Currency Demonetisation and Future course of Indian Economy

[Sicanta]

Big push for digital economy: Government limits transaction fee on IMPS, NEFT transfer

http://www.financialexpress.com/economy ... er/481880/

[Suraj]

It's good that only 86cr out of Rs.3100 cr is in new notes. That suggests that the rate of leeching of the new notes into black economy is low, and most of the base is still the old useless 500s/1000s that they're simply incapable of depositing and declaring without letting dangerous cats out of bags.

I think this represents less than 1%. Still your point is valid. Even by liberal estimates the money exchanged for BM cannot be more than Rs 50000 crores, which is not bad. If they can stop any more conversion in the next 2 weeks, demonetization is a big success. They still have the task of scrutinizing all the deposits. They will easily find another Rs 50000 crores. But most important byproduct is the promotion of cashless transactions which is key to stop BM accumulating again.

Yes I'm certainly extrapolating from one story here, and all disclaimers apply, but the overall trend seems to be that the substantial majority of cash found is the useless old notes. That's a good thing. Some leakage is to be expected, but considering how much the overall figure is, a 10% leakage would count as a huge success, and 1 lakh crore in total leakage is way less than 10%.

[Dasari]

This was about a week ago. I am not sure how credible this report is.

This dropped to 20-30% in the following weeks and settled at 10% a week back. Interestingly, in the last few days the situation has reversed. Now if you have Rs 1crore in cash, there are people willing to take the money off your hands and give you an interest of 6-8% after a year.

“The only hitch is that you have to lock in your money for a year or so; a few days back an interest of 6% was being offered, it has gone up to 8%,” said one of the individuals involved in such a trade.

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

Now we know why FM is making tweaks to Demonetization. All conversion from now onwards is through thousands of foot soldiers depositing small amounts everyday. They need to do stringent KYC on them and the deposits locked, other than nominal withdrawals, until they investigate the source of income thoroughly.

[Katare]

One aspect that needs to be looked at, that has not been talked about in detail in media/speeches so far is BtoB cash transactions. The kirana/cloth trader gets his cash from mango man than he pays a significant portion of that cash to his local stockiest, who in turn pays with same cash to the wholesaler, who pays to manufacturers. What portion of this chain is in cash and how much cash is horded at each pit stop as working capital? If kirana guy waits until he has 100k cash to pay local stockist and the stockiest sits on 50 lakhs and the chain continues till the end than we are filling a very large hording system before money starts to move freely at sove decent velocity.

On the other hand If the kirana guy deposits his daily sales into bank everyday that money is available for his customers very next day and with this higher velocity the cash crunch would ease out. The million dollar question is how do we short this chain at local level rather than making that cash teavel long distanse and sitting at multiple location before getting back at customers hand again? There could/should be regulations/incentives to make these guys go digital too. May be Banks can offer free cash pick-up services from traders to improve circulation. When the currency notes moving fast enough to get back into banks with in a day or two we would automatically bacome a less cash economy.

Economy currenty has Over 8 lakh corer of cash in it, including 6 lakh corer of new currency notes infused since 8th of november. This translates roughly Rs. 7-8k/person or Rs 30K/family of four. I would hazard a guess that today more than 90% of all the families in India don't have this much case on hand. So where did this money go? One Logical answer that i can think of is that it is sitting with your neighborhood traders. Many BRF members are reporting for weeks that they have no problem getting change from these guys. They could exchange your Rs2K note even for a small purchase because they are hording cash in small denominations for their customers. Makes sense, he must be depositing or paying up his suppliers with Rs2K notes and sit on the smaller ones. Since Rs2K note is moving fast, no wonder It is available everywhere. If/when mango man goes digital in mass, traders wont need the cash hord for his customers but this still leaves the issue of another cash pot that he has to grow to pay his suppliers. If he starts to get most of his money in non-cash form he would have less, but still enough, cash to pay in cash to upstream supply chain.

Without solving this BtoB, i think it'll take a whole lot of cash to get this cash trading section of evonomy filled and currency moving again. Again if retail customer goes cashless this problem starts to solve itself to some degree at least

My two cents.

[srinebula]

One question to esteemed BRFites:
Do you think the old 500 notes will ever have decent antique value, may be in numismatics circles?

I have avoided going to a bank so far after Nov 8th. I have 4 old 500 notes with me. Just wondering if it is worth the trouble of visiting the bank to deposit these notes.
Theoretical scenario: I leave these notes in the locker. Next generation finds them, and are able to sell them for decent value. Given enough time, this value might actually cross the value of Rs. 2K invested in a good mutual fund today.
How likely or unlikely is that scenario?

[disha]

^^ Yes it will have., the previous 1000 Rs. is now available only for Rs. 15000 or so and of course there is concern of it being genuine or fake. So yes., your Rs. 500/1000 will have some value as it ages. Since several were out of circulation., you have to hope that 99.9999% of it is destroyed for you to have some value. This may be of 50/60 years in future. At that time - the economy will be totally cashless and the notes you hold will have some museum value where they will rent it from you for display purposes.

So you will not see any benefits., but maybe your great-grand kids will.

----

Rishirishi - saar., I am not as riche-rich as you are. I have NOT seen a shoe box of gold either. All OF my gold possessions can fit into a small purse.

[MohdKav]

Nobody is burning money, nobody is getting caught, other than some token people all around India.

What mind wants to believe., the eyes hear that and the ears see that.

1. Chief Secy. of TN got caught with 170 Kg of Gold and @150 cr. of cash. That is not token. I have in my lifetime have not seen how much a kilogram of gold looks like. Neither I have seen anything larger than 50 Kg. of rice bag. So I do not know how much of 170 Kg of Gold looks like but it is not a token amount and neither is Chief Secy. of TN is a "token" person.

2. In one place you mention that there are still pockets out there trying to launder the BM at some rate which is now down to 15%. Have you thought that there is no more BM to launder and hence the rates have come down? And if people have laundered their BM even at 30% rate - they have seen a significant hair cut. On top of it are you claiming that the 70% has been laundered and returned back to the launderer? If so they should be happy to go out and purchase properties at depressed rates. Why are they not doing it?

All you want to do is whine and pull straw mens out of your musharraf. How much BM did you lose?

1. One Chief secretary, I give you is a big catch. If you are satisified with it, then you dont know the scale and breadth of black money in India.

2. Yup, all money has already been laundered. Either as cash or in fake accounts. Nobody is going to use money for anything for the next 3 months. You can believe that money hasnt been laundered in insane levels.

[Suraj]

MohdKav: you were banned for a month for trolling, and you're back to doing it again within days. Fair warning.

[SaraLax]

What mind wants to believe., the eyes hear that and the ears see that.

All you want to do is whine and pull straw mens out of your musharraf.

1. One Chief secretary, I give you is a big catch. If you are satisified with it, then you dont know the scale and breadth of black money in India.

2. Yup, all money has already been laundered. Either as cash or in fake accounts. Nobody is going to use money for anything for the next 3 months. You can believe that money hasnt been laundered in insane levels.

Either you are a fake guy masquerading as business owner dealing in Black Money or your digital locations truly need to be reported to the appropriate folks.

The recent well publicized hit & early 5.30 AM raids against TN Chief Secretary, his Son and their never-should-have-been tie-up with a highly dubious sand miner & contractor Sekar Reddy across TN/AP/KA ..... all clocks to nearly 170+ Crores INR and 100 Kgs+ Gold bar of unaccounted money & many of them in new 2K INR notes. Sekar Reddy has followed the Satyameva Jayate principle in the custody of IT/ED folks and sung about some more IAS afsars whom he has dealt with. The ED folks have themselves revealed that a few more IAS afsars are under their radar.
If it not were for DeMo, this Sekar Reddy might not have got caught by the IT/ED folks and would instead have been building his BM stash.

Rest Assured, many BM Holding IAS afsars, their benamis & medium level BM Holding businessmen lloking at the raids in TN, will now start panicking, loose more & more of their sleep .... not just in TN but in other states too. The best solution for all these guys who are getting the jitters right now & the best option to not get raided next by IT / ED folks ...is not to launder more & more (stop digging yourself a deeper hole ... shyte diggers !) but to silently take up the very last IDS option offered again via Pradhan Mantri Garib Kalyan Yojana ( PMGKY - basically an IDS-II .. open until end of Mar 2017 ) and get taxed nearly 50% of that BM & start paying tax on earnings made with rest 50% of money (now in white) from FY 2018-19 onwards.

I expect more raids to happen in the coming few days and we will see how much the amount getting collected through PMGKY rises up & up.

Remember .. The guy who started this DeMo game had all the advantages from the first step .... he was the planner, he had a small secretive group game out the ways in which BM Holders will react to DeMo and the biggest advantage was that he launched it in the most sly, unexpected manner and had most BM Holders caught on the wrong foot, lost clarity & making them panic and commit more mistakes to save their BM stash (launder further by seeking help & thus reveal themselves & eventually get caught during checks). All this, i presume, will ensure more collection of money through IDS-II. Most BM holders are caught in this panicked state only and many other BM Holders put their large amounts money as broken down chunks into banks but these transactions are only waiting to be analysed (before Mar 2017) because banks will raise a Suspicious Transaction instance & FIUarm of Fin-Min will come in to investigate & take appropriate action as required.

Nevertheless there is going to be more tax accumulation by the govt. using the above steps.

[Rudradev]

The lame excuses I am hearing 'No big fish has been caught. Rich are getting away" etc sound really hollow to me because people are seeing others being caught every day. The Cong spokes persons language today was pure rhetoric - the language of "blame".

I have a pisko theory to add to Shiv's observation here.

I think people feel vindicated for their hardships in demonetization when they see ANYONE, even so-called "small fish" in the black money game, being apprehended.

In every society there are big fish... mafiosos, politicos, etc. who have established their tentacles of influence so firmly that they cannot be easily removed. Not even by a government that has begun to address the problem of crime and corruption seriously. In general, the public understands that these big fish are not going to be destroyed in one instant by waving a magic wand.

However, what had happened to Indian society included not only the phenomenon of "big fish" but a deeper, systemic, widespread problem that was far more devastating to the public morale.

Everybody looked at their neighbour and wondered... is he keeping black money in his mattress? Is he using it to buy influence? Is he using it to get a better car, better house, better job... better schooling and job opportunity for his kids?

Is this how he seems to do well, when (given my honest ways) life is often a struggle for me?

This constant, nagging temptation caused many otherwise honest individuals and families to say... the hell with it, I'm also going to take advantage of black economy. After all, everybody else is doing it, and reaping rewards... so why should my family and I suffer? And besides, it's not like the government (i.e. any government before Modi) would ever do anything to punish offenders. The government itself is made up of "netas" who came up like this (partaking of the black economy). So this is the only way up the ladder in any case.

The net effect of pervasive black transactions on society is one of those things that is hard to measure because it is a vast integral of incremental, not always documentable effects. However, its overall impact on how Indians see themselves and their country and society is profound. It is like the problem of public littering or defecation... one individual turd, one used plastic cup thrown on the footpath means almost nothing at all. But integrated over lakhs of citizens these things become a vast, constant, and noxious presence with innumerable ill effects and a spirit-crushing appearance of permanence.

On the other side of this coin... when people get a sense that the government is coordinating a set of small, incremental efforts to address any particular problem... and that these efforts are actually working across all parts of the country, even if each effort is individually small... it does wonders to boost public morale AND trust in a government.

Therefore I submit that, even now, it is no big deal that the ~45-day-old demonetization initiative has not netted any "big fish".

What matters is that people see that black money hoarders and tax evaders are getting busted... even if they are so-called "small fish". People see that this is happening, systematically and efficiently, throughout the country. They have a sense of a large, orchestrated program at work to do the right thing.

This perception builds public trust in what the government is doing. I feel better about the Maruti I drive, and the taxes I pay, if my shifty neighbour with the Mercedes ends up in handcuffs. I know that the issue of Dawood Ibrahim's benaami properties or Vijay Mallya's Swiss Bank accounts can't be resolved with one stroke of Modi's pen. But when I see three-four scumbag contractors from my mohalla, who used to operate with impunity, now facing time behind bars... I find it easier to have faith that Modi is building, brick by brick, towards the goal of destroying the Dawoods of the world.

Indians have been told by one Western publication/movie/hit-piece after another that they are inherently unhygienic... littering and $hitting everywhere... and intrinsically corrupt, needing to get paid under the table and incapable of an honest day's work. This has been reiterated hundreds of times by business/finance magazines, popular novels, films like "Slumdog Millionaire", tourist websites like Lonely Planet, travel advisories issued by foreign governments... you name it.

Worse yet, this same notion of Indians as fundamentally dirty and dishonest has been picked up and repeated to us by the Congress-pasand Media... and also internalized by the political parties of the C-System (Congress, AAP, Mahathugbandhan, Left) to such an extent that they treated us, the Indian electorate, with the contempt engendered by it. Viewing us as myopic, greedy, vote-bank vermin who could always be counted on to respond when our lowest instincts of caste, class, religious identity or personal venality were appealed to.

That is what animates the sense of defiance and rebellion for the crores of ordinary Indians who are standing in queues in solidarity with Modi Sarkar's demonetization initiative. We are not who you have always believed we are, what you have always told us we are. We are the inheritors of something far greater, something that was bequeathed to us by the unparalleled civilization of our ancestors, and we have found the leadership who will help us claim that legacy.

This, to me, is what Hindutva really means.

Note that things would have been very different if a Maino-MMS type government had launched a "black money hataao" initiative and made a few token arrests of chhota-mota people. In that case, the public would have been fully aware of the cynical nature of the exercise... completely cognizant that the real "big fish" would never be touched because they are and have always been in bed with the C-system.

[Manish_Sharma]

http://swarajyamag.com/economy/managing ... t-clueless

Managing Cash: How RBI’s Structural Weakness Left It Clueless
Subhomoy Bhattacharjee - December 21, 2016, 5:31 pm

The one institution which has clearly come out much weaker from the demonetisation exercise is the Reserve Bank of India (RBI). This has disturbing implications, given the massive rise in stakes, for all Indians, in the financial sector, post the exercise.

Why did this happen? There are several reasons for this but all of them go back to the place that the mechanism of currency issuance — the department of currency management – occupies in the pecking order within RBI.

This department is the largest among the 26 departments in the central bank. The following chart of comparative staff strength among all the departments shows it clearly. To put it in perspective, every fourth employee of RBI has something to do with the department of currency management. Though the absolute number of people has shrunk, the relative size has not changed.

RBI Staff Strength
RBI Staff Strength

But through the year, most of the work of this department is routine. At the beginning of each financial year, RBI’s central board sets the rate at which cash will be printed in the printing presses. The rate is in turn, determined by the nominal rate of growth of GDP. Once this piece of economic analysis is parsed through by the RBI Governor and his deputies, the rest of the work on handling of currency is quite predictable. For instance, based on the aggregate issuance, the denominations in which the currency notes will be issued is set thereafter. In most years, it is more or less a fraction above what has obtained in last fiscal.

Let us examine some further aspects of the currency operations of RBI. The RBI annual report is a carefully written document. That is not surprising, given its stature among the leading central banks of the world. The report makes a detailed analysis of the state of monetary management in India as it obtained in the past financial year. Going ahead, it makes an equally careful analysis of the expected monetary developments in India in the year ahead.

Till recently, however, the only exception to the painstaking work in the report was the chapter on management of currency. There were years like this and this where the annual reports almost reproduced verbatim the chapters on currency. It is only in the annual report of 2013 that this thread of predictability was altered when it began a discussion on the curious rise in the percentage of high value denomination notes in the economy, far ahead of what the economy needed. Essentially the brick and mortar of actual issuance of currency notes gets short shrift within RBI.

Also, unlike the other major departments like the department of banking supervision and the department of economic analysis, few of the currency officials sit on Mint Road, the headquarters of RBI. So they are rarely able to apprise the Governor and his team first hand about the details about the state of operations on the ground. Hence the feedback loop is thin. In the RBI hierarchy of jobs, the top billing has always gone to the department of economic analysis and the department of banking supervision. Among the deputy governors, these two departments have been the most coveted. Currency management has usually been considered the equivalent of a dog house posting.

So as the cash first dried up post demonetisation and was then released in a thin stream, the RBI top brass were in difficulties. They have rarely got onto this turf. In an exercise of this scale where the configurations of the challenge are altering daily, lack of daily feedback is often fatal. It is like fighting a battle where the commanding officers give orders over long distance, without ever getting to see the state of operations.

This is also reflected in another piece of data. Over the years, the RBI has distinguished itself with a series of studies and working papers written by its staff and invited economists on a range of monetary topics. There have also been reports galore on all aspects of the economy that have made their mark. Management of cash economy has been conspicuously absent from this list. The omnibus-like periodic reports on currency and finance have plenty of details on the role of cash, but they too do not dwell on the practical bread and butter business of transporting cash from one point to another or offer a disaggregated picture of the demand for cash in the economy. Where it refers to cash management, it means how central government manages its requirement for cash as a subset of liquidity management.

So here is the scale of the problem—there was just nobody in the RBI who knew how cash moves. This is not unlike the lack of knowledge on this topic among other central banks too. But then none of them has faced demonetisation. And this explains why RBI has been left scrambling and forced to issue orders almost daily in the course of this six weeks in order to regularise the flow of notes.

This is the reason why RBI bosses despite the data on printing capacity of their own mills, were led to believe that normalcy could be restored by end-December. Check out the data on orders (in volume and not value) placed for Rs 500 and Rs 1000 pieces of note. Notice that it takes the same time to print a smaller or larger denomination note. The table makes it clear that nearly 60 per cent of the old notes had already got printed by the date of demonetisation. Post November 8, that 60 per cent has to be printed again. Will it be possible to compress the print run in the remaining five months of this fiscal year?

The Twitter smirks about the number of notifications which the RBI has had to issue since November 8, including Monday’s now withdrawn tighter rules for depositing old Rs 500 and Rs 1000 notes in banks, are correct. Though anyone who thought the central bank could sit pretty while the world’s largest currency swap was in progress has little idea of the humungous role of cash management, it turns out RBI too was unaware of the scale of the changes it needed to bring in to implement the orders from Prime Minister Narendra Modi.

[Manish_Sharma]

Is there a govt. website, may IT dept etc. which gives out figures of how much money has been recovered per year in raids since year 2000?

I just want to put up that on my various fb accounts to advertise to people that how much money has been recovered in raids since November 8th till now.

[disha]

1. One Chief secretary, I give you is a big catch. If you are satisified with it, then you dont know the scale and breadth of black money in India.

To ban you will be to give you relief from your sorry existence. I personally think that instead of giving you relief., you should be parodied for what you are - a worthless troll.

If you have cared to notice the Black money thread in GDF (general discussion forum) you will find that post demonization some hundreds of kilos of gold and 3000 crores in notes have been caught. To give you a perspective., unaccounted wealth that will fund the entire ISRO's budget for 2016-2017 has been caught in the past 30 days.

Hence as I pointed out earlier you are pulling out whines from your musharraf. Every time you see success of Modi's Demo - you get butt hurt and you pull out a whine from your musharaf. We need some entertainment here sometimes and whipping you around may provide some!

Yup, all money has already been laundered. Either as cash or in fake accounts.

Isn't that a good thing? At least we will know where the most unaccounted wealth is generated. My issue will be if 10% of 15 lakh crore (1.5 lakh crore) does not even show up. That means I will have no clue on where it went and importantly how it went.

[shiv]

However, what had happened to Indian society included not only the phenomenon of "big fish" but a deeper, systemic, widespread problem that was far more devastating to the public morale.

Everybody looked at their neighbour and wondered... is he keeping black money in his mattress? Is he using it to buy influence? Is he using it to get a better car, better house, better job... better schooling and job opportunity for his kids?

Is this how he seems to do well, when (given my honest ways) life is often a struggle for me?

This constant, nagging temptation caused many otherwise honest individuals and families to say... the hell with it, I'm also going to take advantage of black economy. After all, everybody else is doing it, and reaping rewards... so why should my family and I suffer? And besides, it's not like the government (i.e. any government before Modi) would ever do anything to punish offenders. The government itself is made up of "netas" who came up like this (partaking of the black economy). So this is the only way up the ladder in any case.

The net effect of pervasive black transactions on society is one of those things that is hard to measure because it is a vast integral of incremental, not always documentable effects. However, its overall impact on how Indians see themselves and their country and society is profound. It is like the problem of public littering or defecation... one individual turd, one used plastic cup thrown on the footpath means almost nothing at all. But integrated over lakhs of citizens these things become a vast, constant, and noxious presence with innumerable ill effects and a spirit-crushing appearance of permanence.

Absolutely true.

I posit that we tend to want Schahdenfreude in big doses and would like to see, in the police net, "big fish" whom we, over time, have come to believe actually have most of the Black stash. Maybe one person thinks it is Kapil Sibal or Siddaramaiah, someone else wants to see Pawar or Mulayam in jail. So there is a "mirror image Scahdenfreude" of those who oppose demonetization who say "Nyahahahaha - no big fish caught. Fail Fail fail.

In fact this entire mental picture may be a construct based on hearsay and common stories. Most Indians have not even seen 1 crore in cash in one place at one time. In fact India could well have been a nation of 20 lakh small fish with 1 crore each - totalling 20 lakh crore in Black money. 20 lakh people is just 0.2% of the population. If someone tells me that 998 out of 1000 Indians are totally honest i would tell him to go frug himself. We like to think that catching 1 crore is peanuts and that we need to see the people we think have 100 crores plus stored up. But just 20,000 big fish with 100 crore apiece would have 20 lakh crore.

It is more likely as Rudradev points out that India is flush with small fish with stashes ranging from 10 lakhs to 3-4 crores - maybe 50 million Indians are in that category. Almost all small fish would now have deposited their money in banks, either in relatives names, or paid off employees and loans to escape. Demonetization has hit these people in a different way but they have been hit. Yes there are big fish too - but if you take the total cash volume floating around in circulation as 20 lakh crore - you can have only 20,000 big fish of 100 crore plus, or 2000 really big ones with 1000 crores. This is unlikely. More likely that India has lakhs of small fish - many of who will get mopped up as accounts are scrutinized.

If you look at past raids on corrupt officials and also declared incomes of politicians as well as rich people - the 100 crore club is small. The 1 crore club is huge. The 10 lakh club is totally inestimable. But the larger the 10 lakh club, the smaller the 100 crore club. We like to talk about the Reddys who flew from Bellary to Bangalore in a helo for lunch at a 5 star hotel, but we end up acting as if people with 10 lakhs stashed black cash are somehow honest little babes. Many people I know have had small lakhs in cash. What is the use of 10 lakhs in cash one may ask - you can't even buy a house. But people use cash for things like buying dollars to send their children abroad. They help run a parallel hawala economy all for the noble and dharmic cause of education, because who can Manuvadi brahminically deny gyan or stop the Goddess Saraswati from being accessed by every one?

So I would ignore the "no big fish" argument. Remember that the "no big fish" argument is only a stepping stone to the next argument, "OK so you caught 1 big fish with 1000 crore. I know at least 50 others in <name your market> in <name your city> with 500 crores plus. They have all escaped. Really? This could be bullshit - but calling it bullshit attracts the "Liu argument" of China Military thread "Ignore MY gyan at YOUR peril"

Wait for data. Rhetoric and personal views mean bugger all. We do this all the time "All MiG 21 crashes are because our pilots are poorly trained" "All deaths in hospital are because of "wrong injection" "All big fish have escaped"

[achoudhury]

Generally, I have encountered three types of responses for DeMO. 1. Great Idea and reasonably good implementation. 2. Worst Idea and Worst Implementation and 3. Good Idea but terrible implementation. First type response is from Modi supporters who think that it is a great Idea and its implementation, while not bad, could have been better. Second response is from congenital Modi haters, trashing both Idea and Implementations. These people are either hard core followers of some opposition parties ( e.g. AAP, BSP, etc.) or have ideological difference with PM and BJP. I understand the motivations of first two responses but what confounds me is the third response.

So it is a great idea but badly implemented. How?? What is your reference point of bad implementation. How many time has this type of exercise been done ? The usual pointers are to long queue, ATMs not working, Bank/BM hoarder nexus, gloom and doom about short term impact to economy, etc. I think we need some numbers to illustrate what this exercise entailed. 15.5.lakh crore of money was invalidated in one single day. Roughly 400 million people had to deposit and withdraw some money. Cash had to be printed, distributed to 4000 currency chest and then from there to roughly 1.1 lakh bank branches and 1.5 lakh Post Offices and then further to 2 lakh ATMs and 1 lakh Banking Correspondents. All this will translate into more then 1 billion aggregate footfalls (assuming 2-3 visits per account holder in 50 days. ) and about 20 million aggregate footfalls per day and 200 people on average per day per branch. Also, if everyone had to withdraw 24K per visit then it will require 50 lakh per branch per day assuming average of 200 people visiting the branch. We know that RBI had disbursed about 6 lak crore till date, which means on average abt 15 lakh per day per branch only.

Now with these figures in mind, how can we say that queues are not inevitable or cash shortage would not be there. Also, who has denied the short term impact on cash economy due to cash shortage.

Basically, people who are saying that it is badly implemented have no idea of sheer scale of this entire exercise. In my mind, GoI, RBI and Banks have done exemplary work barring few instances of errant bad apples and proof of that pudding is that there has been no larger scale supply disruption and shortages of essential commodities, no major unrest, no impact on Agri sowing, etc. Dip in discretionary spending is just a blip and will recover once new normal of cash supply is in place and people feel that normalcy has returned.

Yes, you could argue that Demo is bad policy but to argue that implementation is bad is mostly non-sense.

[Rudradev]

Correct. If Op Parakram had been implemented with this kind of efficiency there would be no Bakistan problem today.

[Karthik S]

Any update on total money deposited so far. Till Dec 1st week, it was around 12L crore mark.

[asgkhan]

That Swarajyamarg article, validates my theory that baboons on the top hierarchy along with execution arm are fat, well fed, lazy and have zero-clues on the troubles faced by aam-janta.

RBI is suddenly silent, where is the danda on the banks musharraf ? beebul in the ivory towers can keep posting half-baked bositive articles, imaginary numbers, but on the ground, things are going dark.

Yesterdin, the bank manager was almost lynched by the crowd, who were kept waiting for 7 hours to withdraw measly 5k.

But hey, all iz well.

I did a circuit of ATMs in Koramangala and HSR layout, all the 17 ATMs are closed with a no-cash sign hanging. Huge lines in front of the banks to withdraw cash.

But hey, all iz well again.

[ManSingh]

BJP scored a major victory in Chandigarh municipal elections ( 21 out of 26 ). AAP didnt contest. How much of that can be extrapolated to Punjab. Does anybody have any thoughts ? I dont know how realistic this opinion is but this is the general feeling. Is this accurate ?

http://www.dnaindia.com/india/column-6- ... ch-2285060

The BJP-SAD alliance is widely expected to lose Punjab and yet it managed to increase its numbers in the Chandigarh municipal polls. While it would be wrong to over-analyse the data, owing to the absence of AAP which didn’t take part in the elections, one thing is for sure. BJP-SAD is not a spent force in Punjab, and Congress and AAP can only ignore the ruling alliance at their own peril. In a border state like Punjab, where terrorism, drugs and counterfeit currency are big causes of concern, demonetization may even have a positive effect on voters as it is likely to crack down on these burning problems.

Can BJP continue this momentum into the five state polls in 3 months time? A lot will depend on how quickly the system normalises post December 30. The PM asked for 50 days to get rid of black money. The citizens of India seem to have given its ‘pradhan sevak’ that grace period, but patience may run out soon.

It doesn’t take a genius to figure out that demonetization hits a section of dedicated BJP voters badly— the trader community and the urban upper class. Yet PM Modi has used his courage of conviction to implement the scheme. Only the future will tell if he can upend all political calculations and end up with a new larger voting block, steadfastly supporting his decisions. That will be no less radical than the decision of demonetization itself.

OT for this thread. But anyways....

Politics in Chandigarh has no co-relation to politics in Punjab. Different issue(s), different class of voters.

[SriKumar]

Generally, I have encountered three types of responses for DeMO. 1. Great Idea and reasonably good implementation. 2. Worst Idea and Worst Implementation and 3. Good Idea but terrible implementation. First type response is from Modi supporters who think that it is a great Idea and its implementation, while not bad, could have been better. Second response is from congenital Modi haters, trashing both Idea and Implementations. These people are either hard core followers of some opposition parties ( e.g. AAP, BSP, etc.) or have ideological difference with PM and BJP. I understand the motivations of first two responses but what confounds me is the third response.

Thanks for putting some details on the logistics. This combined with the IT raids (and whatever else is happening in the background via monitoring/tracking for future raids) is a pretty solid start to attack BM. As someone pointed out, nothing of this scale has attempted in the history of mankind- in a country with almost the largest population in the world- if you count the BD illegals India probably is on par with China, and by that yardstick this is proceeding reasonably well (yes, there are issues, but in a democracy and with freedom to riot, there could have been a lot more).

As to who falls in the 3rd category. I've come across several people (among my friends) in the third category- they barely mumble something about 'a good plan but' and then launch into a full-scale litany about all the problems it is causing common people. These people are anti-Modi in the sense that they support other (different) parties, but dont want to seem to blatant about their antipathy towards him. One is a total congressi but will not admit it, another has made noises about Kejriwal's commitment to fight corruption, and a couple are supporters of regional parties. They strategically pick the negatives of anything that happens and dwell on it (the pro-AAP guy brought up Pathankot once to me ...but did not say anything about the recent cross-border raids. And I am the target of their criticism.....they see me as the Modi person in the group and pretty much expect me to justify/explain his actions. . One test of objectivity is if they change their opinion over time and take a more balanced view (saw this in a couple of people).

[shiv]

But hey, all iz well again.

Considering that people have said that there is deep anger among common people and that people will starve to death much iz definitely vel.

There is the "other side of the coin" - I have thought about it many times and this is a good time to point it out. Every 2-3 months when something happens in Pakistan, BRFites predict "Expect a major terrorist attack". If someone counts the number of predictions they will find that they outnumber the attacks by a huge margin. 42 days into demonetization - not a single bank manager has been killed yet. Not that I wish for that - but normal protests in India are to burn vehicles, throw stones and gherao somebody. Heck even protests after the rape-murder of nirbhaya turned violent very quickly

It is my view that those who say things like "It's MY money. If I can't get it what will poor people do" are basing their views on the following logic. "I have money. Its my money. It's my hard earned money. I have enough to keep me going but the poor do not have enough"

These statements are coming thick and fast after demonetization. As long as the "It's MY money" people had loose cash in hand or had access to loose cash not a word was said about whether poor people had cash or not. And guess what - poor people never had much cash. Their daily expenses rarely require 500 Rupee notes, forget 1000. The 500s and 1000s were circulating among the "It's MY money" types. I belong to the "Its MY money" class and 90% plus of cash in hand was always 500 or 1000 of which I would have many available at any given moment. I can be excused for thinking that poor Indians are like me - being affected by the lack of 500s and 1000s

Hard as it may be for some people to swallow, demonetization has not hit the poor as much as was hoped by opponents. It has hit some honest people and a lot of dishonest people. The real problem for opponents of demonetization is to locate honest people who are suffering and use them as poster boys to bash demonetization. Opponents of demonetization have found fewer such people compared to the number of arrests and "catches" by the police. So we are being hit by salvoes of rhetoric that claim that things are really really bad and that the poor are suffering greatly. Things are not that bad now and the poor are not suffering as much as is being claimed - simply because the word "poor" is used rhetorically and not based on data. It appears that the genocidal murderer Modi may have had his hand on the real pulse of the poor.A good rhetorical retort would be "Modi has his hand on the pulse of the poor because he is a murderer and can cut the artery where he feels the pulse and let the poor bleed to death"

Ha ha. Even if I say so myself

[asgkhan]

Agree on the honest being hit hard. I am yet to see 500 bundles in the hands of the poor. My only grouch is the fact that new currency is leaking to the dishonest and corrupt and is yet to reach in hands of the honest.

This TN chief sec had 30 lakhs in new currency. WTF !!

This nexus of neta, babus and banks is causing the damage to the benefits of demonitisation. We need to see some harsh action and followup by RBI. We as a downtrodden demand to see suicides, arrests and humiliation of the big fish !!

Monkey Bannerjee and Qtiya Kejriwal, doing r@ndi rona can only provide so much sukoon.

[asgkhan]

Went to see a dermatologist yesterdin, bugger demanded cash and refused to accept card. I had to part grudgingly with my soiled 100s * 6.

[Rishi Verma]

I agree with shivJi, adding to it. Previous issue was that poor have no money, are left out of the mainstream. Now modi gave them zero balance accounts, politicians gave them cash. So the new complaint is the poor have to stand in line!!

In other newJ:

Charter Flight Co. License Cancelled for Transporting old Currency

But the pilot excuse is legit

The Bureau of Civil Aviation Security (BCAS) has cancelled the "security programme" of Air Car Airline Pvt Ltd, a mandatory clearance without which no charter can fly.

BCAS took the step as it felt the pilots should have informed the air traffic control (ATC) in Dimapur because they had checked the bags in Hisar and knew about the Rs 500 and Rs 1,000 in the passenger's bags. The airline said the pilot had to "go to toilet" (on arrival) and therefore could not inform the ATC.

[shiv]

42 days of demonetization and 2-3 forum conversations with Suraj and other experts have now made me an expert in economics and I will now pass down my gyan. This is exactly the way I got an American accent while dropping NRI relatives at airport on 2 hour ride.

What is the economy? Is the economy about day to day essential transactions for food and commodities or is the economy about mobiles, cars, bikes and goods like refrigerators, TVs and washing machines?

I terms of sheer number the "day to day" transactions for food and essential commodities is thousands of times higher than any other type of transaction because those transactions occur every single day. The actual value in money terms of the sale of mobiles, bikes, cars, TVs etc may be higher (I don't know) but the numbers of transactions are smaller.

The value of "day to day transactions" for food etc is less than Rs 100 per person per day and every one of us, poor and rich need to do that. The high value transactions are done less often.

But for the wealthier classes, a monthly expenditure of Rs 20-30000 would not be odd. For a family of 4 that would amount to 150 to 200 per person per day. But because higher value transactions are done - like petrol, restaurants.movies etc - their usage of higher value notes (500,1000) is higher

For this reason - in the pre-demonetized economy - the vast majority of the "poor" probably had "cash in hand" in notes of Rs 100 and less. The more wealthy people retained cash in hand of 500 and higher

Now guess who was hit hardest by demonetization?

[shiv]

Went to see a dermatologist yesterdin, bugger demanded cash and refused to accept card. I had to part grudgingly with my soiled 100s * 6.

Tell him nicely. Sir I have doctor friends who are all hit hard by the lack of cash. Please at least download Paytm and use it to accept payment

[chetak]

Demonetisarion: Pak’s Sinister Designs Forced Modi’s Hands

Demonetisarion: Pak’s Sinister Designs Forced Modi’s Hands
December 20, 2016
By Proloy Bagchi

The e-mails had been going round and round for some time carrying the supposed facts regarding the reasons for the sudden demonetization but one couldn’t really believe all that was conveyed in them. True, Modi had in his election campaign assured that he would fight the menace of black money and bring back all that was stashed away in banks abroad. But, two and a half years had gone by and yet nothing was seemingly moving on that front. He was, therefore, being baited and mocked at by the Opposition inside and outside the Parliament for his extravagant unfulfilled promises.

Perhaps, they were all wrong. It seems to have always been at the back of Modi’s mind, only he was waiting for an opportune moment. What the e-mails contained was indeed alarming and, if things would have been allowed to be left as they were the country would have been in serious trouble. There is a furor over the problems created by demonetization of high value currency notes at every level of Indian society, more so for the poor and deprived classes. But, one cannot really imagine the consequences had no action been taken on what Pakistan was plotting for economic and financial destabilization of the country. A report in the Hindustan Times (HT) on 10th December 2016 carried some of the facts but not all the facts of the matter. According to it, Modi had said while campaigning in 2014 in Bahraich in Uttar Pradesh on the Indo-Nepal border that he would fight the ISI designs to destabilize this country.

There was a specific reason for this statement and this was mentioned in the Hindustan Times report rather cursorily. The Police had in 2009 seized Rs. 4 crore in fake Indian currency notes (FICN) from the currency chest of a nationalized bank. These notes were supplied to the nationalized bank by none other than the Reserve Bank of India. The detection of FICN in the currency chest of a nationalized bank was a serious matter. But the newspaper did not report how it was dealt with by the Reserve Bank or the Centre. This is where the newspaper became part of the secular press as it would have exposed the erstwhile Sonia Gandhi-led United Progressive Alliance government.

The facts are contained in the e-mails that have been in circulation for some time. One did not pay attention as one thought it was probably a prank of Congress baiters. Now that the HT, an unabashed Congress supporter, has reported it howsoever cursorily, it seems the whole thing was true and very alarming and the congress government at the centre chose to put a lid on it. It did not take any action and in bureaucratic rigmarole the matter seemed to have been suppressed and buried.

This is where these identical e-mails come in which tell the entire story and the huge ramifications in India of further lackadaisical approach to this sinister design of the ISI and Pakistan government. The story of demonetization begins 2009-10 when seventy-odd nationalized banks along the Indo-Nepal border were raided only to find counterfeit Indian currency notes and what was shocking was these were supplied by the Reserve Bank of India. That only meant that even the Indian Central Bank had been compromised and it was circulating FICN pushed into India by Pakistan. On inquiries by the CBI it was found that the FICNs were so close to the genuine currency that an ordinary mortal could not detect it. It was only some foreign labs which confirmed that those notes were fake. The minute detail that proved that those were fake currency was reportedly inserted only to distinguish them from genuine Indian currency notes.

Investigations in the matter had proved that the mischief was being done at the UK based company De la Rue from which the RBI was buying 95% of the currency paper. The company was also supplying paper to Pakistan. Blacklisting of the company reduced it to bankruptcy. Later printing of currency notes was outsourced to three foreign companies but soon there was an anonymous complaint somewhere in 2011 from officials of the Ministry of Finance who seemed to have said that it was not De la Rue alone which was compromising the security of the bank notes, other foreign companies also were doing the same. One does not know what action was taken by the government but it seems this information was withheld from the Finance and Home ministries of Government of India.

Sometime later, on Modi’s initiative in 2015 another foreign company – Louisenthal, a German company – was found to be supplying currency paper to Pakistan which was printing high quality fake Indian currency notes and pushing them into India from all directions over land and by air. The Home Ministry barred it from selling bank note paper to the RBI. Pakistan had jacked up the printing of FICN and pushed them into India with vigour and confidence that its economic and financial sabotage would go undetected.

If one goes by what Gen. GD Bakshi, a security expert, has to say one would get an idea of the extent of damage that could have been caused by unchecked infiltration of FICN from Pakistan. He says that India had around Rs.16 trillion worth of Rs 500/- and Rs. 1000/- currency notes in circulation. Pakistan was already printing 15 trillion of these notes to smuggle them into India. Pakistan had established five sophisticated presses for the purpose. This, as Gen Bakshi says, would have “unhinged” the Indian economy with runaway inflation, steep price rise and unlimited terror funding.

In fact, under these circumstances demonetization came rather late. Nonetheless, it came before much damage could be done. With the ban on high value currency notes frequency of terror strikes have gone down and the stone-pelters of Kashmir are out of business. Even the Hurriyat which used to distribute (counterfeit) money received from Pakistan has now invited tourists to visit Kashmir as it is fearful of losing relevance in the absence of the old and now-banned high value currency notes. Even the Pakistani kingpin of FICN committed suicide the other day finding himself in a tight corner after demonetizations.

It is unbelievable that Manmohan Singhs, Rahul Gandhis and Gulam Nabi Azads of Congress were not aware of all these goings on. It is during the reign of the UPA-led government that the RBI was found to have been compromised. Only they did not take the serious breach of security seriously enough. Now that Modi has caught them on the wrong foot they have raised merry hell and have disrupted virtually the entire winter session of the Parliament. Even Rahul Gandhi, popularly known as Pappu, has been threatening of an earthquake were he to be allowed to speak in the Lok Sabha. He should thank his stars that Modi has been pretty decent about it and has so far not made political capital out of the then government’s inaction subsequent to detection of major security breach.

[shiv]

Kookal tells me that the "median" per capita income in India is about Rs 3600 per month - or 120 per day.

Median means 50% of Indians get less and 50% get more. In other words 600 million Indians deal with less than Rs 120 per day for ALL expenses food, clothing accommodation water, power, education etc

Also 600 million Indian get more than Rs 120 per day.

It is safe to say that the 600 million who get less than 120 per day would have had no immediate direct impact on from demontezation. But they would have an indirect impact if salaries are being paid in high value notes. But I bet my ass that most people were paid in high value notes and now have accounts with money sitting in there.

[RajeshG]

I think people feel vindicated for their hardships in demonetization when they see ANYONE, even so-called "small fish" in the black money game, being apprehended.

This may very well be true. And probably this is what NaMo is aiming for to expand his vote base. The resounding victories that BJP has garnered since DeMo has definitely vindicated this stand so far.

But at the end of the day we cannot ignore the elephant in the room. If no big politicians and political parties are caught, we will have to admit that we have a great clean polity or just go out for a walk and sing "hum honge kaamyaab ek din" like naseeruddin and ravi baswani in jaane bhi do yaaron.

[Shaktimaan]

That is what animates the sense of defiance and rebellion for the crores of ordinary Indians who are standing in queues in solidarity with Modi Sarkar's demonetization initiative. We are not who you have always believed we are, what you have always told us we are. We are the inheritors of something far greater, something that was bequeathed to us by the unparalleled civilization of our ancestors, and we have found the leadership who will help us claim that legacy.

This, to me, is what Hindutva really means.

Saar, I have literal goosebumps on reading this. Bravo. Such a clear post, explaining why no other country could have done DeMo so peacefully. It is our Dharma that guides us.

Har Har MAHADEV. Jai Hind.

[shiv]

But at the end of the day we cannot ignore the elephant in the room. If no big politicians and political parties are caught, we will have to admit that we have a great clean polity or just go out for a walk and sing "hum honge kaamyaab ek din" like naseeruddin and ravi baswani in jaane bhi do yaaron.

The "invisible elephant in the room" being given the identity "political parties" may be the real problem here. It is not as if parties or politicians are innocent, but they depend on a huge ecosystem. The ecosystem has been targeted. Individuals from the ecosystem are being caught. It is in my view the ecosystem that is the invisible elephant, not just the parties or single politicians.

For example our local MLA is no doubt wealthy and has many cases against him (I have been told) but his supporters who fund various aspects of his political life are equal crooks who are out of the limelight. What the MLA does is not directly illegal in itself. He helps install corrupt people in key places. Those people make the money under the radar and distribute money to the politicians cronies. When someone gets caught it will not be the politician, but the corrupt babu or secretary. The politicians washes his hands off and is squeaky clean. Siddaramaiah has done just that in Karnataka

[yensoy]

Taking dimensions of gold bars from https://invest.usgoldbureau.com/gold-bar-sizes, 170 kg gold will be:
680cm x 1360cm x 306cm
Not in a shoebox for sure.

Your maths is wrong. That volume of gold will weigh 5467kg. I don't know how you arrived at those numbers.

The 12.4kg "Good Delivery" gold bar https://en.wikipedia.org/wiki/Good_Delivery will fit 3 or 4 to a typical shoebox. So 170kg of gold will need about 4 shoeboxes.

[RajeshG]

Any update on total money deposited so far. Till Dec 1st week, it was around 12L crore mark.

I havent seen any RBI press releases but the closest to official sources was on dec 15. The figure was 13 l cr.

http://www.moneycontrol.com/news/cnbc-t ... 21681.html

This as the Attorney General tells the court that deposits have touched Rs 13 lakh crore. The AG told the Apex Court that fresh currency worth Rs 5 lakh crore has already been pumped in and Rs 2.5 lakh crore worth currency in small denominations is in circulation

There was another moneycontrol link yesterday which quotes "sources" that say 14 l cr is back.

[Karthik S]

So almost all money is back. Not much dividend govt will get from RBI then.

[RajeshG]

The moneycontrol link from yesterday had the cnbc anchor speculating 50k not coming back, I think.

[asgkhan]

http://www.ndtv.com/india-news/over-rs- ... ld-1640544

Again the role of Banks must be investigated and RBI should block the leakages ASAP !!!

[asgkhan]

http://www.abplive.in/india-news/black- ... han-467852

List of IT raids and seizures in the last 24-48 hours.

[RajeshG]

It is in my view the ecosystem that is the invisible elephant, not just the parties or single politicians.

Sure you can argue that. In the previous IDS scheme 67k cr was declared by 21k people. So that is 3 cr per person on avg, by no means big fish. In addition TV channels do continuously show bundles of currency all the time and people do have a feeling that people are getting caught. Nobody pays attention to 3100 cr of unaccounted money caught only. All people see is the wads of cash on TV.

So definitely the perception that "people are getting caught" is there, no doubt.

[shiv]

^^ What we will not know for many months now is the number of bank accounts that have shown huge and sudden post-Nov 9th spike. That should tell us something

[Aditya_V]

Any update on total money deposited so far. Till Dec 1st week, it was around 12L crore mark.

There has been no data on money deposited from RBI/ or Government in Parliment- it is Media Sources. Official data will come in around 5 Jan 16.