Currency Demonetisation and Future course of Indian Economy

Shaktimaan · Post by **Shaktimaan** » 12 Nov 2016 15:38

Modi basically said today in Japan that "I can't guarantee that further steps will not follow after this one."

This is a strong hint that more surgical strikes are coming.

He said after Uri that Pakistan should note that we will never tolerate such an attack.

He said during the Voluntary Income Disclosure scheme that if I take strict action after this scheme is over, then don't blame me.

So basically when Modi hints at something like this you can be sure that something big is already cooking. What will it be this time?

kmkraoind · Post by **kmkraoind** » 12 Nov 2016 15:46

Probably thats a decoy. He said he will act on currency notes, but he will act on other issue. By the way, hence he said, now hoarding big notes will be stopped, and thats good and it will help liquidity issue.

pankajs · Post by **pankajs** » 12 Nov 2016 16:13

Here is a simpler way to think of the whole process.

At the stroke of midnight on 8th Nov GOI CONFISCATED all the cash denominated in 500 and 1000. Everyone was left holding a *chit* that promised to pay them 500 or 1000 rupee depending on the note.

Now those who trot up to the bank with the chit will get what is promised on that chit. Later when the chaos has died down GOI/IT will start looking at the amount and start asking for the source of the chits.

After march 2017, whatever money backing the chits are not redeemed is money that the GOI can use however it sees fit. Think of it as a tax on the black money hoarders @ 100% rate.
-------
So Instead of conducting individual raids on Jewellers/Builders/Traders/Industralist/Businessman/Docors/lawyers/CAs/Gov. Servants/Income tax officers/Exercise tax officers/Custom officers/ ityadi.... GOI did one MASSIVE raid and CONFISCATED all the cash and handed them *chits* noting how much was seized. All have been asked to come to the bank with ID proof and source of income proof and collect their cash.

Simple wonlee!!

kapilrdave · Post by **kapilrdave** » 12 Nov 2016 16:19

Suraj et al,

Is there any comparable incidence of this scale in the world to analyze the immediate and long term effects? Or is this the first of its scale?

If latter is true then this is one hell of a case for any economist to study. And what about those in RBI who are living it! You lucky boy Urjit!

Deans · Post by **Deans** » 12 Nov 2016 17:01

I'd like to weigh in on the `ease (or difficulty) of running a business in India' thing that previous posters alluded to, as well as the IT dept.

I'm a company CEO and was brought in to run the company by minority foreign and domestic VC investors, when the Indian promoter had pretty much led the company to bankruptcy, enriching himself in the process. This was 4 years ago. We had decided from the outset to run the company professionally and pay all taxes, as has been the norm in the companies I worked in earlier. It is difficult, but possible and becoming easier all the time. My biggest problem is not the bureaucracy, but the fact that 17 of the 18 competitors in my industry are small and do not pay many taxes. Effectively we compete with a min 10% penalty (in an industry with wafer thin margins) due to the tax differential. Yet, we are the biggest player in our category, the only profitable one and one of the 2-3 Indian brands.
We do have facilitation payments and `chai-pani' but have never paid an outright bribe. We have been harassed in 2016 for late payment of taxes in 2012 (though we paid with interest and penalty) and for missing import documents of 2011 (which either our bank or RBI misplaced). At the same time, most babus we have interacted with (if you work honestly), are honest and work is done as efficiently as in other developing countries (I've worked in a few). More significantly the overall environment is slowly, but surely improving. None of our payments over Rs 1000 are in cash, except Rs 5000 p.m. to the Bangladeshi (claims he is from Kolkata only with Aadhar to prove it) who cleans our office. That said, local govt's continue to be corrupt and sometimes makes me despair.

My income would put me in the top 0.1% of Indians (perhaps top 1%, counting all BM holders). My tax returns are prepared by me and filed online in under an hour. In 2013, I had a notice & demand from IT dept, pertaining to an error they had made, for a return of 2007-8 (affecting my returns after 2013 as well). This remained unresolved as I had no time to deal with it, till a few months ago, when my CA sorted it out with the dept, in 10 mins, without paying anything ! IT dept acknowledged they made a mistake and closed by subsequent returns in a week. This year, my return (which was complex, with a lot of capital gains), was processed in a month and in another month I got a refund I was not expecting, with a certificate thanking me for being a high value taxpayer.
I don't grudge paying taxes, but I hate the fact that some of my peers (like many of the residents in my building), earn more but pay little, if at all, by way of tax. I am delighted to see them squirm. All of them have done the gold/ refund of tickets/ proxy route to deposit money etc but it wont help launder more than a fraction of their money. The domestic help of one was caught, when he tried to deposit money a second time (on behalf of his master) at a different bank.

I had all of Rs 4500 in high value notes (the rest of my household has Rs 8000), which I exchanged in under an hour, declining my Bank managers invitation - since I'm also his corporate customer, to have a cup of tea, while he got me the cash. I don't see why people need to keep large
amounts of cash unless it is to evade taxes. I'm currently renovating my apartment. The contractors are willing to be paid by cheque, barring a minor 10k advance for materials. Our own domestic help are happy to change to bank transfers instead of cash. All the criticism I have heard to date, seems to be from people who have lost their BM.

The queues outside the ATM's (in Bangalore) are shorter today and people seem to be delighted at the discomfort this is causing to BM holders.
The bank staff are, by and large, doing an admirable job under difficult circumstances and they are not getting the recognition they deserve.

shiv · Post by **shiv** » 12 Nov 2016 17:02

Modi's intention to take on crooks is what is seen as the most dangerous thing by our political parties..

Ankar · Post by **Ankar** » 12 Nov 2016 17:38

https://mobile.twitter.com/TimesNow/sta ... 12/video/1 Modi

JayS · Post by **JayS** » 12 Nov 2016 17:39

Modi in his Speech in Japan has warned that if he catches someone he will go check his entire history from Independence.

He will do it,whatever amount of manpower it may need.

He also reported that in last 2 yesr through various schemes GOI has uncovered about 1.25Lakh Cr BM that is about 50lakh Cr in GOI coffers as taxes.

He also said, there is no guarantee is there will be any more such schemes coming to dump your BM.

Lets see who will dare to take him lightly now on...

JayS · Post by **JayS** » 12 Nov 2016 17:39

Deans wrote:I'd like to weight in on the `ease (or difficulty) of running a business in India' thing that previous posters alluded to, as well as the IT dept.

I'm a company CEO and was brought in to run the company by minority foreign and domestic VC investors when the Indian promoter had pretty much led the company to bankruptcy, enriching himself in the process. This was 4 years ago. We had decided from the outset to run the company professionally and pay all taxes, as has been the norm in the companies I worked in earlier. It is difficult but possible and becoming easier all the time. My biggest problem is not the bureaucracy, but the fact that 17 of the 18 competitors in my industry are small and do not pay many taxes. Effectively we compete with a min 10% penalty (in an industry with wafer thin margins) due to the tax differential. Yet, we are the biggest player in our category, the only profitable one and one of the 2-3 Indian brands.
We do have facilitation payments and `chai-pani' but have never paid an outright bribe. We have been harassed in 2016 for late payment of taxes in 2012 (though we paid with interest and penalty) and for missing import documents of 2011 (which either our bank or RBI misplaced). At the same time, most babus we have interacted with are honest and work is done as efficiently as in other developing countries (I've worked in a few). More significantly the overall environment is slowly, but surely improving. None of our payments over Rs 1000 are in cash, except Rs 5000 p.m. to the Bangladeshi (claims he is from Kolkata only with Aadhar to prove it) who cleans our office.

My income would put me in the top 0.1% of Indians (perhaps top 1%, counting all BM holders). My tax returns are prepared by me and filed online in under an hour. In 2013, I had a notice & demand from IT dept, pertaining to an error they had made for a return of 2007-8 (affecting my subsequent returns as well). This remained unresolved as I had no time to deal with it, till a few months ago, when my CA sorted it out with the dept, in 10 mins, without paying anything ! IT dept acknowledged they made a mistake and closed by subsequent returns in a week. This year, my return (which was complex, with a lot of capital gains), was processed in a month and in another month I got a refund I was not expecting, with a certificate thanking me for being a high value taxpayer.
I don't grudge paying taxes, but I hate the fact that some of my peers (like many of the residents in my building), earn more but pay little, if at all, by way of tax. I am delighted to see them squirm. All of them have done the gold/ refund of tickets route/ proxy to deposit money etc but it wont help launder more than a fraction of their money. The domestic help of one was caught, when he tried to deposit money a second time (on behalf of his master) at a different bank.

I had all of Rs 4500 in high value notes (the rest of my household has Rs 8000), which I exchanged in under an hour, declining my Bank managers invitation - since I'm also his corporate customer, to have a cup of tea while he got me the cash. I don't see why people need to keep large
amounts of cash unless it is to evade taxes. I'm currently renovating my apartment. The contractors are quite willing to be paid by cheque, barring a minor 10k advance for some materials. Our own domestic help are happy to change to bank transfers instead of cash. All the criticism I have heard to date, seems to be from people who have lost their BM.

The queues outside the ATM's (in Bangalore) are shorter today and people seem to be delighted at the discomfort this is causing to BM holders.
The bank staff are, by and large, doing an admirable job under difficult circumstances and they are not getting the recognition they deserve.

+1000

Dumal · Post by **Dumal** » 12 Nov 2016 17:55

Can the spelling of demonetisation corrected in the title or is it possibly an alternate spelling?

Primus · Post by **Primus** » 12 Nov 2016 18:02

Sidharth wrote: Yes, that is the correct thinking. But the same thinking is not what the 'euphoria' folks have. They think all black money.
Also the rider is, this is a temporary win. In a few months, again black money in cash will start to build. There has to be a continuous process, while encouraging e-money. When I can pay the local vegetable cart vendor with m-pay or pytm, mobile to mobile, that will be a giant step. But so long as taxes are high, the vendor will be very reluctant to accept e-money. So he will start building the black money cash reserve again. Probably already started.

I can understand the pain of those who have lost money although I do not buy the entire argument about 'honest black money', which in itself is an oxymoron. And I also do not buy the 'high taxes=black money', that too is simply dishonest, whether people agree or not.

Here in the US, I run two small businesses in partnership. Both are heavily regulated by the government with periodic inspections and mandatory benchmarks that must be met. Every penny earned is accounted for and a yearly audit has to be submitted to the government. Everything is 100% white. Every business in the US has 'payroll taxes' and 'FICRA' which means you contribute over 20% of the employee's salary to the government.

On any profits I make after the above and take as my personal 'income', I pay over 55% of every dollar in various taxes at source (federal, state, city, medicare, SS, AMT etc). Short term capital gains are also taxed at over 25%. Taxes in India are overall lower than in the US or Canada (35% vs over 50%)

Once I take my money home there are additional taxes.

On the consumer front, everything I buy, whether from a local store or online from Amazon, I pay 8.26% local sales tax. My taxes on my residential home amount to 3% of the value of my home annually. There is also tax on phone, electricity, cable, gas and water bills. Every time I eat at a restaurant I pay tax.

Everything I earn, buy, consume, utilize is taxed.

In summary the tax burden on anybody running a business in the US is massive, both on the business income as well as on the take home profits. Yet there is no black money and everything (from where I am) is transparent.

This is not to say there is absolutely no tax evasion here. But guess what, it is, just like in India where small time street vendors, small restaurant owners, baby sitters, housekeepers, small-time plumbers/electricians and unscrupulous Indian jewelers/electronics merchants who deal with all cash sales that can avoid paying taxes and thus accumulate black money.

However, even they have to pay all white when buying any real estate. In fact, if you deposit or withdraw more than $10,000 from any bank in the US it is reported automatically to the IRS, as is any cash purchase for the same amount

I guess my point is that if every penny in the entire chain is white and everybody is honest, it lowers the price of commodities, makes everything transparent and though the high taxes in the US may give me heartburn, it allows me to sleep once I've gotten over the quarterly tax payment.

This transition will be painful for many people in India, but in the end they and their progeny will benefit. Labor pains are never welcome but the results are well worth it.

pankajs · Post by **pankajs** » 12 Nov 2016 18:05

I think didi *might* have been getting a cut for allowing *secure* passage of fake currency via WB.

prashanth · Post by **prashanth** » 12 Nov 2016 18:06

kvraghav wrote:The abolishment will come in a phased manner. Looking at the new 2000 rs note, this is just a temproary note.

+1008

Gus · Post by **Gus** » 12 Nov 2016 18:44

JayS wrote:Modi in his Speech in Japan has warned that if he catches someone he will go check his entire history from Independence. He will do it,whatever amount of manpower it may need.

He also reported that in last 2 yesr through various schemes GOI has uncovered about 1.25Lakh Cr BM that is about 50lakh Cr in GOI coffers as taxes.

He also said, there is no guarantee is there will be any more such schemes coming to dump your BM.

Lets see who will dare to take him lightly now on...

I think folks might be scrambling and pore over transcripts of previous speeches to see what else he said..

Austin · Post by **Austin** » 12 Nov 2016 18:59

New Notes, No Cash?

http://www.ndtv.com/video/news/the-buck ... -top-shows

The discssion says 3.5 Lacs crores of black money will be burnt out cant put back in bank or make it white.

About 14 lacs crores are in the hand of Indian Public or Floating in the economy , I guess they are talking about M2

How much is 14 lacs crores in USD ?

pankajs · Post by **pankajs** » 12 Nov 2016 19:04

14 lakh crore ~ 210 billion
3.5 lakh crore ~ 50 billion

uddu · Post by **uddu** » 12 Nov 2016 19:06

Why is NDTV link posted here. Please find alternate channels with the same info and post it here. Not channels like NDTV

manju · Post by **manju** » 12 Nov 2016 19:42

shiv wrote:
Rahul M wrote: the exception was my ola driver of the peaceful persuasion, who told me modi had 'fled' India to japan fearing reactions, that he was going to lose 2019 and the next govt. will overturn this decision and make old 500/1000 notes legal again. also, people will no longer pay taxes after this. when I asked him how would govt then pay for things like roads, infra & police etc, he told me in foreign lands people do not pay any taxes and those are the lands of milk and honey where everything is cheap and everybody is rich. these foreign lands are all in ME viz. saudi & dubai.
I mentioned to him that they will face problems once oil is finished, he claimed they have huge reserves of gold !
That guy must be a Rhodes scholar..

manju · Post by **manju** » 12 Nov 2016 19:46

kapilrdave wrote:Suraj et al,

Is there any comparable incidence of this scale in the world to analyze the immediate and long term effects? Or is this the first of its scale?

If latter is true then this is one hell of a case for any economist to study. And what about those in RBI who are living it! You lucky boy Urjit!

am not a finance guy... but i remember Brazil doing something similar in the last decade. I do not recall the details now. This was done to tackle high inflation.

Supratik · Post by **Supratik** » 12 Nov 2016 19:50

I think today it will be 3 lakh crore deposited. 11 lakh crore still out there. If 5 lakh crore BM. 6 lakh crore still to be accounted for. Will take a week. I also think there is enough liquidity in banks now to allow higher withdrawal above 10000.

manju · Post by **manju** » 12 Nov 2016 19:53

JayS wrote:Modi in his Speech in Japan has warned that if he catches someone he will go check his entire history from Independence. He will do it,whatever amount of manpower it may need.

He also reported that in last 2 yesr through various schemes GOI has uncovered about 1.25Lakh Cr BM that is about 50lakh Cr in GOI coffers as taxes.

He also said, there is no guarantee is there will be any more such schemes coming to dump your BM.

Lets see who will dare to take him lightly now on...

Slightly off topic (bradmin, if you will allow)..

u throw anything at modi and he will use it against u.

Mani shankar idiot slung a "chaiwala.... cannot become pm." and the idiot i now sucking his thumb

some liberaltard tried trolling "modi, where is my 15 lakhs." now modi does this banning of 500 ad 1000 rs... which may translate to x rs/citizen (x being in lacs I am guessing.. some mullah here can try doing the math)

Mort Walker · Post by **Mort Walker** » 12 Nov 2016 19:58

pankajs wrote:14 lakh crore ~ 210 billion
3.5 lakh crore ~ 50 billion

Estimates of 500 and 1000 notes in circulation are $245 billion.

manju · Post by **manju** » 12 Nov 2016 20:01

today in a small central Karnataka district hq..

across my house is a SBI and there have been long line. A couple of times heard some loud noises. people arguing perhaps.. have not ventured near the bank yet as I can see the long lines. I know the manager but did not want to bother him and I am doing ok with the currency i have.

i have been working on my landscape and have made payments for red soil, organic manure and lot labor all adding up to 20-40 k (since Modi bhai anti-BM nukes) in 500 Rs denomination. Except for 1-2 laborers/vendors who insisted on 100s. I told them they will have to wait for week- one accepted 500 notes and the other guy is willing to wait for a week to get his 1000 rupees that i owe him.

My brother got a 5 lac 6 month interest free loan - all cash from a friend who had excess cash. My brother said he was able to use this 5 lac to pay his vendor (a whole sale cloth merchant).

Austin · Post by **Austin** » 12 Nov 2016 20:16

Mort Walker wrote:
pankajs wrote:14 lakh crore ~ 210 billion
3.5 lakh crore ~ 50 billion
Estimates of 500 and 1000 notes in circulation are $245 billion.

Thanks , Thats Big

Deans · Post by **Deans** » 12 Nov 2016 20:22

There are some things that might have been done better (hindsight is a wonderful thing !), to reduce whatever inconvenience there is and
uncover more black money.

The PM's speech should have been followed up by a joint press conference by RBI Governor & Rev secretary, explaining the Why and How of the scheme and the numbers, to allay the public's fears. (for e.g. the total no of people who will visit the bank or ATM in the next 50 days is a far lower `per day' number than what is the case currently. That should have been followed up a day later, by a more detailed press briefing by FM & Rev Sec to address some of the points the opposition raised (e.g. why a Rs 2000 note).

The logistics of re-configuring and stocking 200,000 ATM's has never been attempted anywhere. Russia, with 147 million people and a denser bank network than India, took 4 years to do (1998-2002) what we are attempting in 50 days. That said, it could have been executed better. transport of money to ATM's is the bottleneck currently. Govt could have authorised hiring outside vehicles and paramilitary (e.g. CISF) forces to ensure more
trips to ATM's under guard.

Also, BJP/RSS/ ABVP workers can do the rounds of banks, assuage the fears of people, help in queue management and filling forms etc. Without this, the narrative is being hijacked by the opposition. Similarly, banks could have organised former staff on a part time basis to open more counters and also (can still be done) introduce staggered shifts and flexi weekly off's with existing staff, so that banks can operate from 8 to 8 on all days.

There are a lot of proxies of BM holders trying to deposit money in their 0 balance JDY accounts. Govt should publicise a whistle-blowers scheme where, if they give details the origin of the money, with proof, they get to keep the money in their account. GOI can publicise contact details, for anyone who wants to give info on BM holders trying to launder money (instead of exchanging stories on whatsapp). The best thing the govt has
going for it is a sense of Schadenfreude at the discomfort of the BM holders, which can be exploited. Appeal to the patriotic spirit of people to
accept a little inconvenience.
Finally, have a tracker which the public can access, on amount deposited, exchanged, no of people availing of either scheme etc

For all this, GOI needs an ad spend 5 times more than what was done in the amnesty scheme.

Primus · Post by **Primus** » 12 Nov 2016 20:23

Sidharth wrote:
yensoy wrote: Taxes wise, boss I file income taxes in 3 large countries and let me assure you that Indian tax rates are the lowest. If you are complaining about Indian IT rates, you have no idea about the world (and please don't compare with islands of prosperity like Dubai or Singapore).

I think the level of corruption in state and local level is much higher than at the central level. But this discussion is not about corruption; that will need other means to fix and from the past actions I believe Modi very much has that as a target.
Saar, please.. I too file taxes in 2 large countries. In the 'other' country, when i visit a restaurant I don't pay nearly 20% in taxes, after i have paid 30% income tax. I dont pay nearly 40% in taxes when I fuel my car. When I buy a car, I dont pay road tax, VAT, tax on tax. I dont need to subsidize someone else through tax because that guy belongs to particular caste/tribe. When I cross inter-state borders with goods, I dont worry about Octroi, Excise (note: use tax is different, it is same as sales tax).
So hope you can see why India is one of the highly taxed countries, also with one of the poorest tax base. Successive govt have done piss-poor to expand it.

Sidharth Ji, please take a look at the Wiki link I posted earlier. Overall taxation (business plus income plus utilization) is lower in India. If you consider the fact that a huge section of the economy and citizens pay hardly any taxes on income from business (unless you include bribes), it is lower still.

Owning/driving a car around where I live is outrageously expensive. You pay 8.26% sales tax on purchase of new cars, you also pay the same even if you are buying a 10 yr old car from your friend or neighbor. You pay huge amounts in auto insurance (currently over $1000 a year for me). There is no monthly road tax as in the UK, but guess what, every time you cross a bridge or tunnel you pay a massive toll. Try driving around New Jersey, there is a toll to be paid every few miles. An average commuter coming into NYC from NJ pays over $400 in tolls every month! Even a short trip for me to visit my daughter in the city costs me $16 in tolls. Yes, gasoline is cheaper, but when you are commuting 50 miles a day or more, the end costs are the same as someone in Delhi driving less than 20 miles a day.

Eating out, you pay 18-20% in tips (15% is no longer considered the norm) along with the local sales tax (8.26% in my area).

Yes, there are many nations where overall taxation is low, but very few of these are in the 'Western' hemisphere. Please note, we are not comparing cost of living here, simply taxation. The two things are not the same.

Primus · Post by **Primus** » 12 Nov 2016 20:26

Sanju wrote:My FIL sold his property in August asking for all white and selling it at the Govt. rate. When the buyer said I don't have the money all in white, He said give it to me when you have it. He could have of-course sold it partly in black and made more money. But then after serving the Army for 30 years as a Doc in AMC he is still supporting his country and doing the right thing.

I hear what the businessmen here are saying. I empathize with you that yes it is a hard step for you. I can only say that you need to have some faith in Modi, who I am sure has gamed it and the sky will come falling down on the corrupt officials. You are all way better off than the Chinese people who lost their livelihood and their property. No consolation but perspective.....for the larger good of the country people will have to go through hardship.

Sanju Ji, my sentiments exactly. We have been waiting for five years for my father's house to be be bought by someone willing to pay white, he was a scientist with DRDO, very much a patriot. Now one can hope this will indeed happen.

kvraghav · Post by **kvraghav** » 12 Nov 2016 20:28

They can increase the withdrawal limit of current account but I think savings account should be maintained at the same levels. No business runs on savings account.

yensoy · Post by **yensoy** » 12 Nov 2016 20:32

komal wrote:Why are authorities forcing temples to seal their hundi boxes? What is wrong if BM is donated to a good cause rather than being burned?

For a couple of reasons:
1. Benefit of confiscation of BM to accrue to people and government, not to any private party or religious institution. Would govt be ok if you say "I will pay my due taxes to my religious institution" rather than IT dept/GoI?
2. This could be a backdoor way for money laundering. There are many small/private temples with trustees of questionable antecedents - the trustee can push money through the hundi and get a big portion back by manipulating what the temple does with these funds (e.g. fund his educational institution, give him a fat contract for doing nothing...).

vijayk · Post by **vijayk** » 12 Nov 2016 20:36

I heard that MLAs are distributing their money of 2.5 lakhs to every one in their villages because they can't spend it anymore.

vijayk · Post by **vijayk** » 12 Nov 2016 20:44

Modi dented this man's khazana very bad. Look at his language

shiv · Post by **shiv** » 12 Nov 2016 20:49

vijayk wrote:I heard that MLAs are distributing their money of 2.5 lakhs to every one in their villages because they can't spend it anymore.

If the villagers have to use that money they have to put it in a bank. If they put it in a bank they must first have a PAN number an other identity documents.

At the end of the year IT is going to as all the men who have 2.5 lakh plus other income to file a return and they will have to show where that income came from suddenly in Nov-Dec 2016. They can then name their MLA or simply allow themselves to be punished instead of him

A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore. Even if the money in black is a measly 5 crores they need to find 2000 people in that village and the local bank with 2 staff members to do the work. And if the MLA has 50 crores in black - well..

Sounds like a lot of fun for everyone

Primus · Post by **Primus** » 12 Nov 2016 20:53

Deans wrote:There are some things that might have been done better (hindsight is a wonderful thing !), to reduce whatever inconvenience there is and
uncover more black money.

The PM's speech should have been followed up by a joint press conference by RBI Governor & Rev secretary, explaining the Why and How of the scheme and the numbers, to allay the public's fears. (for e.g. the total no of people who will visit the bank or ATM in the next 50 days is a far lower `per day' number than what is the case currently. That should have been followed up a day later, by a more detailed press briefing by FM & Rev Sec to address some of the points the opposition raised (e.g. why a Rs 2000 note).

The logistics of re-configuring and stocking 200,000 ATM's has never been attempted anywhere. Russia, with 147 million people and a denser bank network than India, took 4 years to do (1998-2002) what we are attempting in 50 days. That said, it could have been executed better. transport of money to ATM's is the bottleneck currently. Govt could have authorised hiring outside vehicles and paramilitary (e.g. CISF) forces to ensure more
trips to ATM's under guard.

Also, BJP/RSS/ ABVP workers can do the rounds of banks, assuage the fears of people, help in queue management and filling forms etc. Without this, the narrative is being hijacked by the opposition. Similarly, banks could have organised former staff on a part time basis to open more counters and also (can still be done) introduce staggered shifts and flexi weekly off's with existing staff, so that banks can operate from 8 to 8 on all days.

There are a lot of proxies of BM holders trying to deposit money in their 0 balance JDY accounts. Govt should publicise a whistle-blowers scheme where, if they give details the origin of the money, with proof, they get to keep the money in their account. GOI can publicise contact details, for anyone who wants to give info on BM holders trying to launder money (instead of exchanging stories on whatsapp). The best thing the govt has
going for it is a sense of Schadenfreude at the discomfort of the BM holders, which can be exploited. Appeal to the patriotic spirit of people to
accept a little inconvenience.
Finally, have a tracker which the public can access, on amount deposited, exchanged, no of people availing of either scheme etc

For all this, GOI needs an ad spend 5 times more than what was done in the amnesty scheme.

+100

A lot could have been done to assuage the public anxiety and fears of the large number of honest folk out there. It will be a very painful transition no doubt but people are nothing if not resilient.

It is evident that India is changing, and for the better. In another lifetime I spent over a week trying to get an NOC from a clerk in the Municipal Corporation of Delhi. He didn't ask for it but I knew he wanted a bribe. I was adamant I would not give any. So every morning I commuted to Chandni Chowk to the MCD head office, sat down in front of him, stayed all day but for a lunch break. After a week he figured I was a nuisance and moved my file and I got my NOC. I can see how this might be impossible for many folks who need things done in a hurry.

I can imagine a time when there is no corruption at grass-root level and people can go about expending their energies and money in building a future for themselves instead of fighting the daily grind. I think it is worth fighting for.

JayS · Post by **JayS** » 12 Nov 2016 20:55

IMO government needs to work on multiple fronts to stop re-generation of BM now.

Some of them, other posters have pointed out.

One good short term thing GOI could do is to increase 80C limit for the money in long term deposits. Current limit is too low even for lower middle class now. It should be something like 3-5lakh. A lot of people who keep money in gold or just as cash will have a reason to keep it in Bank/PPF or in debt market. This will give a lot of goodwill for Modi as well since this will benifit a large section of public and the tax penalty GOI has would be minimum.

pankajs · Post by **pankajs** » 12 Nov 2016 20:55

Khujli must be hurting bad given that he has gone ballistic ....

And Didi willing to partner with CPM

.... what is going on in didiland? Modi seems to have hit where it is most painful. Mybe the carder bizness of fake currency means that they are revolting against her.

symontk · Post by **symontk** » 12 Nov 2016 20:57

shiv wrote:The reasons why ATMs have not come online could be
1. ATMs not yet reconfigured for new Rs 2000 notes
2. Not enough Rs 100 notes

But I believe a new Rs1000 note is also coming, basically they need to add a tray for Rs2000

Thankfully, I didnt had single note of Rs500 or Rs1000 in my hand. I had Rs200 in my purse and my wife had Rs400. Didn't withdraw for a week and today only got 20 Rs100's from the apartment ATM. All expenses were met by card

symontk · Post by **symontk** » 12 Nov 2016 21:01

shiv wrote:
vijayk wrote:I heard that MLAs are distributing their money of 2.5 lakhs to every one in their villages because they can't spend it anymore.
If the villagers have to use that money they have to put it in a bank. If they put it in a bank they must first have a PAN number an other identity documents.

At the end of the year IT is going to as all the men who have 2.5 lakh plus other income to file a return and they will have to show where that income came from suddenly in Nov-Dec 2016. They can then name their MLA or simply allow themselves to be punished instead of him

A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore. Even if the money in black is a measly 5 crores they need to find 2000 people in that village and the local bank with 2 staff members to do the work. And if the MLA has 50 crores in black - well..

Sounds like a lot of fun for everyone

They can pay that as a salary (lumpsum for a year or more) for the folks working in their factories / fields to make that white. But yes IT folks will definitely smell that

rahulm · Post by **rahulm** » 12 Nov 2016 21:03

Xpost

The last thing we need right now is a transport strike. Fully expect Congoons and other parties to stir up situation through proxies. CPI-M will try their best through unions. Things can escalate downhill rapidly form there into riots and civil disobedience. NaMo has to take charge quickly.

We need daily Kargil type briefings on national TV by heavy weights. Comms is sorely lacking. I can sit this out pretty much indefinitely but appreciate most can't. My Goa tea adda chap has been antsy today after being cheerful last 2 days.

Digital literacy is low amongst the populace. Anecdotally, barring very few exceptions, there is no momentum to embrace EFT of any sort. Businesses feel they can ride out the cash crisis which may not be true.

, i finalised a deal with the pest control chap for my house. 30K. At the end of th negotiations, I said, I will pay either by cheque or RGTS. He insisted on cash. I queried if he has a bank account? He said yes but insisted on cash.

I said, you can have my business by cheque or EFT or else I will find somebody else. He thought about it for a few moments and then agreed by saying that I would have to explain EFT. Kya karein? we just love cash, gold and land. In that order.

In Goa , teachers are telling me, they withdraw their entire salary from the bank once a month every month and keep the cash at home. They are the torch bearers- it goes down hill from there.

symontk · Post by **symontk** » 12 Nov 2016 21:05

pankajs wrote:14 lakh crore ~ 210 billion
3.5 lakh crore ~ 50 billion

What they are counting in RBI is how much of the old notes reach them back. For example, if only 12 lakh crore of the Rs500 and 3 lakh crore of Rs1000 reaches them, rest is BM lost out. Since the money supply is by states, they can track it by states too

But one thing in the episode is that as a child I used to believe the small print written in the note that the "bearer will be paid the amount mentioned". But that is not wholly true. Interesting that this is all happening in a country where the money originated

shyamal · Post by **shyamal** » 12 Nov 2016 21:08

JDY news - Jan Dhan accounts with sudden influx to be looked at
http://economictimes.indiatimes.com/new ... 390173.cms