Currency Demonetisation and Future course of Indian Economy

Yagnasri · Post by **Yagnasri** » 15 Jun 2017 16:37

There is no reason to thing Jaggi went bad etc. Unless there is something-something more, we can not say much. Having said that it is not the first time in the recent past Jaggi has gone anti-NM. He wrote something similar on Cow protection guidelines.

rohiths · Post by **rohiths** » 15 Jun 2017 17:09

Demonetisation was a sudden blow against the corrupt. Lots of corrupt people took haircuts on their stash of cash. Although it caused some problems to the common man, people were happy to suffer for the sake of nation. Any thing of significance is meant to be costly. It showed to the world that ordinary Indians are deeply patriotic and will suffer for the betterment of the nation. Demonetization kickstarted several benefits which will take years to materialize. Future commentators will write that it is one of the measures like 1991 opening of the economy, 1998 nuclear tests

Gus · Post by **Gus** » 15 Jun 2017 17:48

demo may have very well caused a slowdown in how rural transactions are done and cascaded effects into many things that are not quantifiable or different numbers can come depending on how you measure etc.

but all that is temporary thing..at most a cycle or two cycles. the benefits of a 'reset' far outweighs those losses, in terms of setting a solid foundation for future policies

arshyam · Post by **arshyam** » 16 Jun 2017 07:24

Let's not shoot the messenger here. It's okay to call something out if it hasn't worked out. No point doing only rah-rah Modi all the time - going by my observations, I doubt even he will like that. Indeed many people are asking, what did demon achieve? Since the govt is not saying anything (even RBI hasn't released the final figures), one can't help wondering. Such articles keep the pressure on the govt to eventually come up with a statement.

Gus · Post by **Gus** » 16 Jun 2017 17:15

it is quite obvious that the rbi has gone silent on the numbers. Suraj said it could be counting and reconciliation etc.

What is more surprising is - opposition not going after the govt for not releasing numbers. what are THEY shy of?

Suraj · Post by **Suraj** » 16 Jun 2017 18:41

Here's the problem with Jaggis thesis : farm *production* was at all time high record in both MH and MP last year . Even UP had a great harvest . The improvements are largely driven by government improving the farming sector operational processes .

What's still broken is collection and delivery via mandis, which were heavily impacted by demonetization . BUT, a significant part of the farmers agitation is because the glut in production caused price drops .

I posted this in the politics thread - a lot of farmers bet on the usual onion price spike that never happened . Instead production hit an all time high, as did exports. That screwed a lot of small farmers betting on a spike to triple or quadruple their investments - they ended up with a loss instead .

Farm waivers are a separate moral hazard, not related to demonetization . It has resulted in farmers believing they can simply demand a waiver if they speculate wrongly . Remember farmers can use insurance if they lose crops , but insurance does not cover a price bet .

An effective solution to this is the reenabling futures contracts that let farmers produce for a contracted sale price. Or Gao insurance, though that will cost them too.

vijayk · Post by **vijayk** » 16 Jun 2017 19:31

Deleted

rahulm · Post by **rahulm** » 16 Jun 2017 19:42

-- self deleted ---

Gus · Post by **Gus** » 16 Jun 2017 19:42

that is one of the theories out there, with no proof.

Urjit Patel is to reply to parl committee on july 6. looks like no option but to wait till then

rahulm · Post by **rahulm** » 16 Jun 2017 20:07

-- self deleted --

Suraj · Post by **Suraj** » 16 Jun 2017 20:55

Please stop repeatedly peddling unsupported theories about RBI and '18L cr instead of 14.5L cr' . Don't use this forum for unverified CTs . And no, this isn't about right or wrong - this forum is not a suitable place for you to post that .

rahulm · Post by **rahulm** » 17 Jun 2017 07:21

Oops. Don't know if you included me in that post, but if you did, didn't realise it's haraam. Please delete whatever you think necessary and accept my regrets on the work,load. Thanks

As far as I can tell. this topic does not violate forum guidelines so how is one supposed to know ? It's a genuine Q

It would help if there was a sticky list of STFUP topics to avoid situations like this one.

Edit : I deleted my posts myself.

May I ask why this topic is sensitive for the forum please ?? Thanks

Aditya_V · Post by **Aditya_V** » 17 Jun 2017 11:46

Gus wrote:it is quite obvious that the rbi has gone silent on the numbers. Suraj said it could be counting and reconciliation etc.

What is more surprising is - opposition not going after the govt for not releasing numbers. what are THEY shy of?

It is game of Chicken, while it may be past for us for the Black money players

1. There may be fake notes deposit, So RBI will take its time trying to identify these

2. Lots of benami cash deposits have been done, in many cases Bankers have been part of these, shifting deposits received from BM holders and putting the Ledger enttry against say Jan Dhan holders, lots of big data analysis will happening to identify these and other tricks by the Govt to try and freeze and separate the milk and water.

3. There is still a window till 30 June 2017, we know it is the season for Gulf returnees who come on annual leave and we have a sizable 60 lacs or 70 lacs gulf population and 90% would not visited the country since Nov 8. I am sure the BM holders are trying to squeeze and as much money as possible through NRI remittances.

This is a tight game, dont expect real data on this until Aug 20117 or Sep 2017.

KarthikSan · Post by **KarthikSan** » 17 Jun 2017 16:59

Didn't see this posted anywhere. Not retroactive but going forward the number of places to hide is going down.

I'm posting from my phone and cannot post the article in entirety. Please bear with me.

http://m.economictimes.com/news/economy ... 177213.cms

Gus · Post by **Gus** » 17 Jun 2017 17:39

Rahulm - surajuddin runs a tight ship in this particular thread. Lots of people take things posted here and spread it out.

rahulm · Post by **rahulm** » 17 Jun 2017 18:44

I understand but he said ''forum' not just this thread so I am intrigued.

Kakkaji · Post by **Kakkaji** » 17 Jun 2017 21:49

Good article by Surjit Bhalla. He takes on the fake news being spread about demonatization.

No proof required: Battle of the elites

The present news trend, and expert opinions, are very confusing. You have a marked improvement in agricultural growth, and you have farmer riots in two large states — Madhya Pradesh and Maharashtra. You have an economy that has been slowing since June 2016, and inflation now at historical lows, and you have economic experts stating that the RBI/MPC decisions have been valid because the wise MPC is looking beyond the “temporary decline” in inflation to 2 per cent brought about by demonetisation.

One of the major objectives of demonetisation was to diminish the role of cash (read black money) transactions. However, if the expert headlines are to be believed, the volume of digital transactions is contracting. What we are witnessing in India is a historic transformation — one that occurs rarely in most countries. It has never occurred in India before, never. But it is happening now. It is a changing of the guard — more appropriately, a changing of the elites.

In my previous article (‘Just why are farmers rioting’, IE, June 10), I documented that because of good weather, agricultural growth in 2016-17 was much better than the previous two years (4.9 per cent in 2016-17 vs an average of 0.5 per cent in 2014-15 and 2015-16). Farmer incomes had improved — so, riots now and not before? Some experts pointed out that flower sellers had suffered because of demonetisation — true; some others pointed out that vegetable sellers had suffered, especially those cultivating potatoes, onions and tomatoes. And many, indirectly or directly, attributed all of the price decline to the disruptive policy of demonetisation.

The same experts are silent on what happened to fruit prices, also a perishable crop and subject to bad demonetisation — fruit prices (wholesale and consumer) are up 5 per cent y-o-y. And they are silent on sugar, rice and wheat farmers — their prices are up 10-15 per cent. How many vegetable farmers in India? Less than 4 million. How many rice, sugar and wheat farmers — close to 90 million.

Now, demonetisation. This is a parallel to the “farmers-are-justified-in-rioting-with-record-crop-output” flake news. And that is that demonetisation was a comprehensive failure because its simplest goal — reduce cash transactions — has not been achieved. The evidence offered by several experts — RBI data on cash and non-cash transactions since November 2016.

There is a basic flaw in this lazy approach to ideological analysis. The “experts” only process data from November onwards, and are not willing (because of the results?) to look at the change in non-cash transactions over the last three years. They compare April to March 2017, find the volume of transactions lower, and conclude that demonetisation was a failure. The old elite could not possibly do a worse job!

The accompanying table documents RBI data on all non-cash transactions (by volume) since 2014. For each year, the data reported is an average for the months January-April. Card usage is only for POS transactions (as emphasised by the RBI in its weekly releases). You be the judge. Total non-cash transactions increased by 53 per cent over last year, January-April. And non-cash transactions “induced” by demonetisation — debit and credit cards (POS), prepaid and mobile — are up 173 per cent. Your sixth-grade daughter will tell you this is doubling every eight months. And you maintain that demonetisation has failed to move India rapidly towards less cash (less black money) transactions?

I will cross-post the political excerpts from this article in the politics thread

Srutayus · Post by **Srutayus** » 17 Jun 2017 23:33

https://myind.net/Home/viewArticle/unde ... netization
Understanding the GDP slowdown in India in the quarter of Demonetization

…measures that promote sustained growth are critical over measures that incentivize short term spurts…

rahulm · Post by **rahulm** » 22 Jun 2017 08:23

It would appear the wheeling and dealing has been going on for some time and the state politicians have won

Govt allows district central cooperative banks to exchange old notes

Gus · Post by **Gus** » 22 Jun 2017 08:34

It is suspicious that an opening is given. Are the coop banks going to give deposit details?

rahulm · Post by **rahulm** » 22 Jun 2017 18:46

Fake currency notes, machine seized from home of Yuva Morcha leader in Kerala

Gus · Post by **Gus** » 22 Jun 2017 19:21

"The printing machine was found to be set up inside a specially-designed room on the second floor of the house. Ink and other materials were also seized. "

We keep hearing about these fake notes, but not a proper report on how good is that fake. The above does not seem like a sophisticated setup that can do complex process.

DrRatnadip · Post by **DrRatnadip** » 04 Jul 2017 13:55

http://m.timesofindia.com/india/you-can ... 436298.cms

SC to govt on scrapped notes: You can't trash people's hard-earned money

NEW DELHI: The Supreme Court admonished the Centre in strong language on Tuesday giving it two weeks to respond on whether citizens will get another chance to deposit demonetised notes.
The Centre virtually agreed before the apex court that it is ready to examine "the genuineness of each case" involving people who still have old currency notes.

I think people had enough time to exchange old currency.. What might be reason for which SC wants to give one more window for exchanging old notes..

disha · Post by **disha** » 04 Jul 2017 22:25

^^SC lawyers ka kitna gaya?

Karan M · Post by **Karan M** » 05 Jul 2017 00:08

good move by the sc. there was definitely a huge human impact in terms of the policy impacting ordinary citizens. SC needs to have used even stronger language to have knocked some sense into the dilli baboons and next time, modi et al do take into account how ham habded their admin was as versus the smooth crap they claimed. that smug oleaginous jet li was claiming cash flow was restored. many months later, it is still a mess.

tandav · Post by **tandav** » 06 Jul 2017 23:22

No need to allow deposits of old cash now, what is done is done. MOst People had a fair chance to redeem and now that window is closed. There may be some relatively unconnected remote folks who may have saved for a rainy day in Cash. Perhaps for such cases there must be a mechanism to make sure that these amounts of say ~Rs10000 per head can be accepted.

ragupta · Post by **ragupta** » 07 Jul 2017 00:13

DrRatnadip wrote:http://m.timesofindia.com/india/you-can ... 436298.cms

SC to govt on scrapped notes: You can't trash people's hard-earned money

NEW DELHI: The Supreme Court admonished the Centre in strong language on Tuesday giving it two weeks to respond on whether citizens will get another chance to deposit demonetised notes.
The Centre virtually agreed before the apex court that it is ready to examine "the genuineness of each case" involving people who still have old currency notes.

I think people had enough time to exchange old currency.. What might be reason for which SC wants to give one more window for exchanging old notes..

This is the reason why no one takes rule/Law in India seriously. They know that they will be able to twist the law to suit their vested interest, so why bother. There are people hell bent on discrediting good moves done to improve the economy.

Gus · Post by **Gus** » 07 Jul 2017 01:55

http://www.business-standard.com/articl ... 900_1.html

Provisional figures for direct tax collections up to June 2017 show net collection at Rs 1.42 lakh crore, which was 14.8 percent higher than net collection for the corresponding period of last year.

A Central Board of Direct Taxes (CBDT) statement released on Thursday said the net direct tax collection represented 14.5 percent of total budget estimates of direct taxes for fiscal 2017-18 (Rs. 9.8 lakh crore).

Corporate Income Tax (CIT) gross collections grew at 4.8 percent, while the growth under Personal Income Tax (PIT), including Securities Transaction Tax (STT) was 12.9 percent.

However, after adjusting for refunds, the net growth in CIT collections was 22.4 percent, while that of PIT was of 8.5 percent.

Gus · Post by **Gus** » 07 Jul 2017 01:56

http://economictimes.indiatimes.com/new ... 480872.cms

government estimates the number of payers to cross 60 million for the year ended March, an increase of about 10 million from FY16. Returns filed up to June have already risen by 15% as more people pay self-assessment tax. The deadline for filing income tax returns for FY17 is July 31.

ShauryaT · Post by **ShauryaT** » 07 Jul 2017 02:24

Modi's note ban can't kill corruption, it could damage Indian economy significantly: Paul Krugman

Six months ago this country did a major experiment — pulling out 86% of the cash from the system. What do you think about it?
It was puzzling. I would not have done this… It was an attempt to flush out corruption with a very blunt instrument. There is a lot of collateral damage. But we can say that the damage to the economy is not as bad as some of us feared. When it happened, my first reaction was, if I had to guess, the economy would shrink in proportion to the reduction in the monetary base. That did not happen, which is a good thing. It was shock therapy that was not well advised. It is not going to make any lasting dent in corruption and it could do a significant amount of damage to the economy.

ragupta · Post by **ragupta** » 07 Jul 2017 03:54

ShauryaT wrote:Modi's note ban can't kill corruption, it could damage Indian economy significantly: Paul Krugman

Six months ago this country did a major experiment — pulling out 86% of the cash from the system. What do you think about it?
It was puzzling. I would not have done this… It was an attempt to flush out corruption with a very blunt instrument. There is a lot of collateral damage. But we can say that the damage to the economy is not as bad as some of us feared. When it happened, my first reaction was, if I had to guess, the economy would shrink in proportion to the reduction in the monetary base. That did not happen, which is a good thing. It was shock therapy that was not well advised. It is not going to make any lasting dent in corruption and it could do a significant amount of damage to the economy.

He has been proved wrong on collateral damage, he will be proved wrong on the extent of impact on corruption. The collective wisdom and gut of the people will prevail over one persons opinion and advise.

rahulm · Post by **rahulm** » 07 Jul 2017 10:19

Isn't is now illegal to have old 500 and 1000 notes in ones possession ? Should this extension eventuate, pomptly arrest and prosecute fully one and all who come forward to exchange illegal tender.

prasannasimha · Post by **prasannasimha** » 07 Jul 2017 11:00

You can possess a limited number for numismatic purposes as per RBI. I dont remember the exact number but it is around Rs4000

vina · Post by **vina** » 07 Jul 2017 14:17

ragupta wrote:He has been proved wrong on collateral damage, he will be proved wrong on the extent of impact on corruption. The collective wisdom and gut of the people will prevail over one persons opinion and advise.

In Inglees, the "Group Think" , even if it is of propaganda brainwashed village idiots, marching like lemmings to the drummers tunes, will be "right", over the considered opinion and wisdom of someone who knows better and is sceptical.

ragupta · Post by **ragupta** » 07 Jul 2017 21:59

vina wrote:
ragupta wrote:He has been proved wrong on collateral damage, he will be proved wrong on the extent of impact on corruption. The collective wisdom and gut of the people will prevail over one persons opinion and advise.
In Inglees, the "Group Think" , even if it is of propaganda brainwashed village idiots, marching like lemmings to the drummers tunes, will be "right", over the considered opinion and wisdom of someone who knows better and is sceptical.

Just because you get Nobel prize, one does not become "know it all" person. Most of these mechanism are created for scarmongering, he falls in the same category as Amartya Sen. I have had enough of this class. I will go with common wisdom anyday.

ragupta · Post by **ragupta** » 07 Jul 2017 22:01

Demo and cashless economy is needed to control crooks like this below.

How a gang pumped Rs 50 crore fake coins into India
http://economictimes.indiatimes.com/new ... 487341.cms

TrishulM · Post by **TrishulM** » 08 Jul 2017 10:30

These ivory tower economists theorize based on ceteris paribus. That is why they miss the mark by wide margin when reality hits their theory.

tandav · Post by **tandav** » 09 Jul 2017 19:50

Gus wrote:that is one of the theories out there, with no proof.

Urjit Patel is to reply to parl committee on july 6. looks like no option but to wait till then

Did Urjit Patel give a response to the total amount collected due to DEMO? Any resources

Akshay Kapoor · Post by **Akshay Kapoor** » 10 Jul 2017 04:08

ragupta wrote:
vina wrote:
In Inglees, the "Group Think" , even if it is of propaganda brainwashed village idiots, marching like lemmings to the drummers tunes, will be "right", over the considered opinion and wisdom of someone who knows better and is sceptical.
Just because you get Nobel prize, one does not become "know it all" person. Most of these mechanism are created for scarmongering, he falls in the same category as Amartya Sen. I have had enough of this class. I will go with common wisdom anyday.

Krugman is thoroughly discredited for being a huge propenet of quant easing which has lead to massive asset price inflation and sucked money from poor and middle classes to suepr rich. He is as demeneted as Greenspan, Bernanke and Yellen. They have all brough the world to the brink of economic disaster. But I liked Raghuramans monetary policies. Pity he became embroiled in a controversy.

KrishnaK · Post by **KrishnaK** » 10 Jul 2017 06:12

Suspense over demonetised notes may finally end in next two weeks

Even as the debate raged, the value of demonetised notes that were not returned was not revealed, despite queries from the media and the Opposition. According to money market circles, this number could be around Rs 25,000 crore.