounted for!

Then the author goes on to say:

Eventually, the bulk of the cash finds its way into the informal sector, where it provides a part of the essential liquidity for virtually all transactions within the informal sector and between the informal and formal sectors.

Really? How? Like finding its way into RE? Or Gold? Eventually all unaccounted for 'profits' will find its way into only two areas - Real Estate or "Gold" (gold, diamonds, rare artifacts ...). Since by volume they hold the largest amount of value. The trend of the current slump in RE is testament to that. The value (or the economy) is locked up. The rest of the article is not even worth commenting on.

Suraj · Post by **Suraj** » 14 Nov 2016 21:16

I'm fairly certain Modi has asked them to inform banks not to accept deposits of new Rs 500 notes until year end . Doesn't hurt to tweet PMO and other handles though . Multiple people doing it should catch attention .

hanumadu · Post by **hanumadu** » 14 Nov 2016 21:16

On the issue that demonetization did not stop corruption or tax evasion, the current black money is a result of corruption and tax evasion and it is being confiscated. That alone should prevent future tax evasion and to some extent corruption. Money got through corruption is free money so people losing it may not feel the pinch. But black money lost from tax evasion is hard earned money. And they are losing much more than the taxes they would have had to pay if they were honest which should serve as a big hindrance in future tax evasion.

Why do people conclude that nothing more will be done to curb corruption and tax evasion. Don't they give no credence to Modi shouting at the top of his voice that further measures will be taken. In the future, all high value transactions will come under scrutiny and matched against income tax returns and know sources of income. You can probably buy a tv or a motor cycle with corruption money, but you cant a plot or an apartment.
How does a clerk buy a 30lakh apartment in all cash. Fine, lets say he pays 15lakh white and 15 lakh black. Now how will the seller, lets say a real estate businessman, hide the 15lakh. Lets say he buys some other property for 60 lakhs with 30 lakh white and 30 lakh black components. Now this seller has a bigger problem at hand to dispose or manage a bigger amount of black money. This was the case all these years and they managed to do it because no one bothered to scrutiny. No body bothered to scrutiny because the tax officials were themselves corrupt. But when they themselves are under the lens with no means to hide their ill gotten wealth, the only thing left for them is to STFU and do their job properly. Will Modi be able unearth benami property and make sure all purchases are accounted for? We don't know yet, but he says he can. In the very least he needs our trust and encouragement going by his track record. Even if he is partially successful, its an improvement over the past.

Modi has to ensure only a relatively small group of people to stay honest. The IT dept and the judges who handle the cases. If he can watch over them like a hawk for disproportionate income and benami properties, they will in turn make sure the rest of the folks fall in line.

Karthik S · Post by **Karthik S** » 14 Nov 2016 21:19

Sat is half working day for banks, SBI atleast. I agree exhaustion can affect bank employees, but from what we see, many employees are happy to work extra hours. They understand the importance of this decision. I am sure with appreciation from NM and gratitude of public they can keep going, saw a tweet saying NM should give bonus to ATM technicians. We need their help till this task is over.

habal · Post by **habal** » 14 Nov 2016 21:22

have edited that post, kindly give a look.

Karthik S · Post by **Karthik S** » 14 Nov 2016 21:24

गीतिका ‏@ggiittiikkaa
RBI waives ATM charges for all transactions in own bank or other banks' ATM till Dec 30

Opposition: Modi doesn't understand pain of people

Good move.

disha · Post by **disha** » 14 Nov 2016 21:24

rhytha wrote:Pretty much what i wanted to say couple of pages back , before the namo fanboys jumped on me

In short are you stating that NaMo "fanboys" are stupid in economics because some really stupid eCONomists have written articles that you want to believe in?

Suraj · Post by **Suraj** » 14 Nov 2016 21:28

Neela wrote:
Supratik wrote:SBI deposit 80000 crores. Which means about 4 lakh crore has come back.
Dont understand.
Please can you explain how 4L crores has come back?

Cumulative deposits into the banking system since demonetization. 80K crores ($12 billion) was just SBIs deposits yesterday .

At $60 billion in 5 days, I think it's fair to say that so far this action has vastly exceeded expectations . The IDS netted 70K in income declarations in 3 months. This ones on course to uncover 10x as much in about a week or so.

The numbers at the end should astound everyone, moi included.

Sachin · Post by **Sachin** » 14 Nov 2016 21:31

Karthik S wrote:Sat is half working day for banks, SBI atleast.

There are no more half-working days in banks, AFAIK. They get a complete week end off, or they work full 8 hours shift/day on Saturdays. In a month of of 4 week ends, they get 2 week ends full rest, and remaining two weeks they work 6 working days. RBI, how ever have a 5 day working period.

hanumadu · Post by **hanumadu** » 14 Nov 2016 21:42

habal wrote:this week saturday, sunday working days for bank.

and moreover, this doesn't seem to have an end in sight.

banks have to submit a 'day end' at the end of working hours, which basically means all accounts should tally and there shouldn't be any discrepancy.

otherwise the system doesn't allow them to give a 'day end'.

folks are sitting upto 2AM in their branches trying to give a 'day end' because in the hullaballoo, there is always 1K-20K difference.

RBI is doing it's bit, every bundle of new currency notes have 100-300 rupees short, adding to these troubles.

Doesn't seem is not the same as not having an end in sight.
How can you say that every bundle of new currency has 1 to 3 bills short? RBI printing machines/counting machines are faulty?
How do you know the bank employees are sitting till 2AM? Even if they do a few weeks of extra work wont kill them. Modi himself works crazy hours. Most of us have at some time or others had periods of working such hours.

Viv S · Post by **Viv S** » 14 Nov 2016 21:45

Suraj wrote:Phoren press is coming around to grudging admiration . Tim Worstall at Forbes was mocking this a few days ago and then penned a new article that goes 'blimey, this actually seems to be working out surprisingly well considering the phenomenal logistics'.

Was he? I just went through his recent articles and there are mostly positive with some hemming & hawing and albeit/althoughs. Certainly nothing resembling mockery, as far as I can see.

India's Odd, If Possibly Sensible, Decision To Scrap The Rs 500 And 1,000 Notes - Nov 11

Allegations Of India's Great Bank Note Switch Scam - Nov 12

India's Great Bank Note Switch Appears To Be Working - $30 Billion In Rs Deposited In Banks - Nov 13

Adam Smith And India's Great Bank Note Switch - The Tolerable Administration Of Justice - Nov 14

hanumadu · Post by **hanumadu** » 14 Nov 2016 21:48

Supratik wrote:SBI deposit 80000 crores. Which means about 4 lakh crore has come back.

Its tapering. By yesterday it was more than 70K. Less than 10K deposited in today. I think SBI is handling bulk of the transactions. According to an article, about half of the deposits are in SBI. So only 2 lakh crore must have been deposited.

habal · Post by **habal** » 14 Nov 2016 21:50

hanumadu wrote: Doesn't seem is not the same as not having an end in sight.

Doesn't seem means doesn't seem.

How can you say that every bundle of new currency has 1 to 3 bills short? RBI printing machines/counting machines are faulty?

When banks get notes from RBI, the currency bundles are supposed to have 100 notes each. Each such bundle seems to be having 2-3 notes less. So if the bundle is that of 100s. It is 3 notes less. This is happening with increasing frequency. Maybe someone is pilfering from RBI staff hoping no one will notice in this melee because no one has time or patience to file appeal with ombudsman for every such incident in present environment.

How do you know the bank employees are sitting till 2AM? Even if they do a few weeks of extra work wont kill them. Modi himself works crazy hours.

people do fall dead when they are overworked. Just because Modi is not married and is willing to work crazy hours doesn't mean entire nation will wreck an artery or bust a vein to keep up with him. Do have sensitivity towards others conditions also.

Most of us have at some time or others had periods of working such hours.

yes, but you are overworking an already overworked staff. JDY was previous mobilisation and that fell on bank employees also. Now this surgical strike.

Suraj · Post by **Suraj** » 14 Nov 2016 21:52

VivS: Subjective opinion on my part. There's clearly nothing he can say about the actual effort but he's a provocateur. In particular the amount of space he gives to Kejriwals allegations . Feel free to judge him otherwise, but my point of view remains. Anyone who repeatedly brings up muffler's barking isn't remotely even handed.

Viv S · Post by **Viv S** » 14 Nov 2016 22:00

Suraj wrote:VivS: Subjective opinion on my part. There's clearly nothing he can say about the actual effort but he's a provocateur. In particular the amount of space he gives to Kejriwals allegations . Feel free to judge him otherwise, but my point of view remains.

Well let me post the bit about Kejriwal (who is, whether we like it or not, along with M.Banerjee, the face of the naysayers for the moment).

That is, even if the so far rather wild allegations are true, the switch itself has still worked. Which is something that doesn’t seem to have been realised as yet:
.
That’s the allegation. And it’s worth noting that Mr. Kejriwal is the leader of a political party distinctly in opposition to that of PM Modi. His party being a growth from the anti-corruption movement in fact.
.
There is also the inevitable call to undo this decision:

Kerjiwal’s point about the introduction of the Rs 2,000 note is reasonable. Having a larger denomination bank note out there will indeed make future black money deals slightly easier. But then the economy does actually need bank notes of a reasonable size (Rs 2,000 is about $30) in order to function. And no, cards, bank transfers and so on are not a complete solution given that large percentage of Indians who are entirely unbanked.

No, let’s not speculate about whether this is evidence of an inadvertent leak, a deliberate one or just happenstance. Instead, let’s consider the implications of that cash flow into bank accounts.

It’s worked.

The aim is to get unproductive and untaxed cash money into the banking and taxation system. Yes, it’s a nice bonus to be able to levy what amounts to a fine on those with large illicit cash holdings. But that’s not actually the point–the point is to get that illicit money into the licit economy. And if it all pours into bank accounts where it is taxable and traceable then that’s the job done. That is, even if the news did leak and the big money all knew in advance, the aim of the bank note switch has still been achieved. Perhaps unfairly, not in the manner which we would wish, but it has still worked.

It’s a rather clever policy in fact–even if it fails through being leaked it still works.

And then this is from his article the next day -

As I’ve mentioned before I regard this all as having been rather well done. Yes, obviously, there are long lines and no little disruption. Yet small amounts of cash, the sort that might be lying around in a wallet or as an emergency stock, can be changed at the banks into still useful notes. It’s going to be a little more time before the ATM machines are all altered to be able to deal with the new denominations but not that long in a country so large. And larger sums can still be deposited into bank accounts. This isn’t just the straight confiscation of the value represented by those cash bills. Rather, it’s an insistence that the cash must enter the banking, and thus the tax, system. Cash that can be shown to have been legitimately earned and taxed enters the bank system at no further cost in penalty or tax. Cash that has been untaxed must enter said banking system or become worthless–and once recorded in the system the mills of justice will be able to grind slow and small to ensure that it is taxed.

As I mentioned yesterday this all seems to be rather well done, a clever plan. Even if the allegations by Kejriwal were true (which I don’t think they are) that the news was selectively leaked it would still work. Because the way to get around the bank note switch is to deposit into the banks–which is what is the desired result anyway. Got to grant credit to a plan that still works even if it leaks.

And from the day after -

In broader terms, everyone must believe–or a large enough portion of everyone at least–that the game is basically fair, that there are rules and those rules are obeyed by everyone. Only then, if all believe in the possibility of that positive sum economy, do we actually get that positive sum economy and thus the highest degree of opulence.

Arvind Kejriwal has claimed that this is all a fix by Modi (no, I don’t think he’s correct). My own technical view is that it’s a clever plan. But going to the root of the idea I think it’s better than just clever. An essential move in fact. Reading the comments over the past couple of days (and yes, I do read them, also welcome them, you all in aggregate know more than I do on any and every subject so please do inform me) I’ve seen that there’s a rage at the manner in which the Indian economy, specifically with this black money problem, is felt not to be fair, does not have this tolerable administration of justice. Yes, there are specific concerns about forgery of notes, terror financing, house prices and so on, but the more general point Smith avers still stands.

We’ve got to believe that the economy is roughly, tolerably, fair for it to work in producing that opulence. That’s not a belief that many have about the black money problem in India today. Thus rooting out that problem is justified. It’s not just clever it’s necessary.

Suraj · Post by **Suraj** » 14 Nov 2016 22:08

Thank you for providing all the quotes to assert my claims of Worstall indulging in mockery .

His is the sort of opinion shaping technique that I'll openly call out . He goes 'Kejriwal says (I don't really believe it though)' in multiple articles . Yeah that's totally credible Tim . Doesn't believe it and repeats the allegation anyway (along with his disclaimer) . I'm sure shiv can piskoanalyze this sort of weasel attitude well.

Here's what I'll reassert - Kejriwal is indulging in open mockery - his usual state of being . Worstall is doing the same by giving the guy repeated press. I'll throw him a small biscuit for not obfuscating the validity of the demonetization in empirical terms .

shynee · Post by **shynee** » 14 Nov 2016 22:08

One my wife's close relative died day after the demonetization. He had pre-existing medical conditions, but was doing fine. Taken to the hosiptal due to chest pain. But had a massive heart attack causing multiple organ failure. Initial we thought it was due to his ill health. But the rumors going around in town is due to large exposure to BM running into crores of rupees. I bet there are more people like him.

hanumadu · Post by **hanumadu** » 14 Nov 2016 22:13

habal wrote:
hanumadu wrote: Doesn't seem is not the same as not having an end in sight.
Doesn't seem means doesn't seem.

It does seem to others things are improving. We will know who is right in a few days.

habal wrote:

When banks get notes from RBI, the currency bundles are supposed to have 100 notes each. Each such bundle seems to be having 2-3 notes less. So if the bundle is that of 100s. It is 3 notes less. This is happening with increasing frequency. Maybe someone is pilfering from RBI staff hoping no one will notice in this melee because no one has time or patience to file appeal with ombudsman for every such incident in present environment.

Hearsay or worse still rumour. Is it a manual process in the RBI to bundle the money into stacks of 100? I would think not. Are the bundles not tamper proof? How many people and how much time does one need to siphon off bills from every bundle?

habal wrote:
people do fall dead when they are overworked. Just because Modi is not married and is willing to work crazy hours doesn't mean entire nation will wreck an artery or bust a vein to keep up with him. Do have sensitivity towards others conditions also.

habal wrote: yes, but you are overworking an already overworked staff. JDY was previous mobilisation and that fell on bank employees also. Now this surgical strike.

I am being sensitive to the crores of people suffering from black money for years. JDY was 2 years ago. Just like you know how EVERY bundle is some bills short, soon you will know people collapsing from the work load.
You have decided that this was a bad move for what ever reasons and come up with silly excuses. Why don't we wait for a few more weeks and if you are right, you can come here and gloat as much as you want.

habal · Post by **habal** » 14 Nov 2016 22:16

>> JDY was 2 years ago

No, it was last month also.

>>You have decided that this was a bad move for what ever reasons and come up with silly excuses. Why don't we wait for a few more weeks and if you are right, you can come here and gloat as much as you want.

so you are not done with being a twat.

Viv S · Post by **Viv S** » 14 Nov 2016 22:21

Suraj wrote:Thank you for providing all the quotes to assert my claims of Worstall indulging in mockery .

His is the sort of opinion shaping technique that I'll openly call out . He goes 'Kejriwal says (I don't really believe it though)' in multiple articles . Yeah that's totally credible Tim . Doesn't believe it and repeats the allegation anyway (along with his disclaimer) . I'm sure shiv can piskoanalyze this sort of weasel attitude well.

Here's what I'll reassert - Kejriwal is indulging in open mockery - his usual state of being . Worstall is doing the same by giving the guy repeated press.

It sounded like he was refuting Kejriwal's criticism but pointing out how all this is missing the big picture. Maybe there's some psych-ops angle, too deep for me really.

I'll throw him a small biscuit for not obfuscating the validity of the demonetization in empirical terms .

That's what 90% of the content seemed to be about i.e. Modi's step being "not just clever but essential". (Mind you, I only read his articles just now and only because you named him and I was curious. And thereafter pleasantly surprised.)

Anyway.. last for me on this.

hanumadu · Post by **hanumadu** » 14 Nov 2016 22:25

habal wrote:>> JDY was 2 years ago

No, it was last month also.

>>You have decided that this was a bad move for what ever reasons and come up with silly excuses. Why don't we wait for a few more weeks and if you are right, you can come here and gloat as much as you want.

so you are not done with being a twat.

The JDY drive was 2 years ago. Any further JDY will be at a much more leisurely pace. The people doing the JDY drive may not be the same people manning the counters now. You seem to have an inside track on all banking procedures and personnel. Funny neither the bank employees nor the unions themselves complained but you seem to be much more concerned about them.
We will know soon if I am being a twat or you are being ingenious.

habal · Post by **habal** » 14 Nov 2016 22:28

JDY was 2 years ago. Last month was JDY + APY (Adult Pension Yojana). But main thrust was on JDY waise.

take it easy.

kapilrdave · Post by **kapilrdave** » 14 Nov 2016 22:39

Anyone and everyone have to work hard some day or other. Some - like software guys (poor chaps) - do it bit too often. Nowadays even school teachers work for 12 hrs.

Besides, NONE of the bankers I know (two of them branch managers in SBI) come as late as made out to be. 10pm is max I've seen which is no big deal.

hanumadu · Post by **hanumadu** » 14 Nov 2016 22:42

habal wrote:JDY was 2 years ago. Last month was JDY + APY (Adult Pension Yojana). But main thrust was on JDY waise.

take it easy.

Doesn't automatically translate to they were over worked. Teachers do it during census and elections. No body expressed concerns they may bust an artery. Military does it all the time.

habal · Post by **habal** » 14 Nov 2016 22:44

hanumadu wrote:Doesn't automatically translate to they were over worked. Teachers do it during census and elections. No body expressed concerns they may bust an artery. Military does it all the time.

Ok, i get it.
If it doesn't affect you, it doesn't matter. + my way or the highway.

hanumadu · Post by **hanumadu** » 14 Nov 2016 22:52

habal wrote:
hanumadu wrote:Doesn't automatically translate to they were over worked. Teachers do it during census and elections. No body expressed concerns they may bust an artery. Military does it all the time.
Ok, i get it.
If it doesn't affect you, it doesn't matter. + my way or the highway.

I can say the same about you.
Let the bankers or their representatives voice their concerns. Until then you are making up facts. Some how only you seem to have a window in to their problems and appointed yourselves as their spokesperson. People have recognized the effort put in by the bankers and expressed their gratitude in no uncertain times. Oh by the way, a section of the bank employees belonging to the CPM union are going for a three day conference as per twiter. What does it tell about their concern for their fellow employees.

Suraj · Post by **Suraj** » 14 Nov 2016 23:02

habal and others: please DO NOT indulge in rumor mongering like 'RBI packets are 100-300 short' . Everyone's free to air their legitimate issues, but this is outside of that domain . This forum does not want to serve as a platform for such rumors to abound . This is the only warning about the matter; further references will involve action against the poster and post deletion .

hanumadu · Post by **hanumadu** » 14 Nov 2016 23:05

State Bank of India ‏@TheOfficialSBI 3h3 hours ago
As of today, 33000 thousand ATMs are functioning. - SBI Chairman, Smt. Arundhati Bhattacharya. #Demonetization

Manish_Sharma · Post by **Manish_Sharma** » 14 Nov 2016 23:07

EXPLAINED: How Rs 2000 note will curb black money - Gujarat CA's open letter to Arvind Kejriwal breaks internet

Surat: A chartered accountant (CA) from Gujarat's Surat has written an open letter to Delhi CM Arvind Kejriwal (as he has been criticising the demonitisation move by PM Narendra Modi).

The letter explains 'How Rs 2000 note will curb black money'. This letter has gone massively viral on internet.
The CA from Gujarat - Mehul Shah - in its open letter has explained the probable logic behind issuing new Rs 2000 note instead of Rs 1000 note, according to India Arising website.

Here is the FULL TEXT of the CA's open letter to Arvind Kejriwal:-

Sir, I am a practising Chartered Accountant aged 28 in Surat and I was very hopeful that you would support the Notification for Demonetization of Currency and was very eager for your Reaction because your very entry into Politics was for supporting any small move to reduce Black money and Corruption and after all, this was indeed a very big and bold move….!

But after going through the Video released yesterday, my expectations from AAP as a Commonmen were shattered once again because I believed that a person of such stature and designation as you would spread positivity all around without any ifs and buts to make this Mega Clean-up Drive possible and rather help the common men in mitigating the problems rather than nagging about the same and hence I would like to bring to your knowledge the following Points

Point 1
As you have stated in your Video that it took full 2 days for you to understand the various aspects of the Scheme and even after consultation with various Experts , you could not basically understand the Logic of why 2000 Rupee Notes were released instead of 1000 Rupee Note, I would like to make an attempt to tender my best possible logic ( Please enlighten me if I am wrong somewhere) as follows:

Sir, let us Simply take 2 Scenarios to understand the funda !

Scenario A : If as per your suggestion , Rs. 2000 Note are not issued but only New Rs. 1000 Notes are issued.
Lets say , for example Mr. X has Rs. 1,00,000/- black money in 100 Old Notes of Rs. 1000 each.

Mr. X divides those Rs. 1,00,000/- into 10 Equal Bundles, each comprising of 10 Old Notes of Rs. 1000 each and puts each Stack on a Table.

On Day 1 , in the morning Mr. X would deposit the first Bundle i.e. 10 Old Notes of Rs. 1000 valued at Rs. 10,000 into the bank and on same Day 1 in the Evening he would withdraw 10 New Notes of Rs. 1000 again valued at Rs. 10,000 and put it in the Locker in his house.

Now the real Game starts.

On Day 2 : Morning , Mr. X would deposit the second bundle of 10 Old Notes of Rs. 1000 valued at Rs. 10,000 kept on the Table. However in his books of accounts submitted to Income Tax Department, he will show that he has deposited the same 10 New Notes which was withdrawn on Day 1 : Evening ( which is actually still lying in the Locker of House )

On Day 2 : Evening , Mr. X would again withdraw 10 New Notes of Rs. 1000 valued at Rs. 10,000/- and keep the same in Locker . So at the end of Day 2, Mr. X has Rs. 80,000 on Table in Old Notes and Rs. 20,000/- in New Notes in Locker.

Now Day 3 will come in next weekaslimit of Rs. 20000 per week
The same exercise shall continue till Day 10 and by the end of Day 10, Mr. X shall have no Old Notes and Rs. 1,00,000 in 100 New 1000 Rupee Note in the Locker.
However, to the Income Tax Department, Mr. X has shown that he was having only Rs. 10,000/- as black money initially ( i.e. one bundle of 10 Notes of Rs. 1000 ) and he has rotated the same Rs. 10,000/- by depositing it into Bank account in the morning and withdrawing it in the evening and again redepositing the same on next day and so on.

Thus, Mr. X has paid tax only on initial Rs. 10,000 whereas he has managed to convert all his Black money of Rs. 1,00,000 into new Notes.

This Modus operandi is called Peak theory i.e. theory of rotation of same money which is accepted by most of the High Courts and Tribunals. Revenue is also helpless to catch Mr. X because the above scenario can also occur in genuine cases where you withdraw money from bank to purchase something and then when you think that no good deal is available, you may again deposit the same money into your bank account and are not required to pay tax again.

Scenario B : Watch what happens when PM issues New 2000 Rupee Note instead of 1000….!
Mr. X deposits first bundle of 10 Old Notes lying on Table in the Bank on Day 1 : Morning and then he withdraws 5 New Notes of Rs. 2000 on Day 1: Evening and keeps it in locker.

Now on Day 2 : Morning when he goes to deposit second bundle of 10 Old Notes of Rs. 1000 each and wrongly shows the Income Tax Department that he has redeposited the same money which was withdrawn on Day 1:Evening – Bingo !!!

He is caught red handed !! because the Bank slip on Day 2 submitted to bank shows deposition of 10 Notes of Rs. 1000 each whereas the Govt knows that Mr. X could never have withdrawn on Day 1 any note of Rs. 1000 because they were never Printed !!!!

Now Isn’t it really a Master StrokebyMr. Narendra Modi, the beloved Prime Minister of our country ?!

Sir, you have stated in the Video that if Someone gives you the logic of issuing New notes of Rs. 2000 instead of Rs. 1000, you will Salute the PM and support him in his endeavour. I hope this explanations finds you in good health and I am waiting for the support in full sense.

Even if the above explanation is not completely true, we should rely on and respect the PM of our country who is elected through clear democratic majority.
Further, the fact that when someone is holding the new Rs. 2000 Rupee Note , he is phychologicaly getting a sense of freshness that the country is in the growth phase. Messages are being circulated not to write anything on New Notes.

Imagine if the Govternment would have never issued new higher denominations notes with inflation and growth we would still be dealing with Annas and Pavlis!!
Sir, the above example also gives you an explanation as to why the withdrawal limit is kept so low because the above modus operandi can still be done with Rs. 500 note however, the incentive would be less because Mr. X cannot withdraw more than Rs. 10000/- in a day and even if he withdraws Rs. 10,000/-, there is every possibility that Banks shall give Mr. X, 2000 Rupee note.

So Mr. X cannot follow the above modus operandi.
And believe me Sir, each and every condition in the Notification is seen to take care of the problems likely to be faced by Citizens and at the same time making sure that such Sophisticated theories are not resorted to by Black money hoarders, but questioning everything in the name of Freedom of Expression may create Panic situations or bring out Loopholes and hamper the success of reforms.

Point 2
Sir, you have again criticised and stated in the Video that printing Rs. 2000 rupee note will help to increase Corruption because Stacking those Rs. 2000 Rupee Notes would require lesser Space as compared to Stacking Rs. 1000 Notes.

In this regard, I would like to ask that Sir, have you come across any case where the “Babus” have not taken any bribe and done work honestly because they had a small Bag which could not be fitted with Rs 1000 Notes ?!
Or have you come across any Businessman who has declared unaccounted money solely because there was no space to keep those Rs. 1000 Notes !!

Point 3
As stated in the Video by you, it is truethatinspite of PM efforts, there shall be dubious commission agents and unaccounted Investment in gold through jewellers, but as far as I remember when the jewellers were on strike for 45 days when our PM levied excise duty on gold in month of April 2016, it was you who supported their strike.

It shows that whenever some changes are suggested to regulate a particular Market, AAP opposes them and then now you nag that the Gold market is unregulated.
Infact I believe that the PM had a full blue print for the development of our country right from Day 1 of his being elected if I recall my last 3 years as a Professional.

Firstly they asked for all the bank account number in your Return of Income

Then they linked your PAN with Aadhar

They linked all the subsidies, pension and other benefits directly to your bank account throughDirectBenefit Transfer Scheme.

Then they gave opportunity to all the common men to open an account with bank through Jan Dhan Yojna
They entered into revised treaty with most of the countries in which unaccounted money goes through HAWALA e.g. Mauritius and thus the route of Black Money coming from Mauritius which everyone knew is stopped.

They passed few strict laws to overcome the evil of black money such as Benami Transaction Act and Foreign Black Money Act

They levied Excise duty on Gold.

They also made TCS compulsory for Cash transactions above 2 lakhs.

They withdrew lakhs of pending income tax and service tax litigations where Common men had won at Appeal level and Department had gone further.

They also entered into information exchange agreement with such countries.

Then they gave last opportunity to all black money hoarders through Income Declaration Scheme, 2016
Now they have a Scheme for Dispute Resolution Panel again to reduce Litigation till December 2016.

Now the masterstroke, that they have banned Rs. 500 & Rs. 1000 denominations.

Not only the destination of this whole process is commendable but even the journey or the chronology of these events is interesting which explains the ultimate destination and who knows ,may be the journey is still not over and the ultimate destination may still be the Swiss Account holders!!

Point 4
Further, you have stated in your Video that penalty would be levied at the rate of 200%. The said statement has created a panic and peoplehavestated discounting their own hard earned cash.

Being in Income tax Department in the past , you ought to know that as per the present Income Tax Act,1961 penalty is never levied on Cash deposits but on “concealed income”.

Hence when the common men is depositing Cash in hand which is duly accounted or out of his past savings and even out of unaccounted current years income whose return is yet to be filed, there shall not be any penalty if there is no mismatch between returned income and assessed income.

Even the Government Officials in their statement used the words “underreporting” or “mismatch”. To understand the definition of “underreporting”, Sir please refer Section 270A of the Income Tax Act or go through the following article:

No penalty on high denominations notes deposited into bank if such amount is declared in return of income by paying appropriate tax

Instead you could have encouraged the citizens to pay appropriate Tax.

Point 5
Nowhere in the Video have you stated anything relating to Fake currency or Counterfeit Notes because you know that the issue of Existing Fake Currency issolvedfoolproof.

Which situation would be better ?

Scenario A:
A Labourer standing inqueue to exchange Notes from bank for a Short term.

Scenario B :
A Labourer working hard whole day to get a Fake Note at the end of the day?!

The issue ofTerrorrist Funding is also tackled but you chose to remain silent on the same.

You have stated that Modiji should have infused Rs 100 Note from before and it would have been you only to have said in this video that “Arre ATMse do din pehle se hi Sirf Rs. 100 ki Note bahar aa rahi thi toh sab ko pata tha , yek koi Secret nahi tha”

Conclusion:
Now Sir, if I am to believe that you really don’t understand these simple concepts even after consulting with Experts for 2 days as already described by you, I am deeply saddened because the common men believe that you are an IITian and have spent considerable time in Income Tax Department also.

Contrary to the same, If I am to believe that you already know the benefits of demonetization which I first learnt in Standard 8 when subject of economics was introduced to me and the concept of Peak Theory which is described by me above and which I learnt with my very limited experience while pursuing my profession of Chartered Accountancy , then I am more saddened and feel AAP Party as more dangerous because I believe that above any religion, politics or reservations in any caste or creed, it will always be education which shall uplift the common men and it is the common men who have elevated you to a position where you are looked by millions as their Idol and it is your duty to educate them and spread knowledge and not keep them in ignorance to preserve your vote bank.

I am grateful to all my Teachers who have selflessly shared their knowledge and some fellow members of CA fraternity who are playing an active role in creating awareness andeducatingCommonmen about the positive consequences of Demonetization true to the Jewel crowned to the profession as “Partner in Nation Building” and I would therefore like to advise the citizens not to sell the notes at discounted prices or deposit the cash into bank accounts of other benami persons in fear of penalty.

Further, do not claim any bogus expenses or bogus loss to gain more trouble. Do not manipulate accounts by creating bogus cash on hand. Be sporty and pay tax honestly to buy peace of building capital.

PS : Sir, Please share the same explanation to Rahul Gandhiji too as lately you both share the same thoughts and statements and have same queries.

Wait for a miraculous amount of tax collection this year !!

I have mainly written this Letter mainly for my love for writing and my love for questioning and understanding the concepts and in view of the freedom of speech and expression my country offers and hope that no one is offended.

http://zeenews.india.com/news/india/exp ... tml?src=fb

Brad Goodman · Post by **Brad Goodman** » 14 Nov 2016 23:32

Here is my take on JDY misuse from purely non financial background so feel free to poke holes.

No scheme will be perfect including demonetization so lets accept that and try to figure out what level of perfection is acceptable to call it a success. Now as someone had said earlier there are following category of people with cash holding currently

1) Salaried middle class who are still old school (in 70's and above) who do not trust banking system much, Line up on 1st of month to withdraw pensions from bank. These days with pay commission the pensions run in tens of thousands have very little liability so expenses are low and love the feeling of sitting on cash. They file NILL income tax return each year and most time are careless to report income from interest they get from fixed deposits (which they love as much as they hate current accounts deposits in bank) They have turned white money into black (because they don't maintain good trail of money) this kind of class is sitting on 5 Lacs to 10 Lacs of cash.

2) Doctors/ Lawyers: Professionals who deal with cash. Usually underreport incomes. Lets leave the doctors with their own hospitals and rich advocates out for now. Most common types might be going a 60:40 income disclosure (again a pure guess). Over years most of this money has been safely parked into realestates (no loans all purchased to can escape the down valuation easily since they don t rely on income from it) and gold which is sitting in bank lockers. Now they still have lot of unparked cash at hand that was not disposed. My guess is they are sitting on some where between 20 Lacs and 40 Lacs in cash ( It can be higher but I would want to assume less than 1 Cr)

3) Traders and small scale industrialists: They have CA on payroll whose full time job is to run the two books in parallel. I have very little insight into the working but I want to put this category of people as one who have some where between 1 Cr and 5 Cr sitting in cash ( rest parked into real estate, stocks and gold)

4) Large Industrialists: Now they not only have CA and whole scale finance department dedicated to their money. They are even more sophisticated. I would assume they might have 5 Cr to 50 Cr sitting in cash. Rest parked in Foreign Currency, Stocks, Real Estate, Gold ....

5) Politicians: I am clubbing Sarpanch, Corporator, MLA and MP all into this bucket. He has parked his money safely but also sits on huge pile of cash individually needs upto 15-20 cr to fight Loksabha election so needs that much cash. Plus has to provide similar matching amount to Party as fund. He also needs to keep 100's of karyakartas on payroll throughout the year. This workforce is not free and netaji has to pay them all through the year. SO I am assuming even after parking all his surplus assets. Netaji needs to have somewhere between 50cr - 100 cr in cash

6) Wild card: I am lumping all corrupt government officials, criminals, Maoists etc into this class (not dawood category). They have huge amount of cash with absolutely no proper way of parking assets except in real estates and gold. There is some level of Hawala but what will they do with money parked outside unless they have children there. They would be sitting in biggest pile of cash ( 1cr - 50 Cr)

The numbers in Lacs and Cr are just representative of how the scales change with each category. So we can safely disagree on the numbers itself but continue reading if you agree on scales they represent in terms of cash that now needs to be moved back into the system.

Now if I was #1 category. I would be worried because I am less sophisticated but have very little cash to really dispose off. If I have 5 Lacs sitting in my home I can deposit 2.5 in my account and 2.5 in my wife's account. If it is little more I can still deposit and collect all the paper trail from my passbook to jusify the source. Its a hassle but manageable, In most cases they don't need to use JDY account of poor people to convert their money

#2 They will goto CA. They will bump up incomes for 2016 and from now on convert most substantial part of their business into white. They are ready to pay fine and move into mainstream. They can try to use their maids, domestic help, workers etc to launder some money. (for every 10 Lacs they need 4 people) How many people do they trust? What if they deposit the money and not give back what can they do? So if they are looking at 20 lacs to 40 Lacs they need 8-16 JDY accounts which is not practical for them

From # 3 onwards the probability of misusing JDY accounts increases for few reasons. One they have enough such social and professional circle of people (example workers / employees in factory or office, karyakarta, poor people who come to them for help etc) but remember they have to use the ultra poor JDY accounts that are at 50K now they need to launder in crores they needs 1000's of such accounts. They will do it as much possible but the gains are not huge.

So overall I feel that JDY misuse will happen. But if you are talking of a 5000 Rs account then it might not be worth your time and effort to catch these small fishes. Ultimate goal is to wean people off cash transactions. focus on that goal for now go after medium and big fishes, streamline the cash flows.

SRoy · Post by **SRoy** » 15 Nov 2016 00:24

It remains to be seen how exactly the black money converted in gold and real estates will get disposed off now or in future.

Suraj · Post by **Suraj** » 15 Nov 2016 00:39

SRoy wrote:It remains to be seen how exactly the black money converted in gold and real estates will get disposed off now or in future.

Those people are stuck. They have to report capital gains, but lack adequate purchase documentation. In general they will have to fess up, despite some coming up with creative ways to dispose of it Burn it down and claim insurance payout perhaps ? That might still attract the tax man though...

shyamal · Post by **shyamal** » 15 Nov 2016 01:02

I heard that airforce is being used to transport notes. Any links?

Bart S · Post by **Bart S** » 15 Nov 2016 01:04

x-posting

Arnab has articulated very well what most of us feel. Well worth a watch (~6 mins duration)
https://www.youtube.com/watch?v=_Nrtk7XFoqw

pankajs · Post by **pankajs** » 15 Nov 2016 01:23

Watch

vijayk · Post by **vijayk** » 15 Nov 2016 01:47

GoodGovernance ‏@sri9011 3h3 hours ago
1.Maoists hit
2.No stone-pelting in J&K
3. Burning schools stopped in J&K
4.Corrupts burning cash
5.Arhar dal crashes to Rs.80/kg in UP

Primus · Post by **Primus** » 15 Nov 2016 01:55

habal wrote:
hanumadu wrote:

How do you know the bank employees are sitting till 2AM? Even if they do a few weeks of extra work wont kill them. Modi himself works crazy hours.

people do fall dead when they are overworked. Just because Modi is not married and is willing to work crazy hours doesn't mean entire nation will wreck an artery or bust a vein to keep up with him. Do have sensitivity towards others conditions also.

Most of us have at some time or others had periods of working such hours.
yes, but you are overworking an already overworked staff. JDY was previous mobilisation and that fell on bank employees also. Now this surgical strike.

Habal Ji, I worked for 17 yrs straight doing more than 60 hrs per week, some weeks over 80 hrs. Did three residencies and two fellowships across three countries. Being on call for weekends in the UK in the eighties, it was non-stop work from 9AM on Friday to 5 PM on Monday, you got sleep in snatches whenever you could. You did this every third weekend. Others here know what I am talking about.

Most of my brothers-in-arms have done this and as far as I know, everyone is alive and healthy.

Nobody dies from hard work. As my late Dad used to say 'Kaam se Kya Darna?"

Especially if it is in the national interest.