Currency Demonetisation and Future course of Indian Economy

vera_k · Post by **vera_k** » 09 Jan 2017 00:17

rahulm wrote:Suppose, I get paid in cash and make just enough in the year so that I don't breach the tax free threshold do I have BM even though it's all cash if I

A. don't file my tax return and so my income is undeclared and below the ITO radar
B. file my tax return and no tax is payable ?

If there were no taxes at all would there be any BM?

Far as personal income tax goes, it would not be black money. If however this was a business, then some level of sales tax would have not been paid.

However, these small time transactions are not something to spend time on. Such a person would be poor and eligible for aid from the government. If a business, it would again be no different from small time businesses running babysitting or tutoring services on a cash basis. Not a big deal.

The problem to tackle right now is that people and businesses who are well off and make significant amounts of money cannot be bothered to operate honestly. Probably the closest analogy is to land reforms after independence that kick started the first migrations to cities since there was no longer the easy option to live off rent generated from the land.

rahulm · Post by **rahulm** » 09 Jan 2017 00:46

I foresee pretty much every business group following in the adulterated foot steps of petrol pumps to resist card payments due to MDR charges. GOI Might have to legislate e-transactions.

This could be a trial balloon to test GOI's resolve.

Are COCO pumps part of this goondagardi?

Marten · Post by **Marten** » 09 Jan 2017 00:49

As if this was not there earlier. Hope all the adulterated fkers get raided overnight and all their benefits properties go jjapt.

saip · Post by **saip** » 09 Jan 2017 01:17

Are not some of the petrol pumps owned by Government or Public Sector Undertakings? How can they refuse to accept cards?

Rishirishi · Post by **Rishirishi** » 09 Jan 2017 03:55

shyamal wrote:Petrol pump situation resolved for now. All cards to be accepted till further decision is taken on 13th Jan.
http://www.ndtv.com/india-news/petrol-d ... ht-1646498

It is worth noting the proactive approach government is taking. Good or bad, the gov is responing very fast. With such an approach they are bound to get things right sooner or later. If they are allowed to stay in power, India may end up with one of the best managed economy in the world. That would be something.

shyam · Post by **shyam** » 09 Jan 2017 06:11

Government should provide a mechanism for consumers and merchants to transfer money between two bank accounts, without paying any fee. The demonetization is forced upon the people for a good cause, but that should not cause people to pay someone else for doing what they had been doing for free.

shiv · Post by **shiv** » 09 Jan 2017 06:34

nishu wrote:Guys, I've a doubt if some one deposits black money in some others account and the bank is unable to identify who deposited it.
Can the account holder withdraw that amount or the money will be confiscated ?

The account will be locked The date of deposit will be known from the "challan" that was used for the deposit and the cashier who accepted the money. CCTV footage may show all the people who deposited money at that time.. The people who has access to the man's bank details (eg employers) will be investigated. The bank staff too (manager) will come under scrutiny.

If the depositor is still anonymous the tax amount will be deducted and a penalty amount locked in and the person will most probably get the money (about 25% of it) for his use

pandyan · Post by **pandyan** » 09 Jan 2017 06:53

shyam wrote:Government should provide a mechanism for consumers and merchants to transfer money between two bank accounts, without paying any fee. The demonetization is forced upon the people for a good cause, but that should not cause people to pay someone else for doing what they had been doing for free.

There is NEFT which is very convenient for transfers.
https://en.wikipedia.org/wiki/National_ ... s_Transfer

shyam · Post by **shyam** » 09 Jan 2017 07:40

There are fee for it, including tax. Second it is not fast. Government has to bear the cost of this transaction.

b) Outward transactions at originating bank branches (charges for the remitter):

For transactions up to ₹10,000 (not exceeding) : ₹2.50 (+ Service Tax)
For transactions above ₹10,000 up to ₹1 lakh (not exceeding) : ₹5 (+ Service Tax)
For transactions above ₹1 lakh and up to ₹2 lakhs (not exceeding) : ₹15 (+ Service Tax)
For transactions above ₹2 lakhs : ₹25 (+ Service Tax)

NIC or CDAC has to build an app around it so that people can do free transactions instantly from account to account.

I do not like fee coming up which is free money for those service providers. People have no option to avoid that.

chola · Post by **chola** » 09 Jan 2017 07:56

Rishirishi wrote:
shyamal wrote:Petrol pump situation resolved for now. All cards to be accepted till further decision is taken on 13th Jan.
http://www.ndtv.com/india-news/petrol-d ... ht-1646498
It is worth noting the proactive approach government is taking. Good or bad, the gov is responing very fast. With such an approach they are bound to get things right sooner or later. If they are allowed to stay in power, India may end up with one of the best managed economy in the world. That would be something.

Waiving the fee is a good start. As I mentioned earlier, forcing the cash economy to credit services is basically a new tax that the government forces on people carte bkanc. It works for wealthy nations in the West and Japan since their consumers can afford it but even there they have a choice.

shynee · Post by **shynee** » 09 Jan 2017 08:04

Demonetisation: Rs 14 lakh crore in old notes are back, only Rs 75,000 crore out

According to information now available with RBI and the government, about Rs 14 lakh crore in demonetised currency have been deposited with banks, so far.

sivab · Post by **sivab** » 09 Jan 2017 09:24

^^^ Here is a more detailed analysis using RBI data.

http://swarajyamag.com/economy/demoneti ... d-to-banks

Demonetisation: Latest RBI Data Reveals That Over Rs 1.6 Lakh Crore Has Not Returned To Banks

The amount of SBNs deposited with banks and post offices works out to Rs 13.78 trillion, implying that old currency worth Rs 1.66 trillion (Rs 1.6 lakh crore) has not yet seen the light of the day.

hanumadu · Post by **hanumadu** » 09 Jan 2017 10:18

sivab wrote:^^^ Here is a more detailed analysis using RBI data.

http://swarajyamag.com/economy/demoneti ... d-to-banks

Demonetisation: Latest RBI Data Reveals That Over Rs 1.6 Lakh Crore Has Not Returned To Banks

The amount of SBNs deposited with banks and post offices works out to Rs 13.78 trillion, implying that old currency worth Rs 1.66 trillion (Rs 1.6 lakh crore) has not yet seen the light of the day.

The article estimates new currency printed after Nov 8 but does not have RBI figures for it. Plenty of scope for getting it wrong.
The article also claims old currency not returned is considered CIC by RBI. Is it true?

pandyan · Post by **pandyan** » 09 Jan 2017 10:50

shyam wrote:There are fee for it, including tax. Second it is not fast. Government has to bear the cost of this transaction.
b) Outward transactions at originating bank branches (charges for the remitter):

For transactions up to ₹10,000 (not exceeding) : ₹2.50 (+ Service Tax)
For transactions above ₹10,000 up to ₹1 lakh (not exceeding) : ₹5 (+ Service Tax)
For transactions above ₹1 lakh and up to ₹2 lakhs (not exceeding) : ₹15 (+ Service Tax)
For transactions above ₹2 lakhs : ₹25 (+ Service Tax)
NIC or CDAC has to build an app around it so that people can do free transactions instantly from account to account.

I do not like fee coming up which is free money for those service providers. People have no option to avoid that.

https://rbi.org.in/scripts/FAQView.aspx?Id=60

2 business hours and fee is like 0.025% and drops quite a bit for larger amounts (0.0125%). So, it is probably the fastest and cheapest electronic transfer scheme.
For 2 hour service, you have to pay through the nose in other countries.

When can the beneficiary expect to get the credit to his bank account?

Ans: The beneficiary can expect to get credit for the NEFT transactions within two business hours (currently NEFT business hours is from morning 8 AM to evening 7 PM on all week days and from morning 8 AM to afternoon 1 PM on Saturdays) from the batch in which the transaction was settled.

JayS · Post by **JayS** » 09 Jan 2017 12:38

pandyan wrote:
shyam wrote:There are fee for it, including tax. Second it is not fast. Government has to bear the cost of this transaction.

NIC or CDAC has to build an app around it so that people can do free transactions instantly from account to account.

I do not like fee coming up which is free money for those service providers. People have no option to avoid that.
https://rbi.org.in/scripts/FAQView.aspx?Id=60

2 business hours and fee is like 0.025% and drops quite a bit for larger amounts (0.0125%). So, it is probably the fastest and cheapest electronic transfer scheme.
For 2 hour service, you have to pay through the nose in other countries.

When can the beneficiary expect to get the credit to his bank account?

Ans: The beneficiary can expect to get credit for the NEFT transactions within two business hours (currently NEFT business hours is from morning 8 AM to evening 7 PM on all week days and from morning 8 AM to afternoon 1 PM on Saturdays) from the batch in which the transaction was settled.

NEFT is grossly inadequate and is thing of past in terms of implementation. IMPS should have fully superseded it. I don't understand why we have NEFT when IMPS has already been there for quite a while now. The only difference in IMPS and UPI is the way sender-receiver's address is given at the end user interface (as far as user is concerned).

If Govt makes slabs like this it should be good enough. Expecting Govt to make it completely free of charge is unreasonable. Expecting nominal fees that too flat rated in slabs is reasonable IMO.

No fees for Rs <1k
50p for 1k to 10k
Rs 1 for 10k to 1lac
Rs 2.5 for 1lac above

This rate comes out to be far far cheaper than VISA/MS. Govt could in fact connect RuPay with UPI/IMPS and have unified system. Ideally we should have only 1 system but 2-3 is better with full interoperability for reliability and disruption proof operations (let pvt players come up with any number of their own systems over and above these basic systems available for all e.g. PayTM. Whoever thinks its good for them can use them but would have fallback option always). So if two independent but fully interoperable systems are provided by Govt through NPCI then it would be great. RuPay Credit cards could have more fees if the Credit biz model demands so but Debit card transaction expenses should be dirt cheap.

UlanBatori · Post by **UlanBatori** » 09 Jan 2017 13:02

Desi EyeTee companies are missing the bus on the biggest market? They need to get together and set up the One Grand ClearingHouse for digital transactions. NO JOB TOO BIG OR SMALL, ONE SWIPE DOES IT ALL. Worldwide with active link to currency exchange. Totally linked through the Other IT (tax/ ED).
Right now all they are doing is boosting the market for Chinese mobile phones and phoren clearing houses. Not a recipe for future financial stability.

arshyam · Post by **arshyam** » 09 Jan 2017 14:25

JayS wrote:NEFT is grossly inadequate and is thing of past in terms of implementation. IMPS should have fully superseded it. I don't understand why we have NEFT when IMPS has already been there for quite a while now. The only difference in IMPS and UPI is the way sender-receiver's address is given at the end user interface (as far as user is concerned).

IMPS is meant for mobile payments, and has a ceiling of 1 lakh. It is based on the UPI platform, I think. NEFT has no limits - like a cheque, you can send how much ever you want. And just like a cheque, there is a small delay, which IMO is justified for large transactions.

Going forward, I think IMPS/UPI will fully take over the low end of the spectrum and NEFT will stay on large transactions. And the payment charges for IMPS will reduce as usage picks up, hopefully, close to what you've suggested.

shyam · Post by **shyam** » 09 Jan 2017 14:50

2 days delay should be fair enough for a free transfer.

Instantaneous transfer could be a premium service and banks could charge a fee for it.

If Rs 100/- is changed accounts 50 times, actual value of that money at the end will be very small (say middle man charges 2% commission per transaction). If people were using Rs 100 note, it would not have decreased in value. This looks like a parasite living on public and public has no choice. Let people who find benefit in premium service pay the fee, but ordinary people need not pay, as this is a system forced on people.

If a banking tax is introduced (after abolishing income tax) let that cover this cost of transaction.

Prasad · Post by **Prasad** » 09 Jan 2017 15:09

All support aside, if demon was set in motion 6 months back, govt could've taken 3 months out of that to prepare and then use 3 months unleash a massive cashless initiative and then drop the demon bomb.

JayS · Post by **JayS** » 09 Jan 2017 15:10

arshyam wrote:
JayS wrote:NEFT is grossly inadequate and is thing of past in terms of implementation. IMPS should have fully superseded it. I don't understand why we have NEFT when IMPS has already been there for quite a while now. The only difference in IMPS and UPI is the way sender-receiver's address is given at the end user interface (as far as user is concerned).
IMPS is meant for mobile payments, and has a ceiling of 1 lakh. It is based on the UPI platform, I think. NEFT has no limits - like a cheque, you can send how much ever you want. And just like a cheque, there is a small delay, which IMO is justified for large transactions.

Going forward, I think IMPS/UPI will fully take over the low end of the spectrum and NEFT will stay on large transactions. And the payment charges for IMPS will reduce as usage picks up, hopefully, close to what you've suggested.

IMPS is not "meant" for mobile payments per se. I have never done NEFT once IMPS came online. And never did I once used if through Mobile nor from Mobile number based transaction. I use it as exact replacement for NEFT. It has both A/c no + Mobile number based interface. UPI took it to a next level where both of these can be masked by a VPA and need not be shared with the other guy. And you can have as many number of VPA as you want. In fact I suppose they should scrap NEFT and RTGS totally. IMPS should supersede both of them. It makes ZERO sense to have restrictions like 8AM-8PM, No working Sundays, or delays up to 2hrs for transactions when the Technology can very well handle real time transactions for practically any number of transactions we can throw at it now.

Even if you want something separate at upper spectrum it should be RTGS which does real time settlement not NEFT.

NEFT/RTGS are RBI services I suppose. While IMPS/UPI are NPCI services.

shiv · Post by **shiv** » 09 Jan 2017 15:14

shyam wrote:2 days delay should be fair enough for a free transfer.

Instantaneous transfer could be a premium service and banks could charge a fee for it.

If Rs 100/- is changed accounts 50 times, actual value of that money at the end will be very small (say middle man charges 2% commission per transaction). If people were using Rs 100 note, it would not have decreased in value. This looks like a parasite living on public and public has no choice. Let people who find benefit in premium service pay the fee, but ordinary people need not pay, as this is a system forced on people.

If a banking tax is introduced (after abolishing income tax) let that cover this cost of transaction.

There is the counter argument. Indian banks pay 4% interest for simply keeping money in your savings account. That means 1 lakh in your account is paying you about Rs 11 per day for simply sitting there

In a cash economy the government is ignoring or subsidizing the value of the Rs 100 note because there is a cost of printing and distribution, a cost of keeping a security apparatus so that your Rs 100 is safe from criminals and cheats, and the cost of printing smaller denominations in case you want to buy fractions of Rs 100 and the cost of periodically replacing the Rs 100 note. You are asked to pay tax to the govt in return and you can then claim that my note retains its value no matter how many transactions it is used for. In reality - every time the note is used and tax not paid it is losing value by a small amount. As notes get exchanged and do not return at all (in the form of tax for re use by the govt) the government has to print more notes - not knowing where the "lost" notes are. And when more notes are printed the actual value of your Rs 100 not is less because there are more notes in circulation than the actual value of all the goods and services of the country - making notes "cheap"

Patni · Post by **Patni** » 09 Jan 2017 15:14

I will like to list out some parameters that can be used as benchmarks that one can use to evaluate impact of DeMo for say next 12 months. Please help adding to the list:

1) Total number of Personal IT Return Filed with non-zero tax paid. ( Increase in tax payer base. IMHO, it will see least a 30% bump in FY 16-17 as compared to 15-16)

2) % of deposits in PMJDY that does not get drained out in say 6 months.
( From official site)
Pradhan Mantri Jan - Dhan Yojana
(Accounts Opened as on 28.12.2016)
(All Figures in Crores)
Bank Name RURAL URBAN TOTAL NO OF RUPAY CARDS AADHAAR SEEDED BALANCE IN ACCOUNTS % OF ZERO-BALANCE-ACCOUNTS
Public Sector Bank 11.61 9.30 20.91 16.58 12.26 55246.52 24.45
Regional Rural Bank 3.83 0.61 4.44 3.30 2.23 13168.27 20.50
Private Banks 0.52 0.33 0.85 0.82 0.39 2621.80 35.02
Total 15.96 10.24 26.20 20.70 14.88 71036.59 24.13

Please help add more data points with hard statistics from official sources that can be used.

Nitesh · Post by **Nitesh** » 09 Jan 2017 15:50

http://timesofindia.indiatimes.com/busi ... 413010.cms

Data from the Financial Intelligence Unit (FIU) show that between November 15 and December 25, 2016, 2.10 crore bank accounts were created and over Rs 3 lakh crore was deposited in them. Of the amount deposited, around Rs50,000 crore was cash deposit, and Rs3 lakh crore was non-cash deposit (cheques, drafts, etc).

A_Gupta · Post by **A_Gupta** » 09 Jan 2017 15:55

^^^^^
https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx
RBI Bulletin, go to:
43. Payment System Indicators
In that file,
1. RTGS --> 1.1 Customer transactions - monthly volume and value.
5. Cards --> 5.1 Credit Cards --> 5.1.2 Usage at POS - monthly volume and value.
5. Cards --> 5.2 Debit Cards --> 5.2.2 Usage at POS - monthly volume and value.
10. Number of POS (in actuals) - a value is provided for each month

There may be other measures in the RBI Bulletin that can be useful. These are the ones I'm aware of.

madhu · Post by **madhu** » 09 Jan 2017 16:24

Demonetisation: PAC Can Call PM if RBI's Reply Not Satisfactory

A PAC meeting on this issue has been called on January 20th, in which the RBI Governor Urjit Patel, Finance Secretary Ashok Lavasa and Economic Affairs Secretary Shaktikanta Das will be present.
"We have not yet received answers for the questions we have sent to them. They will reply few days before the January 20th meeting. Their replies will be discussed in detail," PAC Chairman and senior Congress leader K V Thomas told PTI.
Asked if the PAC would call the Prime Minister if replies were not satisfactory, he said: "The committee has all right to call anybody involved in the matter. But that will depend on the outcome of the January 20th meeting. We can call PM on demonetisation issue if members unanimously decide."

no amount of proof can satisfy Congress. I doubt Congress will let it go from its hand that easily. interesting time ahead.

UlanBatori · Post by **UlanBatori** » 09 Jan 2017 16:38

Hey, I thought RBI chief had been summoned for 'grilling' by RaGa, MaunMooshik, Laloo etc on Dec. 27? What happened?

UlanBatori · Post by **UlanBatori** » 09 Jan 2017 16:41

Prasad wrote:All support aside, if demon was set in motion 6 months back, govt could've taken 3 months out of that to prepare and then use 3 months unleash a massive cashless initiative and then drop the demon bomb.

BMWallahs did not become crooks by being stupid, hainji? Above would be like USAF bombing Tora Bora and Azad Kashmir terrorist bases after due notitication to Piggistan AF.

Picklu · Post by **Picklu** » 09 Jan 2017 17:46

shyam wrote:2 days delay should be fair enough for a free transfer.

Instantaneous transfer could be a premium service and banks could charge a fee for it.

If Rs 100/- is changed accounts 50 times, actual value of that money at the end will be very small (say middle man charges 2% commission per transaction). If people were using Rs 100 note, it would not have decreased in value. This looks like a parasite living on public and public has no choice. Let people who find benefit in premium service pay the fee, but ordinary people need not pay, as this is a system forced on people.

If a banking tax is introduced (after abolishing income tax) let that cover this cost of transaction.

1. We pay the doc for health check, the CA to account and file tax, the lawyer to plead case - then why not the finanical industry for providing cashless service? This service increases tax compliance and we the people are final beneficiary
2. The 100 Rs changing hand is a financial txn - either sales, service or salary (gift and other such are miniscule in comparison, so ignored) & hence taxable. By saving <5% on financial charges by cash txn, we end up loosing > 10% on such taxes. That is paisa wise and rupee foolish.
3. Govt can and should force a better system even if there is a payment to private industry is associated with it - that is no "biggest of open scams"

Our annual car insurance is one such forced payment that is already existing for ages and we do not even think about it anymore.

Yagnasri · Post by **Yagnasri** » 09 Jan 2017 18:26

https://scroll.in/latest/826262/demonet ... -pac-chief

Leftist wet dreams.

shiv · Post by **shiv** » 09 Jan 2017 18:50

I think the timing of demonetization was as good as it can get. There was no question of giving anyone any warnings - that would have been stupid. If you look at the mockery and gloating even today that demonetization has "failed" because "all" the cash is back in the system imagine the riot of ROTFL we would have seen if word had leaked out. The secrecy level was on par with Pokhran 1998

Could it have been done in March 2016? No. That was the budget session that set the trend.

Could it have been done in April-May 2016: Coming into summer - North India would have boiled to death

Could it have been done in the monsoon June-Sept period when the nation is sowing crops? No

Could it have been done after the harvest when all our happy post harvest festivals involve real spending and real profits. Ganpati, Dussehra, Diwali.

Technically secularism could have argued that Christmas is a happy time - but spending is more or less over after Diwali leaving only the Rabi sowing season.

In January we again have happy post harvest festivals - a time of profit for the agro sector. Then budget and then summer 2017.

So November-Dec was perfect. No doubt about it

shiv · Post by **shiv** » 09 Jan 2017 18:52

Yagnasri wrote:https://scroll.in/latest/826262/demonet ... -pac-chief

Leftist wet dreams.

Small men with little minds.

Yagnasri · Post by **Yagnasri** » 09 Jan 2017 18:54

If they think that they can grill NM they are seriously mistaken. My guess is he is trying to become a hero in the eyes of his boss and his Ej gangs in Kerala. ( Thomas is from Kerala. right?)

shiv · Post by **shiv** » 09 Jan 2017 19:17

Spoke for a while with operating theater staff about demonetization - a couple of nurses and anaesthetic assistants over chai. Asked them about demonetization and got the usual (ho hum) response. "We had some difficulty with cash but demonetization was a good move"

Up until now my main conversations were with business people/service providers like auto drivers and shopkeepers. I asked these hospital staff people if the knew what "digital" payments and what digital economy was. None of them knew - and they hung on to my words. They all have bank accounts and ATM cards. They did not seem to know that by owning an ATM card they were already part of the digital economy. They did not know that their ATM card could be swiped at a PoS and used as a debit card. That apart none of then had registered their mobile numbers with the bank. I asked them to do that ASAP because that is a security feature

shiv · Post by **shiv** » 09 Jan 2017 19:18

Yagnasri wrote:If they think that they can grill NM they are seriously mistaken. My guess is he is trying to become a hero in the eyes of his boss and his Ej gangs in Kerala. ( Thomas is from Kerala. right?)

The nincompoop does not know that anyone with an ATM card is part of the digital economy. Such blithering idiots we have for leaders.

Prasad · Post by **Prasad** » 09 Jan 2017 22:41

UlanBatori wrote:
Prasad wrote:All support aside, if demon was set in motion 6 months back, govt could've taken 3 months out of that to prepare and then use 3 months unleash a massive cashless initiative and then drop the demon bomb.
BMWallahs did not become crooks by being stupid, hainji? Above would be like USAF bombing Tora Bora and Azad Kashmir terrorist bases after due notitication to Piggistan AF.

Well they did manage to keep the entire thing secret. Pushing for a cashless/digital economy first would've eased demon for the layperson and shut a lot of arrogant cu-next-thursdays

It is as much a political act as it is a good one. NaMo needs votes and should use any and all means necessary (UP surveys show a remarkable support for bjp despite or maybe because of demon though so

to

ing). Like what happened, keep the demon secret but still push for cashless would've enabled banks also to transition a lot easier. Anyway, water under the bridge onlee.

Suraj · Post by **Suraj** » 10 Jan 2017 00:16

Prasad wrote:All support aside, if demon was set in motion 6 months back, govt could've taken 3 months out of that to prepare and then use 3 months unleash a massive cashless initiative and then drop the demon bomb.

This is a case of selective memory. In May 2014, the government came into power within an economic milieu where, never mind cashless economy, a large number of people didn't even have bank accounts. Here's a very recent flashback:
Sept 2014: Can India really provide bank accounts to 1.2 billion people?

It is ambitious because nearly 40% of Indians, or some 480 million people, have little or no access to financial services.

To put that in context, that is nearly one-and-a-half times the US population and nearly 17% of world's entire "unbanked" population.

The government aims to provide bank accounts to 75 million households by 2018.

Fast forward to today:
Dec 2016: 99% Indian households are covered by a bank account

In other words, they beat the 2018 target by two years. Demonetization was NEVER about going cashless. In fact, it doesn't touch the lower denominations at all, and they saw an increase in circulation instead. They appear scarce because of hoarding, both by mango people and BMers.

Demonetization was always about destroying the liquidity of the black economy. When you can no longer transact large transactions in cash, and it takes decades to rebuild that BM cash base, it destroys most of the BM economy, turning it white, by force.

The argument given is that most of BM economy is not in cash but in RE, gold and forex. That's true. Now how is any of that going to be transacted ? If you sell black property into white, you have to show purchase data. If there's no data (benami), you're screwed. If you have a low white component in buy price, you're hit with huge capital gains tax and screwed. Big gold transactions need PAN/Aadhar. Forex no longer has hawala route.

Indira Gandhi nationalized the banks in 1971 claiming she wanted to bring about financial inclusion. And yet in 2014 40% of households had no bank account. In 2016 almost every household does. and also in 2016, the black economy that grew dramatically from the IG era, was crippled by demonetization.

For the first time, we have a government that gets things done, that multiple other administrations collectively over 4 decades could not get done. They also had the guts to implement a plan like demonetization that NO major world leader has the ba11s or the political support to do. Let them be, instead of nitpicking specifics of how to do DeMo. DeMo is done, and dusted. We are already in the post DeMo era.

prahaar · Post by **prahaar** » 10 Jan 2017 01:00

Honestly, if UPA had done in 10 years, half of what Modi sarkar has done in 2.5 years, it would have won a comfortable majority. And I do not mean demonetization but about providing bank accounts, toilets, improved power situation, reducing attestation, etc. I thought bank accounts for all to be dream when it was first announced on ID from Lal Kila.

JohnTitor · Post by **JohnTitor** » 10 Jan 2017 01:51

pandyan wrote:
shyam wrote:There are fee for it, including tax. Second it is not fast. Government has to bear the cost of this transaction.

NIC or CDAC has to build an app around it so that people can do free transactions instantly from account to account.

I do not like fee coming up which is free money for those service providers. People have no option to avoid that.
https://rbi.org.in/scripts/FAQView.aspx?Id=60

2 business hours and fee is like 0.025% and drops quite a bit for larger amounts (0.0125%). So, it is probably the fastest and cheapest electronic transfer scheme.
For 2 hour service, you have to pay through the nose in other countries.

Errr No. In the UK/EU, bank transfers are done within 2 hours and are free. Actually, although they quote 2 hrs, transfer is pretty much instant. Depending on the bank and type of account, you can transfer upto £250k free & pretty much instantly. Heck, you can even send to a UK phone number for free and instantly through the same method.

UlanBatori · Post by **UlanBatori** » 10 Jan 2017 01:58

Well they did manage to keep the entire thing secret. Pushing for a cashless/digital economy first would've eased demon for the layperson

Perhaps you were not able to understand what I said: Black money holders did not get rich by being stupid. If I held a huge wad of BM, and I saw the GOI putting immense pressure to go cashless, my guilty conscience is not going to ignore that, in act all senses will be alert if the avenue to transact my hoarded wealth was becoming more and more under the scanner. So, yes, the pain would have been eased, for me. When NaMo eventually Announced DeMo, I would be happily sitting on a fully converted haul of small notes, gold, BMWs etc. OK, in my case, a hoard of 25-paise coins to match my jar of copper pennies.
Consider that on the night of Nov 8, jewelry stores which had closed at 8PM, re-opened. Probably car dealers also conducted transactions, the hawala wires were burning, etc etc. If they had 2 days warning, how much easier would it have been.

So the demand for "warning" was as given in the classic cartoon many pages back, of NaMo sitting on the branch with his flute, and all the Opposition BMwallahs in the water complaining that he should have given advance notice. Now, for the most part, all the cancelled currency has made it back to the GOI. In most cases, there is enough paper/digital trail to track that down, because BM ppl did as greedy ppl do - they brazenly risked exposure by returning the currency via all sorts of crooked means. At least 50% of those are fundamentally catchable, and the GOI, if NaMo stays on, will catch them.

As for the 'pain', what pain? How much of that was precisely due to BM not being available? How exactly do you gently convert a whole nation to 100% digital transactions, when only 0.1% even obeys the law to pay taxes? If ppl were so Govt-Advice-Heeding, wouldn't they have heeded "Do Ya Teen Bas!" back in the 1960s, and India today would have 600 million instead of 1.25B, hain? Sanjay Gaundy would be Caliph.

UlanBatori · Post by **UlanBatori** » 10 Jan 2017 02:10

For this Indian banks' cheque-kiting practices: I think Indians are way too inured to the banks being crooked. If I give a cheque drawn, say, on the Ulan Bator Yak Dung Cooperative Commune Bank, to say, Kala Bania Baink in India, I see that the money gets withdrawn from UBYDCCB like in 2 days, then I have to wait like 30 days or more for the money to appear in my account in KBB. WHY? This is blatant theft. OK, I am not 100% unhappy, because about 75% of the time, the rupee slides in the interim and I usually get the latest conversion rate, not the one that existed when my money was actually withdrawn (I have never understood how that works..)

In one case I actually followed up: the Asst. Branch Manager had actually taken my cheque with him, home, and was playing the market to pocket the difference between the actual conversion rate and what he was going to give me. I sent them a printout of conversion rates for all days between the deposit and clearance days and asked them how they got a rate considerably below any that existed any day, and got them to refund the difference with bad grace. This was a Nationalized Baink, in fact the Indian Bank.

India needs tough laws and enforcement against such cheque-kiting. No more than 5 working days ABSOLUTE MAX is needed for foreign clearances. Inside India, clearance should be mandatory within 24 hours absolute max, and now with Unglic transactions, 1 hour max (if they have a problem they can put a hold and contact the parties, but why delay the other 99.99999% of transactions?)

In the course of all our Ooohs and Aaaahs extolling the virtues of the Hard Working Bank Staff etc we have glossed over the fact that the competence and work ethic levels among Indian banking staff are biss-boor. That may be the BEST reason for demo and ungli-ization: replace the buggers/buggerinis with robots and computer programs.