Currency Demonetisation and Future course of Indian Economy

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RajeshG
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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 08 Dec 2016 18:56

This is interesting.

http://profit.ndtv.com/news/economy/art ... ts-1635486

Banks have so far received Rs. 11.5 lakh crore in deposits in the form of banned 500 and 1000 notes, RBI deputy governor R Gandhi said on Wednesday. But a State Bank of India report has raised doubts on that deposit figure, which is around 75 per cent of about Rs. 15.5 lakh crore, the total value of the currency outlawed last month.

"Given the total high denomination currency of Rs. 15.44 lakh crore as of 8 November, the Rs. 11.55 lakh crore figure may not be depicting the picture correctly," the Economic Research Department of State Bank of India said in a report.


The SBI report said that "there is possibility of double-counting of money deposited in the banks on various accounts".

"RBI has not clearly stated whether the money in the currency chest is taken into estimates, as it includes interbank deposits. Also, both the post offices and co-operative banks have accounts with Scheduled Commercial Banks and it is not clear whether there is double counting there," the report said.

RajeshG
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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 08 Dec 2016 19:03

Chandragupta wrote: UP elections will be the litmus test.


Yes true. To me that is really important because of the RS seats. I havent done the calculation as to how much will be gained from UPs RS seats but I am guessing that would be considerable. If enough RS seats can be accrued before 2019 then some better thought out, big-bang reforms can be carried out.

RajeshG
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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 08 Dec 2016 19:09

Anyhow no matter how this turns out, it must be acknowledged ( once again ) that such type of excercise can never be carried out in any other country. Our capacity to adjust is truly legendary. Reminds me of the "no adjust" advt from VIP..

I say this because i have seen many articles that mention that a lot of countries are keenly watching India's experience and ( i think must be ) watching with awe how everybody just adjusts. :)

https://www.youtube.com/watch?v=fZlb9MFSwzY

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Re: Currency Demonetisation and Future course of Indian Economy

Postby habal » 08 Dec 2016 19:27

pankajs wrote:As soon as the DeMo window is closed FREEZE all co-op bank/bank account for CASH withdrawal. This can be done without even an offical order by just denying them cash. Anyone that needs CASH has to identify his/her account and supply KYC before allowing even a single rupee cash. Folks are free to use cheque/online transfer/Card/other digital means to move money which will make it traceable..

That will freeze all the money at the bank in non-KYC accounts till eternity. Let folks who have *claims* on any such account supply KYC or move court. Just like benami property benami accounts/deposits can be recovered by forcing owners to come forward or loose the money in their unclaimed account(s).


freezing only coop a/c's are not workable ideas because coops will go to courts and courts will pass orders to thaw the frozen. Coop banks operate under rbi license, court can ask why rbi was sleeping on the job and why no due diligence was done earlier and harassment of thousands of farmers and self-employed for sake of exposing a few crooked.

What can most likely happen is that even after Dec 31, there is going be lack of sufficient supply of high denomination currency and things are not going to be back to before Nov 8. There is enough time till Jun-July for tax dept to get house in order because only then as per my estimate currency supply is going to ease. What is the point of no withdrawal limit when banks just do not have surplus cash to disburse. Esp coop banks.

Thirdly coops have not been invalidated. There is nothing preventing them from opening a/c in PSU or banks/state coop/urban coop etc and withdrawing cash as normal a/c holder.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 08 Dec 2016 19:40

Freezing is eminently workable.

1. Unfreezing an individual account is as simple as getting it KYC compliant.
2. Freeze only for Cash withdraw. Rest all kinds of transaction is permitted.

Certainly people can approach the court as I have myself suggested in my post. In this thread itself someone (Scahin saar perhaps) stated that Kerala co-ops had been pushed earlier by RBI to get all accounts KYC compliant but they were resisting all along. That is sufficient ground for action and defense in courts. Individuals can get instant relief after KYC. Why will the courts object to that? Only accounts holders that resist will get frozen for iternity.

Why would farmers and self-employed have problem in getting their account KYC compliant and getting them unfreezed?
Last edited by pankajs on 08 Dec 2016 19:42, edited 1 time in total.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Singha » 08 Dec 2016 19:42


habal
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Re: Currency Demonetisation and Future course of Indian Economy

Postby habal » 08 Dec 2016 19:46

[quote="pankajs"]Freezing is eminently workable.

1. Unfreezing an individual account is as simple as getting it KYC compliant.
2. Freeze only for Cash withdraw. Rest all kinds of transaction is permitted.

Certainly people can approach the court as I have myself suggested in my post. In this thread itself someone (Scahin saar perhaps) stated that Kerala co-ops had been pushed earlier by RBI to get all accounts KYC compliant but they were resisting all along. That is sufficient ground for action and defense in courts. Individuals can get instant relief after KYC. Why will the courts object to that? Only accounts holders that resist will get frozen for iternity.

Why would farmers and self-employed have problem in getting their account KYC compliant and getting them unfreezed?[/quote]

mere bhai, all KYC for coop a/c holders have been collected by coop banks at time of a/c formation or during 2014-15 period when all coop banks were asked to collect KYC as per rbi norms.

So all these coop have KYC of a/c holders. They then misplace these KYC either unknowingly or purposefully.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby surendra » 08 Dec 2016 19:47

Excellent decision to encourage digital payments. The following were announced by Arun Jaitley:

Digital payments will receive the following benefits:

Road Sector:
Petrol & Diesel : 0.75% discount
Toll Plazas: 10% discount


Railways:
Suburban Monthly passes: 0.5% discount.
Online purchase: 10 lakh rupees insurance provided.
Accommodation, catering and retiring rooms: 5% discount.

Online purchase and payment of PSU sector Insurance:
General Insurance: 10% discount.
Life Insurance: 8% discount.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 08 Dec 2016 19:49

habal wrote:mere bhai, all KYC for coop a/c holders have been collected by coop banks at time of a/c formation or during 2014-15 period when all coop banks were asked to collect KYC as per rbi norms.

So all these coop have KYC of a/c holders. They then misplace these KYC either unknowingly or purposefully.

Sure then they can get it redone .... RBI not responsible for lost documents at the bank end .... If any thing the courts will fall hard on the co-ops for their negligence.

To unfreeze the humble "farmers and self-employed " will just doe the KYC again. Simple. They can still transact without cash.

Anyway, KYC is supposed to be re-done every 2/3 years. So what is the big deal.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby shiv » 08 Dec 2016 19:52

VikasRaina wrote:
Why do we think that this is end of BM as we know it. What stops hoarders and corrupts to start the journey once again. How this drive has ended Black Money, someone pls explain.


This question is being asked more often than is useful because no one is saying that. Black money generation has already started - you can bet on that.

The only question is what kind of deal you can do with the amount of black money that one can earn. If a person makes Rs 500 in Black money - he could probably afford a whore for a bit on the side. But if he wanted to buy a used Audi he would need to collect up some more. Similarly getting selected as a constable or a government clerk would require single digit lakhs. To buy a medical seat or property he would need 25 lakhs to a crore. A political party activist looking for patronage would need 3 crores and more. 10 crores plus would be the minimum to start talking about standing for election.

Until 8th November there would have been at least 10 people out of 100 who had money to do these things. That number has suddenly fallen to maybe 1 in a hundred now partly because of cash crunch. People have gold and property, but nobody has cash.

The key here is liquid cash. Things do not move well without liquidity and the government has crushed that. Everyone knows too damn well that black transactions are down to a basic minimum, but the same people are howling that "The poor are suffering". Within months there will be people who have enough money to buy government jobs, police constable jobs and medical seats. Property transactions too will happen. A small number of people will rise up to levels where they have enough in black to buy elections. But entire political line ups have been upset.

The ideal is that they should stay upset. If teh government can ram in low denomination notes, force e transactions down throats while making jihadi attacks against hoarded gold and benami property then the environment for the re-creation of illicit cash becomes more hostile. That is all
Last edited by shiv on 08 Dec 2016 19:56, edited 1 time in total.

habal
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Re: Currency Demonetisation and Future course of Indian Economy

Postby habal » 08 Dec 2016 19:54

pankajs wrote:Sure then they can get it redone .... RBI not responsible for lost documents at the bank end .... If any thing the courts will fall hard on the co-ops for their negligence.

To unfreeze the humble "farmers and self-employed " will just doe the KYC again. Simple. They can still transact without cash.



theek hai.

SwamyG
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Re: Currency Demonetisation and Future course of Indian Economy

Postby SwamyG » 08 Dec 2016 20:03

Shiv, a good post. If SM and dork media existed in pre-1947, then they would have questioned the struggle for independence.

BTW, Investopedia uses 2016 India as a prime example while explaining demonetization. :-) http://www.investopedia.com/terms/d/dem ... o-infinite

In 2016, the Indian government decided to demonetize the 500- and 1000- rupee notes, the two biggest denomination notes. These notes accounted for 86% of the country’s cash supply. The government’s goal was to eradicate counterfeit currency, fight tax evasion, eliminate black money gotten from money laundering and terrorist financing activities, and promote a cashless economy. By making the larger denomination notes worthless, individuals and entities with huge sums of black money gotten from parallel cash systems were forced to convert the money at a bank which is by law required to acquire tax information from the entity. If the entity could not provide proof of making any tax payments on the cash, a tax penalty of 200% of the tax owed was imposed.

Read more: Demonetization Definition | Investopedia http://www.investopedia.com/terms/d/dem ... z4SFzgnlnT
Follow us: Investopedia on Facebook


And the TV channels focus on just the takleefs and BM fight.

Another good read: http://www.investopedia.com/news/indian ... atms-cash/ on crowdsourcing to find ATMs.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby vijayk » 08 Dec 2016 20:13

RajeshG wrote:This is interesting.

http://profit.ndtv.com/news/economy/art ... ts-1635486

Banks have so far received Rs. 11.5 lakh crore in deposits in the form of banned 500 and 1000 notes, RBI deputy governor R Gandhi said on Wednesday. But a State Bank of India report has raised doubts on that deposit figure, which is around 75 per cent of about Rs. 15.5 lakh crore, the total value of the currency outlawed last month.

"Given the total high denomination currency of Rs. 15.44 lakh crore as of 8 November, the Rs. 11.55 lakh crore figure may not be depicting the picture correctly," the Economic Research Department of State Bank of India said in a report.


The SBI report said that "there is possibility of double-counting of money deposited in the banks on various accounts".

"RBI has not clearly stated whether the money in the currency chest is taken into estimates, as it includes interbank deposits. Also, both the post offices and co-operative banks have accounts with Scheduled Commercial Banks and it is not clear whether there is double counting there," the report said.


Very interesting

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 08 Dec 2016 20:25

raj-senthil wrote:Sorry if already posted
100 kilos gold and Rs 90 crore recovered in Chennai IT raids

Out of the Rs 90 crore seized, Rs 70 crore was in new currency notes. Sleuths from the IT department carried out raids in eight locations across Chennai In one of the biggest hauls post demonetisation, Income Tax officials seized Rs 90 crore and approximately 100 kgs gold.



How does one get 70 crores in new notes? Obviously not without the collusion of the Bank officials? If there a way to trace such large exchange of old to new notes, then the colluders and the fat cats owner of the old notes should all be identified and punished.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 08 Dec 2016 20:30

The recovery will lead to the bank/bank officials and who in turn will name anyone else they might have helped. Will also lead them to the gold trader who supplied all the gold and through him to more black money hoarders perhaps.

As of 6 days back, 27 bank officials had been suspended. As more folks are caught more revelations are made the list will keep expanding. But investigation will take time.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby raj-senthil » 08 Dec 2016 20:55

Narendra Modi ‏@narendramodi 59m

Image
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Uttam » 08 Dec 2016 21:04

The fact that RBI did not change the Repo rate points to one or more of these:

1) They are concerned about the flight of capital after the US Fed raises interest rates.
2) There is excess liquidity with the banks, which shows up with falling yields on government bonds

3) The negative impact of demonetization are not that bad. Their advance inflation estimates probably are showing that the fear of deflation are overrated.

When do we see the next inflation numbers?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Manish_Sharma » 08 Dec 2016 21:23

Since last evening Zee News has started introducing a little bit of noise about peoples' tolerance at breaking point. Though most of the time they propound the positivity of DeMo, even now.

Until day before yesterday they were 100% with govt. on this issue.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby shiv » 08 Dec 2016 21:50

shiv wrote:As an aside I bet my left testimonial, which is still with me that Jayalalitha's hospital expenses for 75 days have probably not been met fully. Hospitals and doctors take a big hit with VIPs who sometimes do not pay.


https://twitter.com/amitsurg/status/806691031026581504
In other news, Bombay Hospital got what it deserved for providing safe haven to Bhujbal. He refused to settle the bill running into lakhs

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Re: Currency Demonetisation and Future course of Indian Economy

Postby rsingh » 08 Dec 2016 22:06

Swamy G
f SM and dork media existed in pre-1947, then they would have questioned the struggle for independence.

Nice. It explains everything.Will spread the word.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Austin » 08 Dec 2016 22:43

Foreign diplomats are livid over India's cash crisis

http://money.cnn.com/2016/12/08/news/in ... plead-intl

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Re: Currency Demonetisation and Future course of Indian Economy

Postby chola » 08 Dec 2016 22:52

The truth is there no way this doesn't hurt the overall economy and the benefits we accrue through this pain against black money and counterfeiters will last only until criminals devise new tactics. Of course, the outsourcing and back-office wallahs with their shiny credit cards and paytm accounts are clearly oblivious.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Yayavar » 08 Dec 2016 22:56

^^what about expanding the tax base? That one item itself should improve things

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 08 Dec 2016 23:09

The bakis are cribbing because they are unable to dispatch new notes to Kashmir to keep the protests going.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Sridhar K » 08 Dec 2016 23:11

Dipanker wrote:
raj-senthil wrote:Sorry if already posted
100 kilos gold and Rs 90 crore recovered in Chennai IT raids



This is the same guy who wanted his employees to help with the conversion and somehow mananged to convert to new currency that I had alluded to in my earlier posts on this thread. Had replied to Akshay Kapoorji that he is already on the radar. Also came to know that he was aware of the impending raid.

It shows that
1. Big fishes have managed to convert through various channels and
2. The authorities are tracking the big fishes
3. There are moles in IT dept which makes the whole affair a cat and mouse games.
Per local media, the guy is closed to OPS.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Akshay Kapoor » 08 Dec 2016 23:29

Closed to OPs ??

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Re: Currency Demonetisation and Future course of Indian Economy

Postby suryag » 08 Dec 2016 23:30

O paneer selvam

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 08 Dec 2016 23:31

Squeeze on the money supply will impact the economy in the short term for a heavily cash based economics may be even a year from now. Maximum impact will be in this and the next quarter. Growth forecast for the next year has been reduced by 1% by Goldman. Moody's (or was it Fitch) had the growth for the next year down by 0.5%. In FY 2019 we may even see a uptick from the current growth forecast.

Modi is preparing for the cat and mouse games that will follow. Most of the guys with legit business but only tax dodgers will shift to mostly white business as per this guy. He runs a well respected site and Investing magazine. In that sense he himself is a businessmen and he seems to have spoken to a lot of chota-mota business folks.

pankajs wrote:I has this on my list for a long time but never got around to post it. It is old in that it is dated 28-Nov-2016. Hopefully it hasn't been posted before.

https://www.valueresearchonline.com/sto ... ?str=32522
The real impact of demonetisation
Moreover, there will be many positives, even immediate ones. I have already seen, first-hand, a sharp shift in previously cash-based businesses to above-board, tax-paid transactions. The real success of demonetisation, and the majority of its economic impact, will come not from the 'unearthing' of stocked black money, but from a change in future behaviour. People work in cash, earn profits in cash and accumulate wealth in black because so far, this has been effectively a riskless option. This is no longer true--and that's the real change. For the first time, there is real danger and real unpredictability in continuing to do so.

Those whose black wealth comes from bribery and other crimes are a separate class but as far as real business-owners are concerned, their response is very different. Over the last fortnight, I've personally interacted with a large number who I know personally and they've all said that they are converting their businesses to all white. Not a single one has had any moral epiphany, they're not doing this because it's the right thing. Instead, they've all said that cash is just too risky now because you don't know what Modi could do next. If you are doing business in cash, you can feel the fear in your heart that here's a determined, dangerous and unpredictable opponent who has shown that there is no limit to how far he is willing to go. And that's the real determinant of what the economic impact of demonetisation will be.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 08 Dec 2016 23:46

parashara wrote:A few days back I asked a question on this forum:
"Can the RBI erase the liability equivalent of the unsurfaced BM and transfer that as dividend to the govt?"

A banking tech friend of mine said:
"Nonsense - can't be done"

A couple armchair "finance whizzes" on this forum jumped in aggressively yelling about why my friend was dead wrong and why this was perfectly doable - see messages from Suraj et. al.

Turns out my friend was absolutely right.

And also looks like the amount of this liability is in the tune of 1.5L Cr.

Read the Urjit Patel uvaacha below:
http://profit.ndtv.com/news/economy/art ... eststories

Moral: Better to trust a good friend who speaks softly than some virtual actors low on gyaan and high on vitriol. :)

That's not what I claimed, and what Urjit Patel states is NOT what your imaginary friend asserts. Read the article you posted:
Madan Sabnavis, chief economist at CARE Ratings, said this basically means that instead of the RBI printing new money in place of the currency not returned and transferring that amount to the government, the central bank could keep it as special reserve to meet a possible future liability. "The notes will be on the RBI balance sheet without the status of legal tender and more likely will reside in the reserves of the central bank," he said.

What future liability is it covering if it's *still* a liability ? Patel is saying that there's no longer a depositor liability on the notes. A reserve is not a liability. You literally cannot set aside money as a reserve that's already been set aside against an obligation.

Talk of 'windfall profits' is other peoples' spin on this. The RBI itself gains reserves equivalent to the undeposited cash on its balance sheet. That gives it the authority to broaden the cash base without requesting approval to expand its balance sheet. That's been my sole contention all along, and thank you for showing Urjit Patel say the same thing and contradict your 'friend' :-)

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Re: Currency Demonetisation and Future course of Indian Economy

Postby chetak » 09 Dec 2016 00:03

Manish_Sharma wrote:Since last evening Zee News has started introducing a little bit of noise about peoples' tolerance at breaking point. Though most of the time they propound the positivity of DeMo, even now.

Until day before yesterday they were 100% with govt. on this issue.



This programming seems to be standard across all channels now.

DDMitis


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Re: Currency Demonetisation and Future course of Indian Economy

Postby JohnTitor » 09 Dec 2016 00:15

I don't understand. Isn't it easier to reduce cash transactions and therefore ill gotten wealth by pushing for digitisation?

Extrapolating that, force digitisation by reducing the biggest denomination notes. If 20 or 50 is the highest denomination then people will be forced to pay by card or cheque or bank transfer when buying large ticket items. The common man won't lug around a sack full of 50 rupee notes..

I feel this alone will push electronic payments significantly

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Manish_Sharma » 09 Dec 2016 00:33

Suraj wrote:The RBI issued two press releases:
Rs.4.27 lakh crore in banknotes issued OTC or through ATMs

Consequent to the announcement of withdrawal of Legal Tender status of banknotes of ₹ 500 and ₹ 1000 denominations from the midnight of November 8, 2016, the Reserve Bank of India made arrangements for exchange and/or deposit of such notes at the counters of the Reserve Bank and commercial banks, Regional Rural banks and Urban Cooperative Banks. The Reserve Bank has also made arrangements for supply of adequate quantity of banknotes in various denominations to the public through the banks. During the period from November 10, 2016 and December 7, 2016, banks have reported that banknotes worth ₹ 4,27,684 crore have been issued to public either over the counter or through ATMs.


That means the speed is 1 lakh crore plus some more per week. In next 3 weeks it can be 3 lakh crore plus some more.

That will take the finally tally of Rs. 7,27,684+ some more crore by 30 December.

Or is it possible that next 3 weeks might see less amount per week as it will be less 2000/- notes and more smaller denomination notes?

Also RBI first gave the figures of deposits and withdrawn notes on 18th november and then 9 days later on 27 November. But now they have given only withdrawls but not total deposits. Is it possible that some double counting mistake has happened as remarked by SBI and they are recounting?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 09 Dec 2016 00:46

RBI stated that Rs.11.85 lakh crore were deposited. The withdrawals here constitute both exchanges and withdrawals from open accounts.

If people think 'all that cash now goes back into black economy', that's not really true. Comparatively litte cash was *exchanged*. A lot more was withdrawn. Say some past black money guy deposited lakhs. Now he uses cheques to aggressively withdraw cash. That doesn't let him hide anything. GoI knows both that he deposited a lot, and that he withdrew a lot too. He's still on the IT scanner for his original deposits, and whatever cash he withdrew will still be nailed to him.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby chola » 09 Dec 2016 00:58

Yayavar wrote:^^what about expanding the tax base? That one item itself should improve things


Expanding the tax base will help the GOI but it will not improve the enonomy. Now the GOI can use its new found wealth to build infrastructure, etc. that will improve the economy in the future. But no, pushing economic activity from black to white will not improve the economy by itself.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Lilo » 09 Dec 2016 01:05

x-post of a post from another member in GDF

Singha wrote:criminals rebuilding their war chests...clearly the 10 crore in 2k notes has to be with collusion of very powerful bank officials who need to be arrested

CHENNAI: Income Tax investigation sleuths in Chennai have unearthed a money laundering racket and seized Rs 120 crore in old currencies, new currencies and gold bars from eight premises including a star hotel room.

"The premises belong to industrialist Shekhar Reddy, his associate Srinivasa Reddy and their agents including one Prem," said an IT official.
Of the total seizure, Rs 80 crore was in old demonetised currencies+ and Rs 10 crore in newly introduced Rs 2,000 denomination. The teams also seized 100kg gold bars worth Rs 30 crore, said the official. The sleuths got a tip-off about Prem exchanging old currencies for gold bars, and following his trail they stumbled upon the Reddy associates. They seized Rs 6 crore in newly introduced Rs 2,000 denomination from the house of Shekhar Reddy in T Nagar.

Based on the information provided by him, officials raided a room in a prominent star hotel in Teynampet and seized 70kg gold bars from there. Reddys had booked the room in the name of one of their agents.


This is the same guy who wanted his employees to help with the conversion and somehow mananged to convert to new currency that I had alluded to in my earlier posts on this demo thread. Had replied that he is already on the radar. Also came to know that he was aware of the impending raid.

It shows that
1. Big fishes have managed to convert through various channels and
2. The authorities are tracking the big fishes
3. There are moles in IT dept which makes the whole affair a cat and mouse game.
Per local media, the guy is closed to OPS and Mannai mafia.

Now link Ebil Modi consoling the poor OPS with this

Raj
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Raj » 09 Dec 2016 01:08

May be OT, but interesting data point
Thousands of Kenyan single mothers, widows use mobile money to escape poverty
NAIROBI (Thomson Reuters Foundation) - Almost 200,000 Kenyan households, many headed by poor, rural women, have lifted themselves out of poverty using mobile money services, experts said on Thursday, calling for the technology to be introduced in other developing countries.

The impact was most dramatic among single mothers who used M-Pesa, a text message-based mobile payment system, after switching from farming to business and retail sales, the journal Science found.

"What we saw over six years was impressive," Tavneet Suri, associate professor of Applied Economics at the Massachusetts Institute of Technology, said in a statement.

"When M-Pesa came to an area, women shifted their occupations and their savings went up."

The expansion of M-Pesa, which is used in virtually every Kenyan home, lifted 194,000 households -- or two percent of households nationwide -- above the poverty line in six years, the study found.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby disha » 09 Dec 2016 01:10

Chandragupta wrote:
This forum has become an echo chamber. Any criticism or questions are drowned out and only praise is allowed. Talk about living in ivory towers.


That might be very much true., however I came across a tweet some 20 days back which practically said that tempers are running high at the queue and it will spill over into riots.

It is 20 days hence and I am wondering where the riots are? The only place I saw it was in LS/RS.

This may lead to #Blow2Modi in 2019., but again that is still 2.5 years away.

It seems like all black money has been laundered. And it is going to be a tough mountain to climb for the Government to try and get BM in the net.

Also another tidbit : Muslims are going around Hindu trader hubs and offering flat rate of 15% for them to launder their BM through their bank accounts. It is a windfall for them, they are very confident that IT or Law enforcement can't lay a finger on them and if they try, 'hum dekh lenge sabko'.


'Seems like' is no proof at all. If you ask a lunatic in a mental asylum., he will say that 'it seems like the whole world is insane'. It may very well be (and it might be a sane statement after all)., but there is no quantitive proof to it - except some wink-wink-nudge-nudge-FUD.

On the tidbit part: Looks like the 'Muslims' are smart going after 'Hindu' trader hubs and making some money (15% ROI) on the side. If the trader falls fort it., they deserve it for just being an idiot - particularly after listening and believing the statement 'hum deke lenge sabko'!!

Putting a reverse psycho on it., will not that make NaMo a darling of the muslims? Just saying!

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Re: Currency Demonetisation and Future course of Indian Economy

Postby MurthyB » 09 Dec 2016 01:23

I am no economist, but it seems that if the Indian banks are suddenly sitting on about $200 billion of new liquidity, they will have to use it productively somewhere. From googling, it seems like RBI's cash reserve ratio is 20% (unlike the US where it is 10%), and a rudimentary reading suggests that the multiplicative effect from this will be 5x, or $1 trillion. This assumes that there will be a sharp drop in interest rates (obviously for both lending and saving) in the coming years which will not only spur lending at much lower rates thus sparking economic growth, but also force people into migrating some of their savings into bonds and equities which are also productive for the economy. If this is all true, what are the time scales over which this will happen? A $1 trillion addition to the Indian GDP would be a 50% increment over its current size.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 09 Dec 2016 01:32

Chandragupta wrote:This forum has become an echo chamber. Any criticism or questions are drowned out and only praise is allowed. Talk about living in ivory towers.

I just came back from the bank hoping to withdraw some money but they had no cash. Everybody in the queue was angry and abusing the banks and the PM.

How so ? You are extrapolating a personal anecdote as a broad fact. RBI, from it's 'ivory tower' announced that As of Dec 7, Rs.11.85 lakh crore were deposited. On Nov 27 that figure was 8.11 lakh crore, and a week before that, 5.xx lakh crore. Total cash outstanding was around Rs.14.xx lakh crore. Simultaneously, the latest data posted above shows that Rs.4.xx lakh crore in additional cash was disbursed since Nov 10 . Over 80% of the work is done.

What does this tell you ? Those lines, despite being long, are effective. Everything is working out way ahead of the 50 day deadline. Worthless old cash has been deposited, and new cash has been disbursed, across the country. The banking system has scaled up its effort 10x or 100x above typical volumes.
Chandragupta wrote:It seems like all black money has been laundered. And it is going to be a tough mountain to climb for the Government to try and get BM in the net.

This is the kind of criticism you want to make ? "Seems like" ? Please do criticize, but please show some rigor. People aren't responding to such criticism with 'seems like you are wrong. I think so". Hard data is being quoted.

It's absolutely true that there are long lines and frayed tempers. But that's not criticism against this. That is a mathematical fact . There are 460 million working age people, approx 400 million bank accounts, approz 100,000 bank branches, and 50 days. Assume a certain rate of processing and the math gives you a picture of what the lines will be like. Now plug in how many deposits have been made, and ask yourself if the rate of processing (80% of cash deposited/exchanged in 4 weeks out of total 7 weeks planned) is good or bad ?

When you deal with numbers like in India, lines will be long. They're long at cinemas, at Kumbh Melas and now at bank branches. The amount of surge traffic is impossible to add capacity for at reasonable cost within our current means, e.g. 'Govt should have built 10x more bank branches before DeMo'...

IMHO "forum has become an echo chamber" is essentially a response to anecdotal observations receiving data as response. Largescale loss of confidence should manifest in the form of public rioting, destruction of bank premises etc. Where are these stories ? After all, an antagonist press would gleefully show pictures of bank buildings burning down and people lynching bank officials. Rigor is necesssary. Criticism without rigor should not expect to go unchallenged. When I google 'India bank lines' I see lots of pics of long lines. All orderly and serpentine. No burning buildings, blood, tear gas or anything. The very fact that 50/100-deep lines are orderly is astounding - by popular belief they're 'supposed to' all crowded the counter, after all...

Another claim is 'should have planned this better'. But that's a very superficial argument. Pretty much no one who makes that argument has any idea *how* it can be planned better. It is a rhetorical construct. When queried the answer is typically 'that's GoI's or RBIs job to figure out'. Again, this is not meaningful criticism, and often just demonstrates that the person egostically thinks it could have been done better, even if he/she has no idea, or no interest in explaining how, in a manner others cannot criticize in response. Accepting such criticism means we agree not to bother about understanding what was wrong, how it went wrong, and what measures could have fixed it. Rather, a conclusion has been established and no leading facts are required. Is that fair ?

Yet another claim is that "Government should have figured everything out beforehand". But that reflects a profound lack of experience at the issues associated with leading enormous new initiatives . DeMo is several orders of magnitude larger in scale and scope than anything of the sort that any other nation has ever attempted in the history of mankind. The Chief of Staff of the Prussian Army during Bismarck's time, Helmuth von Moltke, once famously said "no prior plan survives initial contact with the enemy". The best plan isn't one that figures out everything beforehand as a grand strategy, because they can't. It's one that has a basic strategic structure, but which can be adapted to immediate tactical requirements effectively. GoI is doing this, by and large. The incoming data bears this out.


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