Currency Demonetisation and Future course of Indian Economy

[shiv]

There will be temporary contraction of actual economic activity . But not official economy because it's a process off addition to the official economy . The duration of short term shock is within the hands of the businessman to fix - the faster he fesses up and cleans his books the more advantageous is his position . Like GST this is self regulating - fess up early and you have an advantage over others running around trying to conceal .

There is a political issue that crops up here.

Let me quote am anecdotal example. In an auto today I asked the driver "How's business". He said business is down because "No one has money. People will travel only if they have money". Of course he was very supportive of the actual demonetization and like everyone else I speak to, he said patience and time are needed.

But here is what I foresee. In Bangalore (perhaps in all Indian cities) there are entire areas that have shops of one particular category. So you have an entire are selling marble flooring, another area selling tiles, a third area devoted to sanitary fittings; an area for fancy lighting and electrical accessories apart from areas devoted to furniture, steel utensils etc.

The other characteristic is that these areas/businesses are all family/community dominated - mainly Marwari. I foresee a contraction in the sales of items related to real estate and housing - that would be fancy marble/granite flooring, fancy tiles, fancy lighting, fancy sanitary fittings. That means entire areas/streets are going to lose business along with a decrease in income of service people associated with that - ie tea-boys, delivery boys, shop assistants etc. These will become a political force that will be used to claim that the exercise is failure.

What sort of measures would be possible to stem/forestall this?

[Rishi Verma]

Wow a ganja reporter on CNN-18 is obviously instigating crowd standing in line with leading questions and using words like people facing "existancial problems". Crowd of the very peaceful inclination was happy to vent some steam.

[hanumadu]

While some businesses may be hit in the short to medium term, long term there will be more economic activity as input costs for land, building, rental will come down. Housing may increase as land prices come down. While luxury businesses catering to the rich may suffer, businesses servicing middle class and poor will increase. It will not be a smooth sailing for many, but it was a necessary step to take. Any increase in tax compliance means more money for the govt to invest in infrastructure which will benefit every body.

[Karthik S]

There will be temporary contraction of actual economic activity . But not official economy because it's a process off addition to the official economy . The duration of short term shock is within the hands of the businessman to fix - the faster he fesses up and cleans his books the more advantageous is his position . Like GST this is self regulating - fess up early and you have an advantage over others running around trying to conceal .

There is a political issue that crops up here.

Let me quote am anecdotal example. In an auto today I asked the driver "How's business". He said business is down because "No one has money. People will travel only if they have money". Of course he was very supportive of the actual demonetization and like everyone else I speak to, he said patience and time are needed.

But here is what I foresee. In Bangalore (perhaps in all Indian cities) there are entire areas that have shops of one particular category. So you have an entire are selling marble flooring, another area selling tiles, a third area devoted to sanitary fittings; an area for fancy lighting and electrical accessories apart from areas devoted to furniture, steel utensils etc.

The other characteristic is that these areas/businesses are all family/community dominated - mainly Marwari. I foresee a contraction in the sales of items related to real estate and housing - that would be fancy marble/granite flooring, fancy tiles, fancy lighting, fancy sanitary fittings. That means entire areas/streets are going to lose business along with a decrease in income of service people associated with that - ie tea-boys, delivery boys, shop assistants etc. These will become a political force that will be used to claim that the exercise is failure.

What sort of measures would be possible to stem/forestall this?

They must accept payments through Debit and Credit cards. The first set of business you've mentioned can easily buy card swiping machines. If amounts are worth few lakhs, which could be the case with granite business, they must accept checks.

[Suraj]

Regional political parties vs TSP power centers is an approximate but dangerous analogy to make, unless you control the narrative of the analogy.

[Rishi Verma]

There will be temporary contraction of actual economic activity . But not official economy because it's a process off addition to the official economy . The duration of short term shock is within the hands of the businessman to fix - the faster he fesses up and cleans his books the more advantageous is his position . Like GST this is self regulating - fess up early and you have an advantage over others running around trying to conceal .

The other characteristic is that these areas/businesses are all family/community dominated - mainly Marwari.

What sort of measures would be possible to stem/forestall this?

Very simple. Free-market forces with no gov intervention except an even playing field and swift justice.

[shiv]

They must accept payments through Debit and Credit cards. The first set of business you've mentioned can easily buy card swiping machines. If amounts are worth few lakhs, which could be the case with granite business, they must accept checks.

In Bangalore they all do. The problem is not about dishonest business. it is the customers who will dry up because a lot of the fancy stuff was probably being paid for with black money. The businesses are probably pretty clean, and therefore innocent collateral damage.

[shiv]

Regional political parties vs TSP power centers is an approximate but dangerous analogy to make, unless you control the narrative of the analogy.

Anything further I say about this will be totally off topic for this thread and I will leave it for some other time, except to say that India has been blessed with a strong centre courtesy in no small part to an apolitical army.

[ticky]

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

100-300 short in bundles of new notes i.e 500 & 2000, must be magic !!!

Packet = 100 notes
Section = 10 packets
Bundle = 10 packet = 10000 note

A Bundle has a different meaning to banks. I learnt in the most embarrasing way possible. So its possible

[Suraj]

There is a political issue that crops up here.

Let me quote am anecdotal example. In an auto today I asked the driver "How's business". He said business is down because "No one has money. People will travel only if they have money". Of course he was very supportive of the actual demonetization and like everyone else I speak to, he said patience and time are needed.

But here is what I foresee. In Bangalore (perhaps in all Indian cities) there are entire areas that have shops of one particular category. So you have an entire are selling marble flooring, another area selling tiles, a third area devoted to sanitary fittings; an area for fancy lighting and electrical accessories apart from areas devoted to furniture, steel utensils etc.

The other characteristic is that these areas/businesses are all family/community dominated - mainly Marwari. I foresee a contraction in the sales of items related to real estate and housing - that would be fancy marble/granite flooring, fancy tiles, fancy lighting, fancy sanitary fittings. That means entire areas/streets are going to lose business along with a decrease in income of service people associated with that - ie tea-boys, delivery boys, shop assistants etc. These will become a political force that will be used to claim that the exercise is failure.

What sort of measures would be possible to stem/forestall this?

There'll be some temporary shock to every line of business. The auto driver for example. Exclusively cash, unless there are now autos that take paytm or something. Ridehailing services can take cards or electronic payment, right ?

For brick and mortar business, they *already* had 2 sets of books. One set is their white book and the other their true book. The white book reports income *below* their white activity . Why ? Because they're trying to turn white money into black, so if they report income over their white activity, then questions will be asked. If they report as much, well at least they're honest, but it doesn't suit them because there's an incentive to retain the value of black money due to inflation, and that incentive is white-black conversion. They need to convert at least as much as it takes to beat inflation.

So their white book reports less than their actual white activity, the delta being what they convert into black. Now suddenly the black transactions are dead and their white->black conversion cannot happen. So their white books will 'true up' to the actual white business activity. Because two things - the black economy is gone, and the incentive to convert white to black is also gone. So the real books will grow to the true value of white activity, and then grow further to encompass all black economic activity they fess up and turn white...

This is why I said official economy will keep growing in size because this is all accretive to the official economy and is really a question of how much alacrity the businessman has. The situation very much biases him to confess quickly and get a headstart, rather than hem and haw and lose more. The smart ones will rush to take the reporting hit but save his business long term. The rest, well their stupidity while trying to come up with jugaad concealment tactics compounds their problems.

[hanumadu]

There will be temporary contraction of actual economic activity . But not official economy because it's a process off addition to the official economy . The duration of short term shock is within the hands of the businessman to fix - the faster he fesses up and cleans his books the more advantageous is his position . Like GST this is self regulating - fess up early and you have an advantage over others running around trying to conceal .

There is a political issue that crops up here.

Let me quote am anecdotal example. In an auto today I asked the driver "How's business". He said business is down because "No one has money. People will travel only if they have money". Of course he was very supportive of the actual demonetization and like everyone else I speak to, he said patience and time are needed.

But here is what I foresee. In Bangalore (perhaps in all Indian cities) there are entire areas that have shops of one particular category. So you have an entire are selling marble flooring, another area selling tiles, a third area devoted to sanitary fittings; an area for fancy lighting and electrical accessories apart from areas devoted to furniture, steel utensils etc.

The other characteristic is that these areas/businesses are all family/community dominated - mainly Marwari. I foresee a contraction in the sales of items related to real estate and housing - that would be fancy marble/granite flooring, fancy tiles, fancy lighting, fancy sanitary fittings. That means entire areas/streets are going to lose business along with a decrease in income of service people associated with that - ie tea-boys, delivery boys, shop assistants etc. These will become a political force that will be used to claim that the exercise is failure.

What sort of measures would be possible to stem/forestall this?

If there is a decrease in land prices, housing prices their business may actually increase. The increase in legitimate buyers may compensate/outnumber the BM buyers. Imagine a 25% decrease in property prices. I think it will create a surge in demand from honest people. NRIs may increase their spending. Inflation may come down, loans may be cheaper.
My guess is these vendors operate with high margins and made enough profits in past years, they will ride out the storm.

Of course nothing of the sort may happen in the short term. I hope employment is generated else where. Modi has focused on employment generation a lot. He can continue to make it a priority.

[pankajs]

Money not claimed by black money hoarders will be deployed to boot infrastructure projects and there by employment and GDP.

[Karthik S]

And banks can increase loans to many local SMEs that help in employment.

[Sachin]

What is happening in Kerala? Other than a few busts of illegal money getting caught during transit, nothing else is coming out. All the major channels are focussing more on the "ATMs are out of cash, common man suffering" sob stories. To be frank, I was expecting more busts from a few districts by now. Nothing of that sort has happened. Don't know if there has been attempts to route all the hoarded money through co-operative banks as the state government is now trying to get the rules changed. GoKL seems to be using all means to allow the cooperative banks to exchange the demonetised currency.

That means entire areas/streets are going to lose business along with a decrease in income of service people associated with that - ie tea-boys, delivery boys, shop assistants etc. These will become a political force that will be used to claim that the exercise is failure.

These business groups which kind of supported the lesser rich folks, also have to remain in business. So they would have to mend their ways and retune their business strategies. If Debit & Credit cards are one way to do it, they can try that. If it is trying to get more business by lowering margings/profits etc. they can do that. Many of these folks like delivery boys & tea boys have a kind of business which can be quickly moved to another location. One thing I have noticed is that very many times the poorer strata of society does not have much problems to "accept change". It is the more established kind who refuses to accept the change.

[kmkraoind]

There will be temporary contraction of actual economic activity . But not official economy because it's a process off addition to the official economy . The duration of short term shock is within the hands of the businessman to fix - the faster he fesses up and cleans his books the more advantageous is his position . Like GST this is self regulating - fess up early and you have an advantage over others running around trying to conceal .

I have a question to Suraj garu. Since everybody thought GST is going to be inflationary and now this demonetization is going to be deflationary, how this is gong to be fan out once GST rolls it. Will this deflation cancels out all inflation that GST might bring.

[Suraj]

Actually now that demonetization has happened, GST isn't likely to be as inflationary. The original argument was because GST enforces compliance. You can't get a tax credit on input without showing your tax liability on output, and the credit of the next guy up the chain is your liability... It's in your interest to claim a high credit and low liability (i.e. minimal net tax), but the guy up and below you in the chain has diametrically the opposite motive - ooparwala's credit is your liability and he wants to maximize that, while you want to minimize it, and neechewala's liability is your credit that you want to maximize and he wants to minimize... So really no one can get away with it because IT folks will just see that the numbers aren't lining up. In this way compliance is enforced.

So in the above, this takes away the options to convert white to black because it's hard to conceal and squirrel money away. You could maintain books, but then everyone above and below has to do the same. But the black money and economy still remains , it's just that the conversion from white to black became harder to accomplish. What demonetization does is hit a reset on the entire cash base of the black economy, back to Rs.0 . What GST does is take away the ease of ability to reinflate a black economy again.

GST was supposedly inflationary because actual activity had to be accounted for and tax established, so actual price paid would have risen. But this was basically saying 'we're going to pass on the cost of having hidden our business to you' . This is fundamentally unfair to the customer. By demonetizing and forcing business to white, there's not really an inflationary aspect to GST, and possibly they can also envision lowering the peak rate because there's much greater economic activity in white and there's no need to squeeze just the smaller official economy.

So overall this is all quite genius level political economy but which also requires both extremely large brass b*lls and credibility to accomplish, because the social contract with the people that enables you to ask them to accept the temporary pain is a direct function of the credibility you have with them. It takes a particular kind of leader to accomplish this. The rest simply cannot get away with it, nor do they have the executive skill to manage it as well as this one has been by Modi. We are truly lucky to have him in charge .

[Chandragupta]

Has there been an analysis on short to medium term impact on small & medium scale industry & businesses in the country? Quite a lot of confusion & uncertainty in business owners (yes, some run on cash economy).

[Suraj]

What kind of analysis does one expect from business sectors that kept its business off the books ? Let them come forward themselves and quantify what sort of losses they'd take. 'Losses' here are really the gap between how much business they did, and how much they're willing to admit they did. "I have lost Rs.N in business" translates roughly as "I used to do Rs.N business I didn't report".

[Sachin]

Folks!! How best to reach the RBI or Fin. Min?? They have plans to use the indelible ink to tag folks who come to exchange money. If they plan to do it, they should also depute a CISF/CRPF man to do the marking. Ideally these folks should not be from the same state. They actually put the mark and pass the man to get his exchange done. The local bank staff can be coerced to skip doing the tagging. Local police may not be cooperative as well. So better to treat this as an election and deploy out of state police personnel to use the indelible ink. Local police can be called in case if the mob gets unruly.

[hanumadu]

GST was supposedly inflationary because actual activity had to be accounted for and tax established, so actual price paid would have risen. But this was basically saying 'we're going to pass on the cost of having hidden our business to you' .

Any body who inflates the price is only inviting competition who can sell at a lower price profitably, especially in businesses that have low entry barriers/upfront costs.

[Rishi Verma]

Money not claimed by black money hoarders will be deployed to boot infrastructure projects and there by employment and GDP.

My hunch is that evil modi just may deposit 1-2 lacs in people's bank accounts - at least the BPL walas. Good for elections and also good for the economy.

[kmkraoind]

Bear me for posting some columns from Gossipguru. Some say, he is a certified AAPturd, but I see some of these are close to truth, so posting them in full for preservation. If Mods think, this is bad, they can act as they deem necessary.

Party Boss’ ‘white’ demand

On the eve of UP election demonetization seems to be the masterstroke of Modi making BSP and SP apprehensive. A party supremo of UP is often accused for selling tickets. Reliable sources claims that the party supremo is summoning the declared nominees and telling them to take the money back which they had deposited into party’s fund to get ticket. They are being asked to return the same amount in new currency. The nominees were flabbergasted as those who fail to do this will lose their ticket and it will be given to other suitable candidates.

Rahul Handed Modi’s ‘Nuke’

The currency revolution in the country that landed like a tonne of bricks on Indians had already been mooted sometime ago. Economist Anil Bokil had devised ways to curb widespread black money and curb the flush of fake currency from Pakistan. Sources say that almost 18 months ago, Bokil met Congress Vice President Rahul Gandhi with his plan. After a few seconds, Rahul showed him the door, advising him to talk to Mohan Gopal, Director, Rajiv Gandhi Institute of Contemporary Studies, and a key Rahul advisor. Bokil was disappointed. After the elections he tried to meet Prime Minister Narendra Modi. A few months ago he indeed got his opportunity. The meeting was supposed to last all of nine minutes. But when Bokil began his presentation, Modi got so animated that two hours flew by before anybody realised. Bokil apparently told Modi that 76 per cent of the unorganised sector runs on cash. Subsequently, Modi made a team of his 10 most reliable persons, consisting of Ajit Doval, Shaktikant Das, RBI Governor and one time Mukesh Ambani man Urjit Patel and others. The entire plan was furtively executed one fine evening, with a message from the PM.

Shah’s evening snack with hot tea

The BJP president who firmly believes in keeping distance from media and journalist invited a few journalist at 3 pm in BJP head office for tea and samosa. However he was cautious enough and made journalists to keep their mobile outside his office, lest somebody tapes his off the record briefing. Modi had apparently given Shah the responsibility to remove people’s doubts regarding demonetization. One of the journalists raised a piquant question that with this step of PM the core vote bank of BJP seems to be in lurch. Obtrusively, small scale businessmen are quite annoyed with this move. Shah made it clear that government has no intention to bother them about Income tax. The common man will face no trouble as they can deposit up to Rs 2.5 lakh in their accounts and income tax department won’t slap a notice. A journalist raised a question, ‘Will Modi government pace up the income tax raid after Uttar Pradesh election?” Shah replied- “Why don’t you see that without any electoral reform such huge reform took place”. A journalist asked, “But Rahul Gandhi is critcising this move by government”. Shah replied, “Give him an injection of understanding” The informal talk was about to end when a media person asked-“When did you get information of this move of government? Shah replied that he was in flight and came to know after almost half an hour.

[pankajs]

Money not claimed by black money hoarders will be deployed to boot infrastructure projects and there by employment and GDP.

My hunch is that evil modi just may deposit 1-2 lacs in people's bank accounts - at least the BPL walas. Good for elections and also good for the economy.

I think money deposited by BM hoarders in the other peoples account may be left untouched but the *unclaimed* amount will be used directly like in infrastructure project.

[kmkraoind]

Folks!! How best to reach the RBI or Fin. Min?? They have plans to use the indelible ink to tag folks who come to exchange money. If they plan to do it, they should also depute a CISF/CRPF man to do the marking. Ideally these folks should not be from the same state. They actually put the mark and pass the man to get his exchange done. The local bank staff can be coerced to skip doing the tagging. Local police may not be cooperative as well. So better to treat this as an election and deploy out of state police personnel to use the indelible ink. Local police can be called in case if the mob gets unruly.

If I were you, I will use Tweet long to post above, and tag @PMOIndia @HMOIndia @FinMinIndia @DasShaktikanta

[Suraj]

Finance Guru's whats your opinion on this ? arguments run counter to what we have been discussing. on the surface it looks like a typical DDM article with shifting goal posts but i am not qualified to comment.

http://linkis.com/www.bloomberg.com/ga/nWEKr

I wouldn't call Andy Mukherjee DDM. He writes good stuff, but he has a particular audience, and that is the western investor into India. While speaking to and of them, he conflates some western thoughts on this, particularly the Republican 'small government' and 'keep governments grubby hands off my hard won wealth' dogma. But that's not really an apt description of what's happening here. There is an element of confiscation and unfairness e.g. businesses are forced to deal with black money because it was a fact of life . However, I do not think Modi's goal is punitive and focused on redistribution. He just wants to compel everything to be done above the table, by taking away every other option.

AndyM just says that a self-congratulatory payment of a large dividend out of the gains from the new deposit base would look confiscatory and send the wrong message to investors who would worry that their own investments could be confiscated. That's mixing up multiple things because their investments are not black money (and if they are black money conduits, well they deserve to be caught).

There are other inconsistencies in his article, but the general sense I get is that he simply wants to voice somewhat irrational investor sentiment. That's fine. They're unlikely to be impacted by all this anyway.

[sivab]

Rahul Handed Modi’s ‘Nuke’

The currency revolution in the country that landed like a tonne of bricks on Indians had already been mooted sometime ago. Economist Anil Bokil had devised ways to curb widespread black money and curb the flush of fake currency from Pakistan. Sources say that almost 18 months ago, Bokil met Congress Vice President Rahul Gandhi with his plan. After a few seconds, Rahul showed him the door, advising him to talk to Mohan Gopal, Director, Rajiv Gandhi Institute of Contemporary Studies, and a key Rahul advisor. Bokil was disappointed. After the elections he tried to meet Prime Minister Narendra Modi. A few months ago he indeed got his opportunity. The meeting was supposed to last all of nine minutes. But when Bokil began his presentation, Modi got so animated that two hours flew by before anybody realised. Bokil apparently told Modi that 76 per cent of the unorganised sector runs on cash. Subsequently, Modi made a team of his 10 most reliable persons, consisting of Ajit Doval, Shaktikant Das, RBI Governor and one time Mukesh Ambani man Urjit Patel and others. The entire plan was furtively executed one fine evening, with a message from the PM.

BS. There are videos of Modi demanding UPA govt to demonetise Rs 1000 notes from 2011 in youtube. Modi even referred to this 2011 demand in one of his speeches this past week. He also said he started working on this 10 months ago i.e ~Jan 2016. He met Arthakranti people (of which Anil Bokil is part of) much later.

[Chandragupta]

Arthakranti also proposes 0% Income Tax & removal of all other taxes and instead have a 2% transaction tax on every transaction. Is that realistic/practical?

[harish_ch]

Saars,

I am trying to understand why real estate price will come down with this demonetization drive.

As I understand, there are two types of buyers. One who might have bought the property with considerable portion of black and the others who have done a completely white transaction (as happens with big gated community projects).

The one's who bought with black money wouldn't want to sell now obviously to avoid handling the resulting black money. Say they bought a flat worth 80Lacs using 50lacs white. Now they wouldn't want to sell it for less than that 80 Lacs. Even if they manage to sell it at 80Lacs white, they would have to pay tax on capital gains for the profit incurred on top of the white amount they paid earlier(i.e. 50 lacs) resulting in a net loss for them. So unless if they have some emergency unavoidable requirement, all these guys will sit tight and wait for long term hoping for new cycle of black money generation.

This results in lessening the overall supply in the market. But with the deluge of deposits, banks will be rearing to give bank loans at cheaper rates.

Now the properties which are bought with complete white are less in number comparably. It is easy to buy these properties with white, as banks will offer loan amount almost near the sale amount since the earlier transaction was entirely white. Because of the demand, and because that they have not involved any black money earlier, these owners may not sell for less than what they have bought.

Overall, I don't see real estate prices coming crashing down. Passing on to experts to puncture above theory.

[Karthik S]

0% IT is what S Swamy has been proposing for some time too. His contention was that not everyone pays tax, therefore having transaction tax will increase tax base and also people who pay tax, post this policy will have more money to spend, therefore it will further boost the economy.

[Suraj]

Please read at least the last 10 pages of this thread again. It's been asked multiple times now.

[srinebula]

Not sure about the good for economy bit. Getting 1-2 lac for free is like windfall in BPL zone. Many people may just stop working for a while and eat it out. Labor costs will sky-rocket as a large part of labor force suddenly feels they don't have to work for a while.
In village BPL zone this money can last more than a year for a small family.
Not everyone is well motivated or planned to use this sudden "windfall" as base and build up their wealth.

Money not claimed by black money hoarders will be deployed to boot infrastructure projects and there by employment and GDP.

My hunch is that evil modi just may deposit 1-2 lacs in people's bank accounts - at least the BPL walas. Good for elections and also good for the economy.

[Akshay Kapoor]

Folks!! How best to reach the RBI or Fin. Min?? They have plans to use the indelible ink to tag folks who come to exchange money. If they plan to do it, they should also depute a CISF/CRPF man to do the marking. Ideally these folks should not be from the same state. They actually put the mark and pass the man to get his exchange done. The local bank staff can be coerced to skip doing the tagging. Local police may not be cooperative as well. So better to treat this as an election and deploy out of state police personnel to use the indelible ink. Local police can be called in case if the mob gets unruly.

In addition to twitter you should also write on PMO website. It's important to get this message through. Btw I have reported some BM hoarders on the website with full details - courtesy some BM posters. Do what you can folks. Modi is doing a yagya. We all need to give our ahutis.

Suraj , I would snuggest you collate some your posts into one - a guide to demonetisation. You have a very clear understanding of the whole process.

[sivab]

https://twitter.com/dhaval241086/status ... 8004425728

Here is a link to tweet with video of modi referring to his demand in 2011 @1:10.

[Karthik S]

At around 10, he talks about new high value currency notes. He says they are for temporary usage.

[rohitvats]

Humble suggestion - don't use news about property price movement in DELHI as barometer for what is happening in real estate sector. Within NCR, Gurgaon, Delhi and Noida have their own dynamics. Old established cities without fresh development and lot of premium real estate with aspiration value built into have totally different dynamics.

[Rahul M]

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

100-300 short in bundles of new notes i.e 500 & 2000, must be magic !!!

Packet = 100 notes
Section = 10 packets
Bundle = 10 packet = 10000 note

A Bundle has a different meaning to banks. I learnt in the most embarrasing way possible. So its possible

err.. no, it's not.

you can't have100-300 rupees short in a bundle of 500 or 1000 2000 rupee notes. I thought that would be obvious.

[Sanju]

^ Saar I am sure you meant 2000 rupee notes.

[disha]

Saars,

I am trying to understand why real estate price will come down with this demonetization drive.

Do read up previous 10-15 pages. At the same time., before I come to point issue with your line of thought - some questions from me:

1. Do you have BM? And what you feel about this DeMonetization?
2. Are you using Payment banks like PayTM and are you encouraging your domestic help (or office helps) to open PMJDY accounts?
3. Are you encouraging them to use mobile or e-transactions? Did you stand in ATM line and if yes, can you post your interactions?

Now:

In your scenario., you forgot one thing. You forgot to account (or rather unaccount) several BM holders who were earlier looking quickly to exit their stash into land or gold. Now you do not have any competition from them. That is nobody is coming to compete with you and buying the property out as 100% cash or even 80% cash while you are trying to do 100% white and can only pony up so much.

Can you factor that in?

[Sanju]

^ IOW, Liquidity crunch will result in lower prices in RE sector.

[habal]

At around 10, he talks about new high value currency notes. He says they are for temporary usage.

he is talking of 0% interest rate regime. This is a world bank agenda. So is demonitisation and abolition of high value currency.