Currency Demonetisation and Future course of Indian Economy

[Yagnasri]

People are going to come with all kind of solutions for easy payments. One concern is hacking, and another one is safety features of the devices. If both are not attended properly, then the entire effort will fail.

As per the reports some 8 Lac Cr came into system.

[saip]

For my children - we go to a paediatrician doctor who is a lady and promptly gives bills the moment the checkup ends.

These days - she is ready with short printed notes containing her bank's name, the bank account number and the IFSC code of the bank branch. She requests those who are unable to pay in cash, to NEFT the consultation fee (200/300) or the treatment fee to her bank account with in a week and also send her by mobile message the bank's SMS notification of the NEFT transfer of money.

for some strange reason, patients will sometimes (first time) transfer Rs 100 and check back with the doc to see it it has succeeded and on confirmation, they immediately transfer the rest.

a learning curve for all, I guess.

Do you know what happens if you transfer the funds to wrong account? Few years ago, I transferred 50k to my Bil account but it went into wrong branch (my Bil gave the wrong branch code) where he did not have an account. The transmitting bank said they can not help me recover it and the receiving bank would not talk to me as I did not have an account. Luckily my Bil happen to know the Manager and he helped him out by transferring the funds to his account. I am sure eventually I would have got back my funds but who knows after how long. Now I transfer only a 1000 or so first time and check.

[chetak]

for some strange reason, patients will sometimes (first time) transfer Rs 100 and check back with the doc to see it it has succeeded and on confirmation, they immediately transfer the rest.

a learning curve for all, I guess.

Do you know what happens if you transfer the funds to wrong account? Few years ago, I transferred 50k to my Bil account but it went into wrong branch (my Bil gave the wrong branch code) where he did not have an account. The transmitting bank said they can not help me recover it and the receiving bank would not talk to me as I did not have an account. Luckily my Bil happen to know the Manager and he helped him out by transferring the funds to his account. I am sure eventually I would have got back my funds but who knows after how long. Now I transfer only a 1000 or so first time and check.

They are mostly new users trying out the app for the first time. They are making sure that they have got the process right onlee.

[chetak]

Dr. Singh’s scoot and thunder

Demonetisation update 12- Dr. Singh’s scoot and thunder


Anantha Nageswaran November 24, 2016

One of the important lessons of ageing is to appreciate the virtue of silence. There is dignity in that. Some not only do not appreciate it but travel in the opposite direction.

I read the text of Dr. Manmohan Singh’s speech in Rajya Sabha as reported in ‘Indian Express’. He got a few things right and many things wrong.

He was right to focus on the short-term travails and chaos. That is where the government’s vulnerability lies. Well, the government is actually paying the price for the lack of capability of the machinery of the Indian state to pull something off like this on a national scale at short notice. Back in 2003, Dr. Arun Shourie had lamented that the Indian state got the odd big project right (Kumbh Mela, for example) but did not sustain it. This one is even more challenging. No surprise that there is chaos and hardship. There will be some economic costs to the nation and to the people. Hope it is negligible.

He was right not to criticise the demonetisation exercise itself. He focused on the process. That is about it. He got the rest of his speech wrong.

If he did not disagree with the objectives and if he did not wish to favour ‘this side or that side’, then why did he characterise it as organised loot and legalised plunder? Strong words but what is the basis? Did he mistakenly think that we were in 2010 when there was organised loot and both legalised and illegal plunder of national resources?

He is right that even 50 days is too long for the poor to suffer. But, in that case, was it right to let them suffer for 1830 days between May 22, 2009 and May 26, 2014? Annual average consumer price inflation was 10.1% in that period (based on CPI-IW) and food inflation was 10.5% per annum. The poor suffered enormously. The rupee plunged 50%. Businesses collapsed. Telecom licenses were handed out to cronies. Supreme Court cancelled them. Mining licenses were allotted arbitrarily. Supreme Court banned mining. Economic growth, which was flying high due to the global boom pre-2008 collapsed to 5% to 6%, thanks to UPA missteps and loot and plunder. The 50-days that the current Prime Minister is talking about must be seen in this perspective.

Let me try another argument. The suffering of the people is incremental to the suffering that the State has been inflicting on an ongoing basis. Further, if the issue of corruption remained untackled, how could even one compute the suffering that would endure for much longer? By definition, that is harder and even almost impossible to estimate. Isn’t it?

Dr. Singh invoked John Maynard Keynes. Well, most economists know the context in which Keynes talked about the long run. It was in the context of the great economic depression of the 1930s and the advocacy of government remaining passive by the Austrian school. He advocated government intervention. Keynes may have been right (or wrong). It is hard to find out for it is impossible to construct the counterfactual. Indeed, many think that the non-intervening UK recovered better and faster than the American economy despite (or, because of?) Roosevelt’s interventions.

Be that as it may, in India, the situation has arisen out of government action (and not inaction) and it is handling the implementation challenges by responding to them immediately. So, Keynes’ analogy does not apply in this context at all.

Indeed, the long-run arrived for India in 2014 and the economy was nearly dead when the present government took office. It has been a struggle for it to breathe life into the economy left comatose by Dr. Singh’s government.

Dr. Singh is right that there will be economic impact in the short run and the long-run benefits are not easily identifiable or quantifiable, at this stage. That does mean that they are unlikely.

Indeed, much of India’s present economic fragility is traceable to UPA’s errors of omission and commission. Certainly, the public sector banks’ Non-Performing Assets is a UPA legacy. That is just one of many legacies of his government that India could have done without, some of which I have recounted above.

If the economic fragility persists longer, political uncertainty will follow in its wake and the Indian economic revival will end even before it began.

The government faces a very tough challenge. It has to keep up with structural reforms if it has to shut further avenues for corruption and, at the same time, mind economic growth and job creation. Not easy. Dr. Singh cannot be blamed for not offering any advice to the government in this regard, despite his impressive economic credentials. Unfortunately for him and for India, under his leadership, the government neither carried out structural reforms nor facilitated economic growth. So, he has no experience of either. Those were the dark ages.

Both this government and India need all the luck they can muster to avoid a return to those times in 2019. Palms folded or fingers crossed.

[Postscript: Here is Keynes’ full quotation on the issue of long-run. It is easily located in the Internet:

But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again. Source: A Tract on Monetary Reform (1923), Ch. 3, p. 80.

Keynes was addressing some economists. In the case of India, no one is advising the government not to address the short-term issues nor is the government being indifferent to them.

[vina]

Do you know what happens if you transfer the funds to wrong account? .

The transfer DOES not happen. How do I know ? I know first hand. My BIL tried transferring to my account, I gave him my account number wrong and it bounced multiple times as he kept trying. Finally, I realised that my account number was wrong and gave the correct account number and it went thru. It is not just accnt no + branch name. Even, the name is checked in these transfers. And with Wallets (I have ICICI Pocket) you get a preview with some of the letters of the recipeients name blanked out, before you confirm it.

[vina]

I would urge folks to go for ICICI Pocket. You DONT need to be an ICICI customer (I am not one). In addition to their wallet, it also has the UPI interface. Comes handy for me. I use the Wallet's Visa "card number" to pay Uber automatically ( I dont have PayTm) as I am not going to put my credit card details out to all and sundry including Uber and Ola. So saves you the trouble of having different wallets for multiple cabs. That way, just ONE wallet serves both. Also, that way, the wallet can be used in any site universally that accepts any credit cards , and majority definitely dont accept PayTm, while a Visa is universally accepted.

[ShauryaT]

I see too many posts that I will call as "childish" in describing what legendary black money wielders do. Anyone who lives in India will hear at least 2 such stories a week. I am not saying that the stories are untrue or that people are not making that sort of money. It is perfectly true - but what these stories do not bring out is the ecosystem in which such black money is generated and multiplied.

As always the biggest sources of black transactions arise from the "permit raj" or the need for permissions. the guy who has to give permission for something demands money in cash and he gets it. If I am a builder - there may be different permissions I require. There may be a matter of a "minor permission" like building an illegal extra floor, or reducing the gap between the road and the wall of your construction. Here a junior fellow will take the bribe. When the matter is more serious like conversion of usage of government land to build a mall - then the bribe goes higher. So the government itself is full of deeply corrupt people going all the way up to the minister. Time and time again you hear of people who have illegal properties and muscle power standing for election. They often bribe their way into a political party promising money in exchange for a seat - the most powerful elected representatives demand and get choice portfolios where they can fiddle with land records and cover past misdeeds. Police officers and bureaucrats who are compliant are kept in plum posts. This who do not agree - honest people are posted out of the way.

It is because India works in this way that we are among the most deeply corrupt people in the world. The cockiness and anger of the corrupt has even shown up in some posts in this thread but in the long term this system needs to be changed. The reason why Indians wait patiently in lines is that they hope that their patience today will be rewarded by punishment of the corrupt. It is not often that we see action against the corrupt people in our midst although it is getting more common to see that. May it continue

To add to it further. It is not like many of these laws themselves are designed to protect the larger society - they are deliberately designed to extract money out of builders and others involved. E.g: FSI limits in various zones of a city.

But, apart from BM generated due to governmental interaction, there is another entire eco-system of BM, that does not involve government permissions. It is pure under reporting of incomes - for people with the means to do it. It maybe 4K or 4 crores but takes place at a massive scale. The entire challan or kacha bill system works this way. Again, my only point is going into a blame game and a moral equivalency alone will not solve this. The system has been built over 70 years, no magic pill is going to solve it. Penalization alone will not.

Yes I agree, the common man is laughing and appreciating Modi. This is due class disparities that have gone out of whack. India is an economy with one of the highest disparities in income levels between the rich and poor. Attacking the rich alone - though politically popular is unlikely to solve these issues.

[shiv]

About a year back, I did a quick survey of about 30 people in Mumbai to ask, if their Doctors took cards as payments. This was mostly an educated population. Only about 30% of the Doctors did. Safe to presume the one's who took cash only were under reporting their income? So, now would someone say most Doctors are dishonest?
.

Shaurya credit card readers (when I last checked )were issued only to businesses that have a turnover of Rs 2 lakhs or more per month. Most single docs clinics do not have that sort of turnover.

[khan]

Yep, we can count on MS Alhuwalia the UPA appointee who was booted out as soon as the UPA lost power and who was a key part of the economic debacle of UPA 1 and 2, to not have any vested interest and present a fair picture on a policy decision of the Modi government. On an interview with Karan Thapar no less.

Do you really expect a critique of this policy to come from the union cabinet or a modi bhakt?

But anyways, watch this from 14:40 onwards.

Saw this video 14:40 onwards. Regarding the deposit jump, all it show is seasonality - every Q2 (holiday season essentially) a 3-4% jump in deposits. This conspiracy theory mongering is something I would expect more from Pakis.

[vina]

Delhi Transport Corp -Delhi Govtcaught depositing Rs 8.15 cr of demonitiesed notes. Anti Corruption Bureau investigation ordered.

See, it is not that easy. When deposits happen, it is easy to search for patterns of large deposits. Expect cases like this to surge. If they had been swapping their low denomination notes for someone else's BM to exchange, they are going to be in serious soup. A lot of folks who attempt to launder /exchange notes are going to be caught. The only guys who can get away clean , is those who press ganged hundreds in the "exchange" in the first few days. Even there, many would have lost quite a bit on raids etc on the currency swap guys like the one that happened in Bangalore in KR Market/Chikpet area.

[Bart S]

With UPI, she can actually simplify and take it to the next level. All she needs is a bill printer of some kind and software that can handle barcodes. So basically customer opens app, scans barcode, authorizes transaction, and its done. No typing and no typos, which is what worries people.

Or she gives them a simple ID like doctorname@bank and they key that in and the money gets transferred instantly with verifiable receipts as well.

UPI has a bill pay part as well. No need for any paper at all! The doctor can raise a bill for the VPA , or simply even request for payment from you, with the "Ask Money" feature and it will keep following up until closed !

Yep, integrate this with a basic patient records system or any basic CRM or billing system and the whole process is totally seamless.

[shiv]

To add to it further. It is not like many of these laws themselves are designed to protect the larger society - they are deliberately designed to extract money out of builders and others involved. E.g: FSI limits in various zones of a city.

But, apart from BM generated due to governmental interaction, there is another entire eco-system of BM, that does not involve government permissions. It is pure under reporting of incomes - for people with the means to do it. It maybe 4K or 4 crores but takes place at a massive scale. The entire challan or kacha bill system works this way. Again, my only point is going into a blame game and a moral equivalency alone will not solve this. The system has been built over 70 years, no magic pill is going to solve it. Penalization alone will not.

Yes I agree, the common man is laughing and appreciating Modi. This is due class disparities that have gone out of whack. India is an economy with one of the highest disparities in income levels between the rich and poor. Attacking the rich alone - though politically popular is unlikely to solve these issues.

With respect Shaurya - there is a degree of "whataboutery" here. You see when demonetization is done - people ask "What about black transactions - the demonetization move is useless". And when I say that black transactions are encouraged by government you say "What about non governmental under reported income?"

So the blame game goes on merrily like a round of musical chairs "It's not me its him". It was precisely this buggering about with no visible action that has got everyone angry. No one give a flying fruk if some people are untouched and others are hit as long as some of the most cocky mofos get hit. And that is exactly what has happened. If some corrupt people are crying and others are laughing no one cares - the people who are neither corrupt nor hoarders are still happy and cheering. When the time come for votes there is every possibility that they will vote for this radical jihadi loose cannon Modi a though that seems to be making a lot of people shit in their pants. Even if that is untrue - that is a feeling that is creating comfort for those who wait in lines.

Someone should get hit. People are claiming that "poor people are getting hit". You know what? Those poor people seem quite happy to get hit knowing that several crores of people with hoarded cash have been kicked up their sorry asses. It matters not a whit that all those other "Whatabouts" are not hit. Sufficient for now to know that some have been hit. Enjoy the moment

[shiv]

About a year back, I did a quick survey of about 30 people in Mumbai to ask, if their Doctors took cards as payments. This was mostly an educated population. Only about 30% of the Doctors did. Safe to presume the one's who took cash only were under reporting their income? So, now would someone say most Doctors are dishonest?

Did you also take a survey of how much doctors charge per consulatation? And how many patients they see in a month? That is important because unless you have a very high turnover a credit card reader is useless. Most clinic doctors in Blr that I know charge less than 500 per consultation, often as low as 200 esp for children who are often the poorest and sickest.

A doctor's practice differs from selling ice cream in one major respect.

If you sell ice cream there is every chance that you get a new customer every day and repeat customers only once in a while. Doctors get repeat patients who come with reports or for minor follow ups who are seen free or who are charged much less. An ice cream business would close if run like a doctor's business, but the doctor who runs his clinic like an ice cream business will soon start losing patients. Since everyone falls sick at some time a doctor has patients from the lowest strata to the highest. In general doctors do not charge depending on the wealth of the patient because word soon spreads that this chap has differential rates. So they must have fixed rates. The other thing is it won't do to see a patient one day - think he is poor and take Rs 200 and then see the same guy after 3 months - wearing better clothes, and charge him 500 because you have forgotten that you have seen him earlier. And once you start giving receipts the game is up - you cannot charge whatever you want.

The only clinics that take cards would be multispeciality clinics - not the poor lone doc sitting at 9 pm looking at a poor shivering baby brought in by desperately anxious parents.

[Uttam]

Why is the western press so against India's demonetisation? Now before anybody questions my motive, let me state very clearly that I am in absolute support of demonetization. I am just surprised why western media is so negative. Is it because they get views only from the "intellectual" of the congress era? Or is there another motive to impede demonetization's success? Or they know something we don't? Anyway, here is a sample negative coverage by western press:

http://theweek.com/articles/664219/why- ... ring-badly

http://www.nbcnews.com/slideshow/thousa ... cy-n689111
*** Thousands protesting in a country of 1.2 Billion is not a big deal. Still NBC paints such a negative picture.

http://time.com/4583100/india-cash-rupe ... i-economy/

http://fortune.com/2016/11/24/india-rup ... ban-forex/

https://www.washingtonpost.com/news/won ... rency-ban/

http://www.abc.net.au/news/2016-11-26/i ... on/8058922

http://www.nytimes.com/2016/11/24/world ... .html?_r=0

http://www.bloomberg.com/news/articles/ ... ote-revamp
******** Bloomberg is particularly negative. Which is another surprise because up until now they very fairly positive on Modi.

https://www.theguardian.com/world/2016/ ... or-queuing

http://www.bbc.com/news/world-asia-india-37970965


http://www.forbes.com/sites/wadeshepard ... 76424334a4
http://qz.com/846445/the-modi-governmen ... -of-india/

[ShauryaT]

With respect Shaurya - there is a degree of "whataboutery" here. You see when demonetization is done - people ask "What about black transactions - the demonetization move is useless". And when I say that black transactions are encouraged by government you say "What about non governmental under reported income?"

So the blame game goes on merrily like a round of musical chairs "It's not me its him". It was precisely this buggering about with no visible action that has got everyone angry. No one give a flying fruk if some people are untouched and others are hit as long as some of the most cocky mofos get hit. And that is exactly what has happened. If some corrupt people are crying and others are laughing no one cares - the people who are neither corrupt nor hoarders are still happy and cheering. When the time come for votes there is every possibility that they will vote for this radical jihadi loose cannon Modi a though that seems to be making a lot of people shit in their pants. Even if that is untrue - that is a feeling that is creating comfort for those who wait in lines.

Someone should get hit. People are claiming that "poor people are getting hit". You know what? Those poor people seem quite happy to get hit knowing that several crores of people with hoarded cahj have been kicked up their sorry asses. It matters not a whit that all those other "Whatabouts" are not hit. Sufficient for now to know that some have been hit. Enjoy the moment

My post was not in that vein. Simple to supplement another major eco-system that you listed.

I am sorry, I do not share the highlighted sentiment for the most part. I am not looking for the govt to hit, which is easy for a govt, to use its power on the population. I am looking for them to do tough things to bring in systemic reform and better targeting towards such reforms to change eco-systems. I will enjoy when we see more moves that rebuilds trust in society. My sympathies are with the society as a whole and not with the govt and those in power (any dispensation). We can agree this is a populist move.

[shiv]

We can agree this is a populist move.

If people are suffering it is not a populist move. If people are enjoying the show, it is populist. What do you think?

[ShauryaT]

We can agree this is a populist move.

If people are suffering it is not a populist move. If people are enjoying the show, it is populist. What do you think?

I think people are willing to go through a discomfort on the promise that this will bring good to them. Many past govts promised such and many times the masses have fallen for it, only to be disappointed later. The best we can hope for is this move does bring in some benefits to the masses and this leader redeems on that promise. This is the best i can hope for.

[symontk]

My friend went to AP and in his village everyone is expecting that my friends family has BM and are expecting my friend to lose lot of money. Sadly they dont know that money that my friend have is all WM and what they probably have is the BM

There is a perception issue across the country on who has the BM & first and foremost what is BM? Poor people take it as all rich people are BM hoarders. Once they understand that it is not so, there will be a backlash

[SaraLax]

Why is the western press so against India's demonetisation? Now before anybody questions my motive, let me state very clearly that I am in absolute support of demonetization. I am just surprised why western media is so negative.

Or they know something we don't? Anyway, here is a sample negative coverage by western press:

Sir !,
A kind request.

Stop looking at the west or their slanted media for any support of events happening in India ... unless its something bad about India !.
One shouldn't be surprised that the western media will always be slanted against India and true Indians. These are the same foolish entities that have been writing the demise of India as a nation since 1960s and continued to do it periodically every decade after that until 1990s atleast.

The Western Media likes Self Loathing Indians more and not those Indians who express & display their traditions & culture in a cherished manner.

[SaraLax]

My friend went to AP and in his village everyone is expecting that my friends family has BM and are expecting my friend to lose lot of money. Sadly they dont know that money that my friend have is all WM and what they probably have is the BM

There is a perception issue across the country on who has the BM & first and foremost what is BM? Poor people take it as all rich people are BM hoarders. Once they understand that it is not so, there will be a backlash

Technically you can have BM of up to 2.49 Lakh INRs, deposit them into your bank account(s) and still stay safe from any investigation by IT folks. I am sure there are many such folks across India and they wont probably face any issues.

Do correct me If i am wrong.

[Suraj]

My friend went to AP and in his village everyone is expecting that my friends family has BM and are expecting my friend to lose lot of money. Sadly they dont know that money that my friend have is all WM and what they probably have is the BM

There is a perception issue across the country on who has the BM & first and foremost what is BM? Poor people take it as all rich people are BM hoarders. Once they understand that it is not so, there will be a backlash

This is a case of making the problem more complex than it is, or oversimplifying the population's understanding of black money. The task has been defined quite well by GoI in this exercise. They determine whether the money is white or black. They will request proof if they have questions. The only thing people have to do is deposit the notes in the bank because they are not legal tender anymore. When they do that, the government makes the determination of its validity.

I think everyone grasps the fundamental requirement - deposit the old notes to get new and valid legal tender. That's all that's required. I also think it's not a reasonable argument that people would be suddenly shocked at having to pay tax in a white economy. I'll give them more credit than that. They'll be willing to pay their fair share, when they are not subjected daily to the sight of overt utilization of black money by the big fish.

As shiv says, every day people see the political and business class using black money overtly to get their way, whether its to hire rent-a-mobs, pay out for a rally attendance, pay out the goons evicting someone from property being seized, or anything else.

Seeing this entire class separated from their wealth gives the population a reason to comply, because in general people should be expected to be decent and willing to pay their fair share. The effect of black money on society was to make that behavior almost impossible by taunting every mango man directly and making them question their principles.

[KJo]

Talked to my dad and he asked me not to get any money as things were very tight and the Govt was watchful. I just have 2 notes of Rs 500 of my own money and I am told I can use that to buy daaru at the duty free store in BLR. I don't want to carry money from K&N and be answerable to some afsar who asks me whose money that is.

SaraLax, if someone puts in 2.49 lakhs, IT might wonder why they stopped there and then raid them in a year so that it seems like there is no connection with this. That is a clear indicator of BM.

[Karan M]

transfer a small amount first, get it confirmed. then transfer the rest.

[Karan M]

the tune they are singing is because overnight, the one is to 60 influence their ford foundation's had on indian processes has disappeared. first the FCRA stuff with NGOs and then this. pranaams to modi.

Why is the western press so against India's demonetisation? Now before anybody questions my motive, let me state very clearly that I am in absolute support of demonetization. I am just surprised why western media is so negative. Is it because they get views only from the "intellectual" of the congress era? Or is there another motive to impede demonetization's success? Or they know something we don't? Anyway, here is a sample negative coverage by western press:

http://theweek.com/articles/664219/why- ... ring-badly

http://www.nbcnews.com/slideshow/thousa ... cy-n689111
*** Thousands protesting in a country of 1.2 Billion is not a big deal. Still NBC paints such a negative picture.

http://time.com/4583100/india-cash-rupe ... i-economy/

http://fortune.com/2016/11/24/india-rup ... ban-forex/

https://www.washingtonpost.com/news/won ... rency-ban/

http://www.abc.net.au/news/2016-11-26/i ... on/8058922

http://www.nytimes.com/2016/11/24/world ... .html?_r=0

http://www.bloomberg.com/news/articles/ ... ote-revamp
******** Bloomberg is particularly negative. Which is another surprise because up until now they very fairly positive on Modi.

https://www.theguardian.com/world/2016/ ... or-queuing

http://www.bbc.com/news/world-asia-india-37970965


http://www.forbes.com/sites/wadeshepard ... 76424334a4
http://qz.com/846445/the-modi-governmen ... -of-india/

[Karan M]

Talked to my dad and he asked me not to get any money as things were very tight and the Govt was watchful. I just have 2 notes of Rs 500 of my own money and I am told I can use that to buy daaru at the duty free store in BLR. I don't want to carry money from K&N and be answerable to some afsar who asks me whose money that is.

SaraLax, if someone puts in 2.49 lakhs, IT might wonder why they stopped there and then raid them in a year so that it seems like there is no connection with this. That is a clear indicator of BM.

don't overworry saar. things have become easier at airports not worse. if you get even 30-40 k of cash what wll anyone say? u say it's your money which you kept in US over the years for gifts to visiting kids, your expenses now it needs changing. barely some 500$.
2.5L is the limit anyways, which is fair. i deposited some 30k & have another 20 odd k (i guess). when i was at counter a lady came up with a saree shopping bag full of ten bundles of 500s.

[Karan M]

completely right. move is very popular. only "fear" is what i don't have cash to do "daily stuff". even that will ease up i presume.

My friend went to AP and in his village everyone is expecting that my friends family has BM and are expecting my friend to lose lot of money. Sadly they dont know that money that my friend have is all WM and what they probably have is the BM

There is a perception issue across the country on who has the BM & first and foremost what is BM? Poor people take it as all rich people are BM hoarders. Once they understand that it is not so, there will be a backlash

This is a case of making the problem more complex than it is, or oversimplifying the population's understanding of black money. The task has been defined quite well by GoI in this exercise. They determine whether the money is white or black. They will request proof if they have questions. The only thing people have to do is deposit the notes in the bank because they are not legal tender anymore. When they do that, the government makes the determination of its validity.

I think everyone grasps the fundamental requirement - deposit the old notes to get new and valid legal tender. That's all that's required. I also think it's not a reasonable argument that people would be suddenly shocked at having to pay tax in a white economy. I'll give them more credit than that. They'll be willing to pay their fair share, when they are not subjected daily to the sight of overt utilization of black money by the big fish.

As shiv says, every day people see the political and business class using black money overtly to get their way, whether its to hire rent-a-mobs, pay out for a rally attendance, pay out the goons evicting someone from property being seized, or anything else.

Seeing this entire class separated from their wealth gives the population a reason to comply, because in general people should be expected to be decent and willing to pay their fair share. The effect of black money on society was to make that behavior almost impossible by taunting every mango man directly and making them question their principles.

[SaraLax]

Talked to my dad and he asked me not to get any money as things were very tight and the Govt was watchful. I just have 2 notes of Rs 500 of my own money and I am told I can use that to buy daaru at the duty free store in BLR. I don't want to carry money from K&N and be answerable to some afsar who asks me whose money that is.

SaraLax, if someone puts in 2.49 lakhs, IT might wonder why they stopped there and then raid them in a year so that it seems like there is no connection with this. That is a clear indicator of BM.

Sir, the Finance secretary guy told in a press meet that if you deposit more than 2.5L then you will be asked for proof of money source and hence my 2.49 L INR amount indication. I also thought if you have more than 1 bank account - you can put the 2.49L across the accounts and not really arouse any suspicion among the hunters from IT. But a simple computer program at the RBI or IT Dept. that looks for total amount deposited across bank accounts for a given PAN ID would smoke out the total amount as 2.49 L. I am sure the IT dept & RBI has such computer programs that can munch gazillions of such data points and come out with an output listing which accounts need to be probed first up.

[Karan M]

Shiv Sir, the point I was trying to make is entirely different. The point I was trying to make is that this demonetization is not at all aimed at curbing the black money.

I will explain, now in the case of this paandu I have been talking about, what stops him accepting cashless bribes, such as visa or MasterCard or paytm? He can put the POS in front of the bribe giver and ask to swipe the card. Actually this will reduce his work of collecting the cash and checking if there is any FICN, and then carry the physical cash to the bank to deposit into the bank account of his wife's business..

dude, you serious? your above example, now there is a paper trail.

If you want to end corruption, you have to start taxing the farmers, close down all the businesses, and stop all the RE development.

wait, what

[Karan M]

Well if this was so easy, the police man could have tried doing the same even today right? The police man took bribe in cash, as that is the way which leaves minimum trail leading to the transaction. Even a receipt would leave some kind of trail. So if this police man now decides to use a VISA/MASTERCARD based bribe scheme, he would land in trouble soon. Because every swipe on that machine of his, the money passes through multiple banks each maintaining a record. And soon IT would like to know why every one loves a police man so much and swipe at a machine bought by him. And then it is time for asking some questions on having more wealth, when compared to his actual government salary.

Sachin sir, the point I was trying to make is that the paandu is keeping the POS of the hotel his wife runs.

still a record. so if today govt dude gets a bribe in relations account, he escapes? any paper trail is a trail.

[Suraj]

That's the TSP argument:
"If you hurt me, the whole world will burn"
"Do as I say or I'll shoot myself!"

[Karan M]

i still cant figure once supply of small notes eases (only niggle right now) how demonetization is in anyway bad for goi or india or indians.

[jamwal]

Vina unkil is right. Can't do an online transfer to a wrong account number or in a wrong branch. Only offline deposits have this risk.



Shiv saab, when did you enquire about card machines ? You don't need 2 lpm turnover. Even 3rd party companies like PmoneyPay and 1 2 Others are offering this service at good prices.

[Karan M]

daily wage laborers can't afford feature phones and UPI or Paytm - ok. but as reports note the worked with 100's and ten's mostly and don't care for even 500's. so again, how is demonetization a bad thing?

IMO, perennial GOI-Modi baiters have been dealt a real big body blow. all this talk of he is only MMS yaa, nothing major etc.. now what?

[pankajs]

I had this nagging feeling after about the first week that one of the objective of the exercise was to shake the system such that it spread panic amongst the BM cash holders. Now this *may* be a figment of my imagination but the idea is that the Cash BM holder is being to forced to take action in panic with the hope that they will do thing that will expose them and make identification easier.

E.g. As you have stated, any prepayment *could* be used to start backtracking the cash and cash flows of the person concerned. Not to say that everyone who pre-paid their loan is a money launderer but it does provide a list and a starting point.

Here is another way to track after having forced the black cash hoarders into panicky reaction.

The telecom providers are required to maintain call details. The GOI could start with all jeweler / family phone call details starting Nov 8. Anyone who has called in should be put on the *suspicious* list. Then pick one person from the list and search for all calls originating from that phone/person during the period. Do the same for all persons of the suspicious list and create a full blown web of calls for the period. Use the location information to confirm contact. Rank the jewelers/persons based on the number of calls made/received and contacts made. Start deep and intrusive probe from the top ranked jeweler/persons and go down the list. Offer amnesty for cooperation, etc.

The same procedure could be followed for all Bank Managers or staff with access to the treasury. Same procedure for petrol bunks, religious institutions or anyone in the position to help the black cash hoarders.

I understand this is not fool proof especially if the contact and exchange was done offline but the possibility of netting good number of murgas is good especially one who rushed looking fro exit using the phone.

[disha]

Do you really expect a critique of this policy to come from the union cabinet or a modi bhakt?

I have pointed out earlier and pointing it out again., calling somebody a "bhakt" as in a name-calling or slander or condescendingly is pure simple and evil racism.

Other words of racism that several people endure silently - 'code coolie' 'brownie' 'curry muncher' etc ...

Of all places., BRFites should not even be using the word 'bhakt' condescendingly. Only elite chi-chi momeens use that to condescendingly beat down genuine criticism of the elite's disconnected reality when the elite really does not have another argument other than what-aboutery.

Yes., Modi Bhakts have criticized demonetization itself in other places - including pointing out that the quantum of the 'demonetized' money left out of the bank will determine how much successful this whole exercise has been. That is if out of 14 lakh crore., say 10% or 1.4 lakh crore is left out and never returns to bank., that itself is a huge success. However if only 1% or 14k crore of BM is left out., then what is the whole exercise about? It means there is significant loopholes that need to be plugged.

[shyamal]

Update - For the first time after 8th Nov(and after a long, long time) I stepped inside a bank branch today.(I had failed to withdraw money on Friday and Monday as money ended before my spot in the queue could enter through the bank doors )
I reached by 9.15 am and there were 4 people ahead of me in the queue. Bank officials going in and out of the half-shuttered entrance assured that there was cash, but all in 2000s.
Bank opened at 9.30 and I reached the teller in 10 mins. I withdrew Rs 16000. I do not need more cash.
Cam out of the bank and paid my driver his bi-weekly salary in advance. He was surprised as he had though I will not pay(I have already bought him all his household needs). He was very happy.
Next - cook and maid. Paid in the evening and both are happy. No problems with 2000 notes. One will pay her rent with it and the other will pay son's tution teachers.(both this amounts comes close to 2000).
During lunch I went to eat at my favorite shack. Spent Rs 50. felt very embarrassed to ask if they would change Rs 2000. They can keep 1000 as deposit(I will utilize it over next 2 weeks) and give me thousand in change. The guy smiled and gave me back 1500
1000 in 100s and a spanking new 500 note.
So I am happy and set for the next 1 month. Plenty of 100s to spend in the local economy and people I am responsible for (family and help) - all in a good position. No worries

[disha]

^^ Kudos!

[Marten]

Talked to my dad and he asked me not to get any money as things were very tight and the Govt was watchful. I just have 2 notes of Rs 500 of my own money and I am told I can use that to buy daaru at the duty free store in BLR. I don't want to carry money from K&N and be answerable to some afsar who asks me whose money that is.

SaraLax, if someone puts in 2.49 lakhs, IT might wonder why they stopped there and then raid them in a year so that it seems like there is no connection with this. That is a clear indicator of BM.

There is no issue with carrying the money - just get a letter from Kunal stating this amount is to be deposited into his SB account with the details and an authorization specifically to deposit the said amount. Just make sure not to carry too much. I am carrying about 15k for different folks other than the 10k that I already had (I basically never travel without enough cash on hand to make a call and eat a decent meal plus fresh undies).

Someone asked me to carry 8k USD for their family, and rejected that straightaway. Buggers will take a mile if you give them an inch.

[Suraj]

Yes., Modi Bhakts have criticized demonetization itself in other places - including pointing out that the quantum of the 'demonetized' money left out of the bank will determine how much successful this whole exercise has been. That is if out of 14 lakh crore., say 10% or 1.4 lakh crore is left out and never returns to bank., that itself is a huge success. However if only 1% or 14k crore of BM is left out., then what is the whole exercise about? It means there is significant loopholes that need to be plugged.

Actually all black money cash component (500s/1000s at least) will be accounted for . Doesn't matter whether it's deposited or not. Deposits just mean the depositor has a claim on that money (less taxes and penalty assessed). For money that never returned, RBI simply removes the liability from its books and can expand its balance sheet accordingly.

[Sicanta]

Demonetisation: Rights of income taxpayers and taxmen explained

http://www.financialexpress.com/industr ... ed/458652/

Gross NPAs of PSBs jump nearly Rs 80,000 cr in Jul-Sep

http://www.financialexpress.com/industr ... ep/459470/

It will be interesting to see if there is a downward spiral in the numbers after demonetization.

...................................................

Black money: Despite Centre’s warning, misuse of Jan Dhan accounts rampant

http://www.financialexpress.com/industr ... nt/458779/



UP cooperative banks took old currency in breach of RBI fiat

http://www.financialexpress.com/industr ... at/459546/



...................................................

ICICI Bank for rural digital push, 100 villages to be added

http://www.financialexpress.com/industr ... ed/458365/

BJP explains digital economy benefits to Delhi traders

http://www.financialexpress.com/economy ... rs/459652/

Govt removes excise duty on POS machine manufacturing

http://www.financialexpress.com/industr ... ng/458693/

Budget 2017: Post demonetisation, Modi government mulls new housing scheme with just 6-7% home loan interest rate

http://www.financialexpress.com/economy ... te/458911/

With pay day approaching, saltmakers open bank accounts for workers

http://www.business-standard.com/articl ... 936_1.html

IDS fetches Rs 3,500 crore of taxes till Monday

http://www.business-standard.com/articl ... 028_1.html

Cash is no longer the king at RTOs

http://www.business-standard.com/articl ... 054_1.html

Note ban hits sales and registration of new cars; Uttarakhand launches online payment; Delhi, Mumbai to follow suit

Assam to make digital payment a 'norm'

http://www.business-standard.com/articl ... 052_1.html

PMO to notify CMs' panel on making India less-cash economy

http://www.business-standard.com/articl ... 099_1.html

Municipal revenues jump in Nov; Hyderabad tops at 2500% growth

http://www.business-standard.com/articl ... 886_1.html