nachiket wrote:IMHO a lot of the black money hoarders will deposit their money with banks and take a chance with the IT department, rather than throwing it away. They are going to have a lot of work on their hands anyway and would like to go after the really big fish. But the side-effect of that might be that the cash reserves of our stressed banks might suddenly go up. Even if the IT department doesn't catch most of the tax evaders and bribe takers, this might be a shot int he arm for the economy by itself.
To me, this is the best benefit. It massively recapitalizes the banking sector, which in turn means real interest rates are driven down, while simultaneously also driving down demand driven inflation because there are fewer notes out there chasing the same goods, and your white money does not have others' black money competing against you. That applies even to things like dal and onions - the black marketers were skimming your white money away by hoarding stuff every season to profit from the price rise.
nachiket wrote:But I wonder how the people in villages are going to cope. The closest bank might be dozens of km away or more. Especially in states where many villages still do not have electricity. Will take time for this news to percolate to everyone as well.
Postal outlets are authorized to accept the now non legal tender notes. Also, the PMJDY account push needs to be seen in this context. I'm 100% certain GoI planned this much earlier than 6 months ago. They needed Adhaar/PAN and PMJDY in place. They implemented the disclosure scheme to give one last chance, then shut the door in everyone's face.