Currency Demonetisation and Future course of Indian Economy

pankajs · Post by **pankajs** » 24 Dec 2016 22:39

http://economictimes.indiatimes.com/ind ... 155024.cms
Demonetisation erodes over Rs 3.8k crore FMCG sales

http://www.firstpost.com/business/marut ... 71074.html
Maruti races past demonetisation blues, bookings bounce back in December

Recovery of demand has started.

Dasari · Post by **Dasari** » 24 Dec 2016 22:51

Shiv, The poor may not have been impacted as much as middle classclass, but they got impacted. When there is shortage of Rs 500 notes, everybody is after the remaining Rs 100 notes. Now the delivery of these Rs 100 notes to poor is rationed.

Here is one story I was told. One of my relative is a small construction contractor. He does few lakhs of construction every month. He tells me that he is able to substitute Cheques and credit cards for every thing except labor and sand. The sand mafia in Ap is horrible (this is where Sekhar Reddy made crores) and don't want anything on record. The labor wants payment in Rs 100 notes which he doesn't have and he may have to stop work until Dec 30.

disha · Post by **disha** » 24 Dec 2016 23:52

From other sources

Income tax raids "Surveyor Rathinam" house in Dindigal. Seems like the entire backbone network of sand miners being decimated now.

pankajs · Post by **pankajs** » 25 Dec 2016 01:08

Here is another report on households with access to banking AND this is from a different source/survey.

http://www.thehindu.com/todays-paper/tp ... 005519.ece
‘94.4% households have bank accounts’

Almost every household in the country is a part of the banking system, mainly due to government’s financial inclusion plans, the latest Labour Bureau data showed.

Around 94.4 per cent households had a saving bank accounts in 2015-16, results of the Fifth Annual Employment-Unemployment Survey revealed. The figure was much higher than the official figure (58.7 per cent) of households with saving bank accounts in India, as per Census 2011.{This is the figure used by Maun Mohanna and the rest for chest beating .... in the name of villagers and poor. That too the percentage is multiplied by the total population including the new born to to arrive at 400/500/600 million who are supposed to be out of the banking system}

While 93.4 per cent households in rural areas had a bank account, 96.8 houses had a savings bank account in the urban parts. In Daman and Diu and Lakshwadeep, all the households surveyed had saving bank accounts.

And this figure would be about 9-10 months old.

Added later: Forget the rest but Maun Mohanna and Chiddu must know that the figure they were quoting was from 2011 and household is the correct metrics and not the population. So much for fair discussion. Mauna sure has become the great eCON man he is supposed to be.

Lets recollect what this great CON man had stated in the name of the rural and poor folks.
http://www.thehindu.com/opinion/lead/Ma ... 779252.ece
Making of a mammoth tragedy

While the number of bank branches in rural areas have nearly doubled since 2001, there are still more than 600 million Indians who live in a town or village with no bank.

nash · Post by **nash** » 25 Dec 2016 01:36

http://www.hindustantimes.com/mumbai-ne ... MYOBJ.html

“Those who are dishonest, their hardships will only increase post December 30 [the last date for depositing old Rs1,000 and Rs500 notes], while those who are honest will see their troubles reduce...now the real work has started after the notes have come to the banks,” Modi said, at a rally in Mumbai after inaugurating work on a mid-sea memorial to Chhatrapati Shivaji.

“Keep it in mind I will not sleep after December 30,” Prime Minister said, adding black money hoarders should not judge him by what previous governments did. Merely depositing black money in the banks will not make it white. “We will trace out every single note. We will chase them. We may even reach your homes. Your money will not become white, but your face will turn black,” Modi warned those who sought to break the law.

He has done so far what he has said , if he keep doing that after 30 DEC, Dark days are ahead for BM holders.

svinayak · Post by **svinayak** » 25 Dec 2016 03:49

shiv wrote: In an Uber cab today - as the economy is picking up again - as is my own practice. Driver tells me how the corrupt rich (named a few names in Karnataka) need to be punished and how he is solidly behind Modi. I did not even ask him

Retired govt employee who is now seeing the good effects of the Cash replacement notification.
He told his son that he supports PM Modi now and will vote for him

Dipanker · Post by **Dipanker** » 25 Dec 2016 04:42

nash wrote:http://www.hindustantimes.com/mumbai-ne ... MYOBJ.html

“Those who are dishonest, their hardships will only increase post December 30 [the last date for depositing old Rs1,000 and Rs500 notes], while those who are honest will see their troubles reduce...now the real work has started after the notes have come to the banks,” Modi said, at a rally in Mumbai after inaugurating work on a mid-sea memorial to Chhatrapati Shivaji.

“Keep it in mind I will not sleep after December 30,” Prime Minister said, adding black money hoarders should not judge him by what previous governments did. Merely depositing black money in the banks will not make it white. “We will trace out every single note. We will chase them. We may even reach your homes. Your money will not become white, but your face will turn black,” Modi warned those who sought to break the law.

He has done so far what he has said , if he keep doing that after 30 DEC, Dark days are ahead for BM holders.

Hopefully, next the govt. will act on the black money horded in the swiss/offshore bank accounts. IIRC govt. already has list of people with these accounts for last couple of years.

By estimates about 25% of the black money hoarded in the swiss/offshore banks, about 5 times more than in the domestic black money.

vnms · Post by **vnms** » 25 Dec 2016 04:49

Dipanker wrote: Hopefully, next the govt. will act on the black money horded in the swiss/offshore bank accounts. IIRC govt. already has list of people with these accounts for last couple of years.

By estimates about 25% of the black money hoarded in the swiss/offshore banks, about 5 times more than in the domestic black money.

I'm no math wiz, but how does 25% of x become 5 times 75% of x.

Can someone please help out this back bencher?

vijayk · Post by **vijayk** » 25 Dec 2016 04:51

^^ PAPPU School of Math and Kujli School of Logic.

U need to get degrees from IIT/London/Harvard/Florida o understand it

not that easy u know

hanumadu · Post by **hanumadu** » 25 Dec 2016 04:52

There was an article on twitter which said that all the raids being conducted and GM confiscated is based on the leads and inputs from PMO. Looks like PMO identified and formed a core team of honest officials who will oversee all the income tax cases.

Dipanker · Post by **Dipanker** » 25 Dec 2016 04:57

vnms wrote:
Dipanker wrote: Hopefully, next the govt. will act on the black money horded in the swiss/offshore bank accounts. IIRC govt. already has list of people with these accounts for last couple of years.

By estimates about 25% of the black money hoarded in the swiss/offshore banks, about 5 times more than in the domestic black money.
I'm no math wiz, but how does 25% of x become 5 times 75% of x.

Can someone please help out this back bencher?

By some estimates,

~5% of the black wealth is is domestic currency,
~25% of the black wealth is in foreign bank accounts
~30% of the black wealth is in gold
~40% of the black wealth in land/real-estate

Of course they are only estimates and will vary somewhat from source to source.

Dipanker · Post by **Dipanker** » 25 Dec 2016 05:11

pankajs wrote:Here is another report on households with access to banking AND this is from a different source/survey.

http://www.thehindu.com/todays-paper/tp ... 005519.ece
‘94.4% households have bank accounts’
Almost every household in the country is a part of the banking system, mainly due to government’s financial inclusion plans, the latest Labour Bureau data showed.

Around 94.4 per cent households had a saving bank accounts in 2015-16, results of the Fifth Annual Employment-Unemployment Survey revealed. The figure was much higher than the official figure (58.7 per cent) of households with saving bank accounts in India, as per Census 2011.{This is the figure used by Maun Mohanna and the rest for chest beating .... in the name of villagers and poor. That too the percentage is multiplied by the total population including the new born to to arrive at 400/500/600 million who are supposed to be out of the banking system}

While 93.4 per cent households in rural areas had a bank account, 96.8 houses had a savings bank account in the urban parts. In Daman and Diu and Lakshwadeep, all the households surveyed had saving bank accounts.
And this figure would be about 9-10 months old.

Added later: Forget the rest but Maun Mohanna and Chiddu must know that the figure they were quoting was from 2011 and household is the correct metrics and not the population. So much for fair discussion. Mauna sure has become the great eCON man he is supposed to be.

Lets recollect what this great CON man had stated in the name of the rural and poor folks.
http://www.thehindu.com/opinion/lead/Ma ... 779252.ece
Making of a mammoth tragedy
While the number of bank branches in rural areas have nearly doubled since 2001, there are still more than 600 million Indians who live in a town or village with no bank.

Actually both set of numbers could be right. One can have a bank account without a bank branch in the same village. But IMO extrapolating the census figures should be give better estimates.

India has over 600,000+ villages and the total number of bank branches are ~100,000 approx, meaning there are over 500,000 villages without any bank at all and still 70% of of the population lives in villages. So you can do the math.

hanumadu · Post by **hanumadu** » 25 Dec 2016 05:21

Dipanker wrote:
nash wrote:http://www.hindustantimes.com/mumbai-ne ... MYOBJ.html

He has done so far what he has said , if he keep doing that after 30 DEC, Dark days are ahead for BM holders.
Hopefully, next the govt. will act on the black money horded in the swiss/offshore bank accounts. IIRC govt. already has list of people with these accounts for last couple of years.

By estimates about 25% of the black money hoarded in the swiss/offshore banks, about 5 times more than in the domestic black money.

Spoken like a true aaptard. When Modi started the foreign money amnesty scheme, aaptards were saying India has much more black money. Now that he is going after domestic black money, the same aaptards are asking him to go after foreign black money.

If Modi indeed goes after foreign black money, they will again be the first to say how that money is invested back in India. Going after it will be a disaster, FDI will hit the bottom and GDP growth will be negative. Even if some corrupt people are benefiting India is benefiting infinitely more because the corrupt are oh so noble, that they invest it back in India. So predictable.

Don't worry Modi will go after swiss bank accounts too. But you will be the first to be shi**ing in your pants because that will cause his ratings to sky rocket even more even as your dream of inquilab appears even more distant. You guys are already cowering what if the DeMo will be a success and your prospects of coming back to power in 2019 diminish even further.

svinayak · Post by **svinayak** » 25 Dec 2016 05:28

This is the biggest propaganda article I have seen.
They are obsessed with Modi

http://www.zerohedge.com/news/2016-11-2 ... e-disaster

Conclusion
India faces a highly uncertain future. A vicious cycle has been set into motion by Modi and it will not end well. Unpredictable problems and unintended consequences are bound to surface incessantly. If Modi comes under sufficient pressure, he could easily go to war with nuclear-armed Pakistan

Modi, in his permament search for personal glorification could easily impose a state of emergency or martial law. This is in fact extremely likely, perhaps even inevitable, for the so-called intellectuals will beg for it.

As we have said previously: this will go down in the history books as one of the most naïve, least thought through policy decisions ever, a massive man-made disaster.

This is completely strange tabloid article
http://www.zerohedge.com/news/2016-12-2 ... lice-state

Is Modi Losing Support?
Modi enjoys very strong support from non-resident Indians (NRIs). In the past Indians living in the UK and the US were often asked about snake-charmers, cows and elephants on the streets of India. At one point India briefly came to be seen as the rape-capital of the world, after a number of rapes cases got international exposure.

Being tribal, NRIs could not detach themselves from what was happening in India, and felt a deep need to change perceptions about the country. In the eyes of NRIs, Modi has put India on the international map, making it look modern and progressive.

While most people around the world don’t really care about the economic non-entity of India, Modi convinced NRIs that Obama and Putin were dreaming of Modi every night. Modi gave these self-confidence-lacking NRIs vicarious confidence in their place of origin. NRIs support Modi for the emotional crutches he offers them, not because they really care for India.

Members of India’s middle class love to copy NRIs, to make sure they come across as modern and cool. On top of this, Indians have for a long time craved a strong, firm leader, someone to relieve them of self-responsibility. Modi’s huge backing among members of the salaried middle class remains firmly in place.

prahaar · Post by **prahaar** » 25 Dec 2016 05:37

It is funny that man-made disaster articles have not stopped. Also it is enlightening to see so-called Modi Bhakts cry out about how this regime has miserably failed with demonetization, Modi is burning the economy, etc.

vnms · Post by **vnms** » 25 Dec 2016 06:21

Dipanker wrote:
vnms wrote: I'm no math wiz, but how does 25% of x become 5 times 75% of x.

Can someone please help out this back bencher?
By some estimates,

~5% of the black wealth is is domestic currency,
~25% of the black wealth is in foreign bank accounts
~30% of the black wealth is in gold
~40% of the black wealth in land/real-estate

Of course they are only estimates and will vary somewhat from source to source.

So, per these estimates, how much is 'x'?

Dipanker · Post by **Dipanker** » 25 Dec 2016 06:21

hanumadu wrote:
Dipanker wrote:
Hopefully, next the govt. will act on the black money horded in the swiss/offshore bank accounts. IIRC govt. already has list of people with these accounts for last couple of years.

By estimates about 25% of the black money hoarded in the swiss/offshore banks, about 5 times more than in the domestic black money.
Spoken like a true aaptard. When Modi started the foreign money amnesty scheme, aaptards were saying India has much more black money. Now that he is going after domestic black money, the same aaptards are asking him to go after foreign black money.

If Modi indeed goes after foreign black money, they will again be the first to say how that money is invested back in India. Going after it will be a disaster, FDI will hit the bottom and GDP growth will be negative. Even if some corrupt people are benefiting India is benefiting infinitely more because the corrupt are oh so noble, that they invest it back in India. So predictable.

Don't worry Modi will go after swiss bank accounts too. But you will be the first to be shi**ing in your pants because that will cause his ratings to sky rocket even more even as your dream of inquilab appears even more distant. You guys are already cowering what if the DeMo will be a success and your prospects of coming back to power in 2019 diminish even further.

O.k. if my post makes me an apatard, does your response makes you Bhaktard? My recommendation, drop the insult if you want a civilized discourse.

That said I do expect the govt. to go after all sources of black money as well as do major reform of the political system as political parties themselves are the most corrupt.

vijayk · Post by **vijayk** » 25 Dec 2016 06:36

The essence is there is no allegiance to India or Indian interests by supporters of CON/AAP family of party lovers. It is just Hate Modi is their mantra. These fellas love corruption/corrupt crooked power/murderous naxals/extortionists/Paki terrorists as long as all these keep troubling Modi/RSS/BJP. ISI is hero if they kill Indian soldiers because it hurts Modi. They love WSJ/Forbes if they criticize Modi and hate them if they support Modi.

If he goes after BM @home, point to 15 lakh SWISS promise he never made.
If he goes after foreign BM, point to Adani/Ambani sh1t and domestic BM.
The fact is Ambani/Adani sh1t were mostly given loans by UPA to the extent of lakhs and lakhs of crores by $CUMs of UPA and Fraudster Kejri Kutta, bloody $cums Shanto Bhushan/Yogendra Yadav all supported/keep supporting UPA kuttas.
If he goes after BM holders, cry how economy is hurting
If economy does well, cry how Ambani/Adani are making money because of Modi

Saral · Post by **Saral** » 25 Dec 2016 06:37

A_Gupta wrote:In the US, there is no limit on cash; but any cash deposit or withdrawal at or more than $10,000 generates a Cash Transaction Report (CTR) that goes to the government. If the bank employee involved feels there is something fishy then they can mark the CTR as an SAR (Suspicious Activity Report). Structuring bank transactions to avoid CTRs is a crime.

Funny how life has now brought me into working on AML detection (part of Financial crimes) from Data Science pov. Indeed, tellers can report various things including the literal smell of money if it seems fishy. The data gathered by Indian Banks must be a gold mine that can be mined for a long long time. Supposedly 40% of transactions in US is cash (sounds too high) but as a percentage of value it must be a lot smaller.

UlanBatori · Post by **UlanBatori** » 25 Dec 2016 06:45

It is funny to see people demanding that Modi open the "Swiss Bank" vaults to find BM. Are ppl like Sonia and Laloo and Pinnarai Vijayan that stupid, to put BM in SWISS bank vaults? Since the US Feds won the hearts and minds of the Swiss Bank Burghers, putting anything in Swiss Bank is like publishing it in the IRS Gazette.

The BM is in Indian and phoren real estate - and maybe in gold etc, but not in Switzerland. Probably in UK and Argentina. Or spread between Thailand, Gelf, Mauritius, Seychelles, US, Germany, France, Canada. Look at Mallya coolly living it up in his mansion in UK, protected by that Great Terrorist/Crook Sanctuary. India has no hope of recovering any of that - just maybe make the Indian entities lose control of those.

hanumadu · Post by **hanumadu** » 25 Dec 2016 06:58

Dipanker wrote:
hanumadu wrote:
Spoken like a true aaptard. When Modi started the foreign money amnesty scheme, aaptards were saying India has much more black money. Now that he is going after domestic black money, the same aaptards are asking him to go after foreign black money.

If Modi indeed goes after foreign black money, they will again be the first to say how that money is invested back in India. Going after it will be a disaster, FDI will hit the bottom and GDP growth will be negative. Even if some corrupt people are benefiting India is benefiting infinitely more because the corrupt are oh so noble, that they invest it back in India. So predictable.

Don't worry Modi will go after swiss bank accounts too. But you will be the first to be shi**ing in your pants because that will cause his ratings to sky rocket even more even as your dream of inquilab appears even more distant. You guys are already cowering what if the DeMo will be a success and your prospects of coming back to power in 2019 diminish even further.
O.k. if my post makes me an apatard, does your response makes you Bhaktard? My recommendation, drop the insult if you want a civilized discourse.

That said I do expect the govt. to go after all sources of black money as well as do major reform of the political system as political parties themselves are the most corrupt.

I will be called a Bhakt no matter what - even if I criticize Modi and his plans. And I wear that tag proudly. Being a bhakt does not prevent a Hindu from finding fault with his god. You would have known that if you were, Oh not so secular.

When have you last took a stand against what your fair skinned goddess Sonia did or your yuvraj Rahul did? When have you ever appreciated something good done by this govt.

Civility is reserved for those who have the interest of India at heart not for those who want India to fail as long as they can point a finger at those whose ideology you don't agree with. Civility is not for people who wish to see India break up into pieces as long as it helps to impose their ideology on them.

Pray tell me is there anything you think that the present govt did right since they came to power?

vnms · Post by **vnms** » 25 Dec 2016 07:31

I don't understand how one comes up with an estimate of black money.

If 5% of BM is in cash(INR) and 40% is in real estate, hasn't this changed since DeMo in the sense that property value has gone down.

I'm going to ignore the fact that the 'estimate' of 5% being in cash is essentially setting up an argument for future where the claim will be made that DeMo only got in less than 5% of BM.

This morning, when I visited pakistan, I looked at turds and asssigned % based on the lengths and came up with the following:
40%: cash in India
30%: real estate
20%: gold
10%: offshore

The above might vary tomorrow and it depends on what I have for dinner tonight.

YMMV

Rishi Verma · Post by **Rishi Verma** » 25 Dec 2016 07:47

Pune Bizman Caught Converting WM to BM!

NEW DELHI: While several businessmen with hoards of black money have come under the lens for exchanging illegal tenders with legitimate currency notes using intermediaries, here is a case of a Pune-based industrialist who has been caught converting his legitimate income into black money—the transaction is over Rs 200 crore.

A major example need to be set soon.

KLNMurthy · Post by **KLNMurthy** » 25 Dec 2016 08:11

shiv wrote:
rahulm wrote: PS what's a 'sweetmeat' stall?
I wish I could find a fascinating early description of India by a Brit who was writing about mithai shops of those days. He writes that "the people of India do not eat meat but the meat they are a variety of sweet dishes blah blah blah.." The name "sweemeat" probably comes from that early inference of what Indians eat if not meat

"Meat" in sweetmeat may be a corruption of mithai?

rahulm · Post by **rahulm** » 25 Dec 2016 08:14

Yesterday, alighted at Wardha station, its a sorry arsed station with an even sorrier arsed refreshment room but the refreshment room accepted PayTM!

Boarded a teeth rattling MSRTC lal dabba bus. All cash only. Government needs to swallow its own koolaid and offer digital modes of payment in addition to cash.

KLNMurthy · Post by **KLNMurthy** » 25 Dec 2016 08:38

chola wrote: ...
Without supporting the polemics of Forbes ("theft", "immoral", etc.), the crux of what the big man says is correct and I think most us are smart enough to know this is true except we do not wish to believe it.

A country where upwards of 90 percent of the people are employed by the informal cash economy (thus black economy as defined by DeModi) cannot afford to have 86% of its currency declared worthless. An population that is still 80% rural, that is often miles away from the nearest bank and thus keeps its wealth in jars and mattresses cannot suddenly convert its savings to digital without massive losses along the way.

We are smart enough to know this is true. But as citizens of Bharat's aspiring upper and middle class we BRites do not want to see pass our tinted glass windows and our shiny new credit cards and mobile wallets that are as out of reach for the average Raj and Ram as a Delhi apartment is for a bihari farmer laboring for his landlord.

The Street studied this since the week after Modi's surprise. It caught even us offguard, yes. But what I've seen in the sales numbers for white goods since is not good. Everything is down between 25 to 90 percent. The idea that all is well because prices have not gone up or down much is fools logic. Belts have tightened in sync with the disruption in the supply line. People are not spending discretionary cash. Household budgets are being cut back 50% according to some pollings. Why would you spend freely if you are forced to wait line for that money?

And even if everything moves to digital (unlikely) then there will be a permanent tax in the way of fees and interest from credit cards and mobile wallets. This informal tax (along with the real tax enforced by I-T) is nothing to huge chains like Walmart but crippling to the mom and pop stores that we instinctively knew would be hurt when fought to keep Walmart from expanding.

What you wrote sounds reasoned and sensible but it is not, really.

90% of the people are paid in cash. Maybe so. Are 90% people without bank accounts? Clearly that is false. They can put their money in bank accounts and lose nothing if they have already paid the tax.

86% of the cash value has been eliminated? Firstly it actually has not been. As noted above, it has only been transformed into a different format if you will. Just deposit that 86% money in banks and it doesn't go anywhere.

Those owning the 86% that has temporarily gone into a sort of escrow have a very low intersection with the 90% who are in the cash economy like laborers etc., so banging on about the effect on the 90% is irrelevant and a distraction.

"We are smart enough to know" that you are right? What kind of BS manipulation is that? Why don't you just make your case if you have one?

Obviously the demo step comes with a price, including a temporary overhead and a drop in productivity and high-end consumption. On the other hand, your so-called Street is greedy at the core, uninterested in the common man (except as fodder for bullsh1t self-serving manipulative attacks) and stupidly focused on short term. It has no interest in long- term changes. It has an abysmal record in predicting long- term economic events, and its so-called wisdom has been full of sh-t so you need to spare us your pompous pseudo-authoritarian pronouncements.

Talking of "us" being smart enough, why don't you reflect that you are in the company of brains that aren't impressed by spouting of vacuous garbage that just quotes self-appointed authorities instead of a well-argued case.

Suraj · Post by **Suraj** » 25 Dec 2016 09:11

Performance of FMCGs over a single month is a measure of the success of DeMo ? That's a pretty absurd idea . About as realistic as judging the stock market by a day or week's performance . There's simply too much noise in the short term . Approx $250 of currency is being turned in here . That's more than the GDPs of 80% of the worlds nations . OF COURSE there's short term disruption!

Entire supply chains in all kinds of things have a major cash component involved . It takes weeks for it all to transition to white non-cash mechanisms whether it's cheque or electronic payments .

We are the worlds third largest economy, with formal economy adding up to more than $8 trillion and an additional informal economy adding up to 20-50% more . The entire cash base of that informal economy has been deflated overnight. One has to be crazy to think $1600-4000 billion of economic activity will seamlessly switch over to white overnight . The process takes months, and in fact depends on how willing those with BM are to stop wasting time trying to find more creative ways to keep hiding their ill gotten wealth.

Suraj · Post by **Suraj** » 25 Dec 2016 09:28

This whole 'I estimate the breakdown is A% cash, B% RE, C% gold, D% forex' picture is nonsense . The black economy has only one mode of transaction and that is cash . Approx half the high value notes were the cash base of the black economy .

When one says 'cash is onlee 5% of black economy! Modi has only fixed 5% of problem' it reveals significant economic illiteracy . Let's pretend the example percentages are correct and 95% of BM economy is non cash .

Go ahead and demonstrate how any of that 95% will be transacted in the absence of cash . One cannot use cash to buy/sell benami property anymore. Not the trillions worth of property that percentage figure implies . Large gold transactions must be reported too. Again, since gold holdings as BM are multiples of cash that means there's at least half a trillion of gold out there . Forex no longer has hawala route.

Nothing has value until it is transacted . Transactions has maximal value in a smooth liquid market . How does the BM folks unload trillions worth of gold , RE and forex without the underlying cash liquidity ? They cannot do so undetected . That's the simple reality . Step forward voluntarily and lose 50%, or get caught and lose 90% plus jail time.

Claiming '40% of BM wealth is in RE' or something is bullhonkey . Nothing has value until transacted and if you cannot transact something without being caught, your asset is a liability .

I would challenge anyone making such silly suggestions to prove valid ways. Your explanation MUST be realistic and more importantly, it MUST scale, because it's your claim that trillions of assets exist and can obtain their value through transactions . This is an easy challenge to make because no one will prove it; there simply isn't enough new cash. Everyone claiming such nonsense is going to chicken out when asked to describe the economics, with milquetoast comments like 'the big guys have already figured it out, believe me'.

UlanBatori · Post by **UlanBatori** » 25 Dec 2016 09:52

a) If cash is difficult, barter comes into play. What is your take on the news that BITCOIN (which I don't understand at all) is rising sharply in the wake of NaMoDeMo.

b) One could barter (with goonistan providing the guarantee) say a 1/10 interest in a bldg in Kozhikode for a bldg in Karachi or Doobai. On white paper. Whereas what is actually being exchanged is 100 times that. How does the new owner unload the new acquisition I haven't figured out. Maybe they are outside the reach of Indian law. If the barter is done 10 times, the trail becomes too hard for the babus to trace.

c) Or you barter the bldg. for a stock whose price is variable. Say a new company is floated, at Rs. 100 per share. You exchange your 400% halal bldg which is worth only 10 lac on white paper (10 crore BM) for 10,000 shares (hope my madarssa math is halal).

1 year from tomorrow, said company shares are bought by my 6th coujin thrice removed, for Rs. 100,000 each. Speculative rumors that the pakistan of the building is sitting on a huge uranium field.

I have just managed to unload my BM bldg, totally halal. There is zero cap gain tax on long-term gain in desh, hain?

And 1 month later, I buy a 400% white money bldg in Bengaluru, Kerala, with the proceeds of my windfall stock sale.

Where is the flaw in this, hain? You as EyeTee / ED aphsar may know what was done, but what can you do about it?

Moral: As long as the mafia has a havala-style trust mechanism enforced by fear, the govt has a very tough time. Govt has to operate on letter of the law, not trust, unless the Enforcers are Clint Eastwood/ Amitabh Bacchan ishtyle.

UlanBatori · Post by **UlanBatori** » 25 Dec 2016 09:59

shiv wrote:
UlanBatori wrote:Pssst: What eej PAYTM pls?
eet eej a mobile wallet - downloadable on to onej Andhroid smartphone. Needj loading with cash frm bank.Can be used to pay for large no of utilities, movie tickets, taxis etc https://en.wikipedia.org/wiki/Paytm

.
Shubhanallh shivullah! May your goats eat 500-rupee notes onlee!

Already downloaded with help of knowledgeable Nephew/Niece #256. This is exactly what I needed. QR code and all. I am into the New Millennium!!!

UlanBatori · Post by **UlanBatori** » 25 Dec 2016 10:04

BTW, about this "my village has no bank"

How many villages have BANKs? International airports? Rail stations? 5-star hotels? Nuclear power plants? Shopping Malls? There is a reason why they call a village a village, hain? One pakistan, and it is already a Major Village. IIRC, Velachery, which had its own IIT, had only a pakistan and a tea-shop. Correction: the tea-shop and pakistan were co-located.

Today of course, Velachery has huge high-rise apt bldgs, a 5-star hotel, but I still doubt if it has a bank.

Dasari · Post by **Dasari** » 25 Dec 2016 10:06

Suraj, In latest tweet, LokSatta leader JP says that BM is about Rs 10000 cr/day. He could be wrong, but typically his numbers are reliable. This translates to Rs 36 lakh crore/year or about $500B. How does this reconcile with your numbers?

UlanBatori · Post by **UlanBatori** » 25 Dec 2016 10:10

Suraj, instead of the magically rising corporate stock, racehorses or paintings could be used, though for smaller amounts. Point is, something where the value is in the eyes of the buyer, and not subject to govt. valuation.

Sachin · Post by **Sachin** » 25 Dec 2016 10:10

Around India...

Chaos due to PM's limited education: Kejriwal
Raising a fresh pitch for making Modi’s degree public, the Aam Aadmi Party (AAP) leader wondered whether the prime minister understood economics as he had studied “only up to Class XII”.
Builder raided for money laundering
Income tax sleuths on Saturday raided Gopalan Enterprises and seized a bunch of documents...They said they had noticed huge discrepancies between deposits and sales. The officials suspect various people are using the company's accounts to stash away money.
DRI seizes Rs 2.60cr cash, 95kg gold, silver from Noida SEZ......
Rs 39.98 lakhs in Rs 2,000 notes seized in Kerala, 1 arrested......
While Rs three lakh was seized from 63-year-old Shoukath Ali at the bus stand in Tirur
A Malayalam local media also reported that bags with old currency notes pulverised have been found in one of the Northen districts of the Kerala state.

Schmidt · Post by **Schmidt** » 25 Dec 2016 10:42

Freewheeling conversation with Sub Swamy including Demon and BM on PGurus :

https://www.youtube.com/watch?v=j7fB_1PRIIk

amit · Post by **amit** » 25 Dec 2016 11:06

Suraj wrote:When one says 'cash is onlee 5% of black economy! Modi has only fixed 5% of problem' it reveals significant economic illiteracy . Let's pretend the example percentages are correct and 95% of BM economy is non cash.

Suraj,

Excellent points. Sometimes in the noise of social media engagement putting forward a valid economic argument is not always enough, it has to be put forward in a simple easy to understand format. Sometimes the lowest common denominator approach works the best.

I was having a similar argument/discussion the other day on a social media forum and this same argument came forward in other words cash component is very small and most black money is held in real estate gold etc and so this exercise is futile. Instead of contesting this very questionable premise, I countered by saying think of black money being a lubricant of the black economy, takeaway the lubricant or make it more difficult/impossible to use then you are stalling the black economy train - nobody buys gold bricks with cheques and no one takes a loan to buy a benami property. That shut up the argument very effectively.

Another very popular argument, which I'm sure a lot of folks have faced, and in fact I've seen some semblance of that argument even on this thread, is that the "poor" are hit because they are not tech savvy and hence can't use mobile banking and PayTM and other mobile services jacks the transaction cost for them. That's bullshit of the highest order because the "opportunity cost" of the use of cash is extremely high both for the user as well as the government. The opportunity cost for the user stems from a variety of ways like the time spent withdrawing the cash from the bank/ATM and also includes the risk of carrying a lot of cash. However, the opportunity cost for the government is staggering. A report was linked on this thread recently and there was not much discussion on it. The cost of cash in India has one number that literally made me jump out of my seat. RBI and the banks spend annually $3.5 billion to keep the banking system in shape to handle India's cash economy!

Coming back to why mobile banking is vital for the poor one should refer to M-Pesa in Kenya. The last research paper I read on this decade old mobile payments system, which mainly uses feature phones (Kenya's telecom infra is way behind India's) as much as 25 per cent of banking transactions are done through this app. Best way to convince others is not to say it yourself but by letting gora mouthpieces say it for you.

Here’s why mobile money is dramatically reducing poverty in Kenya

One thing that need to be noted here is the Vodafone had introduced M-Pesa into India in 2011-12 timeframe but an insistence of it having to tie up with a bank has restricted its success here. However, the issue is not whether M-Pesa is a silver bullet for mobile banking for the poor. What's of more interest is that empirical studies have clearly shown two things, one is that a successful mobile banking application doesn't always need Internet access (a very popular argument nowadays to take advantage of the fact that India has a relatively low smartphone penetration) and the other is that it improve the socio economic conditions of the poor. Here's some proof that:

Abstract from a Science Magazine study

Mobile money, a service that allows monetary value to be stored on a mobile phone and sent to other users via text messages, has been adopted by the vast majority of Kenyan households. We estimate that access to the Kenyan mobile money system M-PESA increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty. The impacts, which are more pronounced for female-headed households, appear to be driven by changes in financial behavior—in particular, increased financial resilience and saving—and labor market outcomes, such as occupational choice, especially for women, who moved out of agriculture and into business. Mobile money has therefore increased the efficiency of the allocation of consumption over time while allowing a more efficient allocation of labor, resulting in a meaningful reduction of poverty in Kenya.

There is also a very authoritative MIT study on this subject. Unfortunately I couldn't find it online.

JMT and sorry for a bit of a ramble.

Suraj · Post by **Suraj** » 25 Dec 2016 11:08

UlanBatori wrote:Suraj, instead of the magically rising corporate stock, racehorses or paintings could be used, though for smaller amounts. Point is, something where the value is in the eyes of the buyer, and not subject to govt. valuation.

My point is that NOTHING can be done at scale without being caught and having to cough up huge ass penalty. All manner of things can be done at khadi level . But since the argument is that BM 'wealth' runs into trillions, I challenged anyone to come up with explanations that cover both the preservation of value and hiding from the government .

Look you basically cannot get the value for something you purchased in a liquid market, when the market is no longer liquid . All this barter warter talk ignores the fact that such approaches are illiquid in nature and you take a huge haircut on the earlier mark-to-market value of your property to do that .

No ones paying you cash anymore, and selling in white means IT man knocks on your door for GoIs 50% haircut minimum . In other words the nominal wealth of BM economy took a 50% haircut which goes as future GoI revenue as and when they are caught.

pankajs · Post by **pankajs** » 25 Dec 2016 11:27

Dipanker wrote:Actually both set of numbers could be right. One can have a bank account without a bank branch in the same village. But IMO extrapolating the census figures should be give better estimates. {Both numbers are right! And that is why I called him a CON man and NOT a liar}

India has over 600,000+ villages and the total number of bank branches are ~100,000 approx, meaning there are over 500,000 villages without any bank at all and still 70% of of the population lives in villages. So you can do the math.

When giving the Independence Day speech in 2012, Mauna talks of households but when opposing DeMo he talks of *more than 600 million Indians who live in a town or village with no bank*. Why change the metrics but to suit one narrative.

1. Mauna knows the correct way to look at this is by household going by his 2012 speech. Per the latest survey 98.6 per cent rural households have bank accounts. Details on the prev. page posted by myself from an article written by Bibek Debroy in The Hindu.
2. Everyone who has an account can transact at the nearest branch. The question is not of access but of *easy* access. A branch 50 km away is not easy access for a small farmer or a farm worker who cannot spare a working day. Easy access is taken care by bank mitra who provide service at the village level. This is similar to the postal system where not all villages have a post office but postmen cover the entire (almost) country. That is why talking of villages having no banks makes no sense.

KLNMurthy · Post by **KLNMurthy** » 25 Dec 2016 11:36

UlanBatori wrote:a) If cash is difficult, barter comes into play. What is your take on the news that BITCOIN (which I don't understand at all) is rising sharply in the wake of NaMoDeMo.

b) One could barter (with goonistan providing the guarantee) say a 1/10 interest in a bldg in Kozhikode for a bldg in Karachi or Doobai. On white paper. Whereas what is actually being exchanged is 100 times that. How does the new owner unload the new acquisition I haven't figured out. Maybe they are outside the reach of Indian law. If the barter is done 10 times, the trail becomes too hard for the babus to trace.

c) Or you barter the bldg. for a stock whose price is variable. Say a new company is floated, at Rs. 100 per share. You exchange your 400% halal bldg which is worth only 10 lac on white paper (10 crore BM) for 10,000 shares (hope my madarssa math is halal).

1 year from tomorrow, said company shares are bought by my 6th coujin thrice removed, for Rs. 100,000 each. Speculative rumors that the pakistan of the building is sitting on a huge uranium field.

I have just managed to unload my BM bldg, totally halal. There is zero cap gain tax on long-term gain in desh, hain?

And 1 month later, I buy a 400% white money bldg in Bengaluru, Kerala, with the proceeds of my windfall stock sale.

Where is the flaw in this, hain? You as EyeTee / ED aphsar may know what was done, but what can you do about it?

Moral: As long as the mafia has a havala-style trust mechanism enforced by fear, the govt has a very tough time. Govt has to operate on letter of the law, not trust, unless the Enforcers are Clint Eastwood/ Amitabh Bacchan ishtyle.

Maybe so. Or not.

Cash is fluid and well-understood. It also maintains privacy, and protects against the intrusive eyes of the taxman, and other government sleuths who would like to study your transactions as a means of exercising behavioral control--if all you do is e-transactions, sarkar can know if you bought blasphemous literature, beef recipes, *****, seditious literature, or donated to terrorists. Each is problematic in its own way, but all are not equally problematic. To me, this is the biggest problem with forcing everyone to go cashless--big brother will be firmly and efficiently in charge.

But India, across the political spectrum, doesn't really have a problem with big brother. There is near-unanimity that we are willing to give government vast powers over our individual selves, and trust it to not exceed its limits. That may work in India,, since we are unique only, it remains to be seen.

Those other tricks you listed, none of them has the simplicity and precision of cash when used in a transaction. They are harder to understand, have high overhead, are unstable, and risky. I would bet that none of them is as viable as plain old cash. I see cash-based illegal transactions making a comeback in the years after this demo episode. On the other hand, RBI can keep a check on these by controlling the number of notes it keeps in circulation.

That last may be the ultimate meaning of this exercise--the first shot in a new reality in which currency note supply will be more actively controlled and not allowed to stagnate.

jamwal · Post by **jamwal** » 25 Dec 2016 11:50

http://indiatoday.intoday.in/story/demo ... 42411.html

Demonetisation hits money laundering market in Delhi; only 5 per cent hawala survived note ban
The hawala trade took a massive hit with Prime Minister Narendra Modi's demonetisation drive. Mail Today finds out that only 3 to 5 per cent of the trade is functioning now.

Dozens of agents in old Delhi - a hub of the money-laundering network - have shut shop in the absence of customers and cash after the Centre last month suddenly banned Rs 500 and Rs 1,000 notes in a bid to curb corruption and promote digital payments. The worst-hit hawala operators in the Capital are the Gujarati businessmen.
"They used to celebrate Diwali by shutting their offices and going back to their home state for 15-20 days," said Rakesh, whose father runs a courier services centre in old Delhi.
"But they have not returned since then because at the time they were supposed to come back, the scrapping of notes was announced."
Investigation agencies say the underground networks are trying to revive themselves by parking their black money in new currency in neighbouring countries. Officials say they have tightened vigil along border areas, especially near Bangladesh.

This reporter approached the operator as a client, asking for Rs 20 lakh in old currency to be sent to Mumbai. But the hawala dealer refused to change the scrapped notes. When asked if Rs 20 lakh in new currency can be transferred to Mumbai, the operator turned that down as well, saying only Rs 4 to 5 lakh can be transferred.
"The liquidity of the new currency is very less so the operator sitting on the other side might not have the same amount as the client is willing to send," said another hawala dealer.
"But to survive, we are relying on the conversion of black money using agents and giving them 10 per cent commission."
A broker who was ready to send hawala money from Delhi to Dubai said that he is taking extra commission for old currency transactions.