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Currency Demonetisation and Future course of Indian Economy

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SBajwa
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Re: Currency Demonetisation and Future course of Indian Economy

Postby SBajwa » 10 Jan 2017 20:42

Rural banks even today have lots of issues. My own cousin gets "Cash" money from "Aartiya" after selling of his crops. I asked them why don't you just deposit them into bank., too much hassle and many times banks do not accept more than 3-4 lakhs of rupees due to "security issues" many rural banks do not have more than 1-2 lakhs in cash again due to security issues. The bank guard is usually a very old man with 12 gauge shotgun (double barrel) which is totally inadequate now with modern weapons. Back in 2008 I was at a rural bank (Punjab and Sindh Bank)
Bank: PUNJAB AND SIND BANK
Address: ALIWAL TEHSIL BATALA, DISTT. GURDASPUR, PUNJAB - 143505
State: PUNJAB
District: GURDASPUR
Branch: ALIWAL (NASARKE SARCHUR)
IFSC Code: PSIB0000560 (used for RTGS, IMPS and NEFT transactions)

I gave them a personal check of Rs 2 Lakhs for which they refused to give me cash as "Bank didn't had that much money" and asked me come back in 3 days. People avoid banking because of these very issues!

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Re: Currency Demonetisation and Future course of Indian Economy

Postby abhijitm » 10 Jan 2017 20:56

^^ this a very valid reason to move towards digital transactions. But the problem is entire chain of transaction (or at least most of it) should be digital.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby shiv » 10 Jan 2017 21:04

Pratyush wrote:
I though that 50 days was sufficient time for GPRS based POS to be installed in places that want to do honest transactions???

While the suppliers could be paid through cheques.

Earlier this evening I was pleasantly surprised to note that 60-70 year old family run-hole in the wall shops in South Bangalore have both PoS and Paytm. Unfortunately one was in a place where I did not get a good interent signal and could not login to Paytm. But I had a plastic card - so no worries.

Listened to the news over dinner - you guys will all hear it anyway - about 20 lakh accounts with 1000s of crores appearing in Nov-Dec. I also heard some vehicle stats.

Scooter sales were down 26% - the biggest fall in history
Total two wheeler sales down by 22%
Heavy vehicles down by 12%
Cars by a small single digit percent

Looks like car buyers are most likely to buy in white
Heavy vehicle owners seem to be heavy into cash - likely black
It is the two wheeler buyers who seem to like to pay in cash.

But why can't they simply use cheques? What am I missing? :lol:

I have this picture in my mind of people who have several cars and when they want to buy their son or daughter a two wheeler for college - no sweat - it is small change that comes from cash in the cupboard. What's a few tens of thousands for a good cause?

rahulm
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Re: Currency Demonetisation and Future course of Indian Economy

Postby rahulm » 10 Jan 2017 21:06

We keep trying to build structures of concrete on foundations of jelly.

Fundamental Dharmic duty as I see it is to walk the road that that you wish cleaned up. If I had the propensity to demand bribes and then go to temple and act pious I wouldn't wish or want change.

No system can have a corruption epidemic for as long as we have had without the CM of the state being aware of it. Baboo and other postings are monetised with a tacit understanding that the state will look the other way in return. Our system has created the perpetual corruption machine and the entropy keeps increasing.

Electoral funding mess means BM is a necessity. Electoral funding reforms should decrease this demand.

Isn't it a irony that in our high-context society the most efficient and clean processes are low-context delivered through automation !!

In BLR PG's accepted cheques in December for rent. This month, they are insisting on cash. Today in Pune, several,auto drivers said to me that payTM Zi's now not necessary as there is enough cash available. There goes the incentive to move to electronic. Perhaps, We need to squeeze cash liquidity even more.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby SRoy » 10 Jan 2017 21:55

shiv wrote:Scooter sales were down 26% - the biggest fall in history
Total two wheeler sales down by 22%
Heavy vehicles down by 12%
Cars by a small single digit percent

Looks like car buyers are most likely to buy in white
Heavy vehicle owners seem to be heavy into cash - likely black
It is the two wheeler buyers who seem to like to pay in cash.

But why can't they simply use cheques? What am I missing? :lol:

I have this picture in my mind of people who have several cars and when they want to buy their son or daughter a two wheeler for college - no sweat - it is small change that comes from cash in the cupboard. What's a few tens of thousands for a good cause?


Easily understood. For car sales look for the entry level / mid level sales figures vs luxury car sales. Luxury car segment has crashed.

It is the entry level / mid level car segment that is holding up. It is the segment fed by salaried class white money.

Additionally, average salaried purchasing power is way above the price of two wheeler's, so they prefer such cars right away.

So, who buys two wheeler? One, very low salary earners who don't drive significant sales anyways (have to have disposable income). Two, the second group is cash based skilled people, small merchants etc. who have been squeezed on two fronts, less cash in hand and stash evaporated overnight.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby A_Gupta » 11 Jan 2017 09:11

Not so fast.
http://auto.ndtv.com/news/two-wheeler-s ... on-1633243
"Two Wheeler Sales November 2016: Manufacturers Post Positive Growth Despite Demonetisation"

That article contains this, from a Honda SVP: "Looking ahead, we remain cautious on recovery forecast next month as December is traditionally a lean sales month.""

---
There was a shock to sales for some days in November after the demonetization announcement, but sales began to recover.
---

I also note:
https://www.rushlane.com/two-wheeler-sa ... 30126.html
{For Bajaj Auto} Domestic sales of motorcycles in December 2016 dipped 11% to 1,06,665 units as compared to 1,20,322 units sold in December 2015 while exports dipped 24% to 96,647 in December 2016 as compared to 1,27,460 units exported in December 2015.


Why would exports be hit by demonetization? Surely some of the company's woes are not due to demonetization?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Yagnasri » 11 Jan 2017 16:06


shiv
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Re: Currency Demonetisation and Future course of Indian Economy

Postby shiv » 11 Jan 2017 16:13

Yagnasri wrote:http://www.hindustantimes.com/business-news/hit-by-cash-crunch-auto-sales-hit-16-years-low-two-wheelers-worst-impacted/story-tTH00JWp3ZqAHU20aLa5DO.html

So it is not just RE that got hit.

The first sentence of this article has come straight from the mouth of a presstitute
Automobile sales, which is also a true indicator of the state of economy of the country came down crashing to its 16-years low in the month of December, according to data revealed by Society of Indian Automobiles Manufacturers.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Yagnasri » 11 Jan 2017 16:26

So if we all purchase cars, then everything is great. Let us purchase cars then. In fact, NM should have gone for car sales instead of DeMo. Pity.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 11 Jan 2017 16:50

^
Why not *gift* a car to everyone who deposited 20L+ in accounts***? That should make the GDP scale new heights hanji!

*** The money can be deducted from the account to pay for it.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby UlanBatori » 11 Jan 2017 17:05

Why has no one published figures on alcohol sales, hain?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 11 Jan 2017 17:22

At least by the landing page of Google news only CON remains attached to the DeMO issue while the other parties have moved on to other issues.

Bhell ... that to me signals little or no dividend to be gained from hanging on to the issue. Once again pappu seems to be on a losing wicket but has not realized it yet going by his latest statements.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 11 Jan 2017 17:34

http://www.dnaindia.com/money/report-de ... nk-2291327
Demonetization may take India's growth rate to 'still robust' 7%: World Bank

The World Bank decelerated India's growth for 2016-17 fiscal to a "still robust" 7% from its previous estimate of 7.6% due to demonetization, but asserted that the country would regain momentum in the following years with 7.6 and 7.8% growth.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Singha » 11 Jan 2017 17:39

some of this is not due to bank a/c but because builders themselves are short on funds. even civil engineers & office staff in some builders are not being paid regularly.

bangalore mirror:
DEMONETISATION HITS CONSTRUCTION WORKERS

Demonetisation woes: Bank accounts aren't helping these construction workers yet
They’re supposed to have their salaries credited to their accounts. But for these migrant workers, realities are quite different. Why? Read on.
By Akshatha M , 11 Jan 2017 , Citizen Matters
Kaveri (name changed), hails from a remote village in Raichur district. It has been two years since she shifted to Bengaluru and started working in a construction site. Her employer would pay her Rs 6,000 a month in two instalments. The money she earned added up to the family income and was used mostly to look after her three girl children, whom she sees as a ray of hope. She admitted all her girls to a private school back home with an intention to provide them good education.

But last two months have been considerably tough for Kaveri. She has not received her wages from the last week of October. Lack of money coerced her to compromise on several things - particularly her children’s education. She sounds desolate when she says she forced two of her girls to quit school last month as she was unable to pay their school fee.



Labourers at work in a construction site. Pic: Nalme Nachiyar

“My first daughter studies in 7th Std and second one was in 5th Std. I had put them to a private school hoping that they would study well and get good jobs. But things went beyond my hands when I stopped getting my wages. The school demanded me to pay their quarterly fee of Rs 4,000 (for the second quarter) failing which they said my children can not continue their studies there. Without wages, when I am struggling to make my both ends meet, I was left with no other option (she says there was no government school in the vicinity) but to make my children quit their school and bring them to Bengaluru,” she says.

She meekly asks if her children could be admitted to any other school. If not, she says she would put them into work. “May be that way I get some money to run my family,” she tells.

This is not just the story of Kaveri, but several other construction workers like her, who have not been paid their wages ever since demonetisation wave swept the country.

Construction workers unpaid for weeks
Take the case of Adarsh Palm Retreat. Over 200 construction and maintenance workers and supervisors at Adarsh Palm Retreat , a plush under construction residential project on Outer Ring Road, have not received their wages in last two months, thanks to demonetisation.

These workers, who are either employed through masons or through labour contractors say that earlier they used to be paid in cash twice a month, but they have stopped receiving their wages in last 10 weeks.

Then how do they manage their lives? To this, Varadappa (name changed), a construction labour says, they are paid Rs 500 a week to buy basic commodities for survival and since they all live in labour sheds, they need not pay house rent.

“We end up borrowing from known faces. In fact, a lot of workers have returned to their villages because they were not paid,” he says. On asked why he and several other workers continue to work despite having not received their wages, he says, if they quit the work, they are afraid that they would not get their pending wages.

“We have been assured that we will be paid soon and we are hopeful,” he says.

A supervisor working in the site confirmed that they have been told there will be further delay in making payments and they would get their wages only in March.

Even as the workers and supervisors are not paid their dues, a civil engineer who was in the construction site said that he had no issues in getting the monthly salary. So obviously in this case, it is clear that demonetisation has hit the unorganised sectors, while the lives of salaried remains stable.



Workers are busy fastening ropes to the poles in a construction site. Pic: Nalme Nachiyar

Cash-trouble for construction sector
T S Rajagopalan, Vice-president (Projects) at Adarsh Developers agrees that the working class has got very badly affected due to demonetisation. “They (construction workers) are not able to get the payment. Because of demonetisation, every payment has to be done digitally or through cheques. But construction workers are not having their bank accounts in place. Earlier payments used to be routed through labour contractors. The contractor was given the cheque and in turn he would pay the workers with cash. But now, both the builders and contractors cannot withdraw money or make transaction above certain limit. Hence the problem,” he says.

He adds that his company is encouraging everyone to open their bank accounts to transfer the amount.

In fact, the workers Citizen Matters spoke to, too said that the company has opened their bank accounts in one of the nationalised banks in Marathahalli. “Nearly 250 bank accounts including mine were opened recently,” Babu (name changed), a construction supervisor said. New bank accounts were opened even for those who already have their accounts in banks elsewhere.

Limitations of bank accounts
However, the bank account too comes with glitches. While ATM cards have been issued to the literate bank account holders, cards are not issued to those who put thumb impression. “I got a passbook recently, but there is no money in my account yet. And I haven't got an ATM card because I do not know to sign,” Shanthamma (name changed), a construction worker said. Citizen Matters cross-checked this with the officials at a State Bank of India branch and verified that illiterates are indeed not given ATM cards.

The workers also wonder if these bank accounts will be of any help in the long run. “We live like nomads. Our work site and employers change each season. So will we be asked to open another bank account the next time when we shift the workplace?” asks Madesh (name changed).

Normally, when a new account needs to be opened for a migrant worker, banks ask the applicant to get a letter from the employer - from the builder in case of construction workers. A self-affidavit on the place of residence is also required. The other option for the builders is to transfer the amount to Jan Dhan account. However, the new know-your-customer (KYC) norms that mandate Aadhaar or other documents have only made the issues difficult for migrant labourers.

When asked about the wages not paid to the workers in Adarsh Palm Retreat, Adarsh Developers Vice-president T S Rajagopalan said he was not aware exactly what was happening in this particular case. “But, yes, demonetisation effect is felt by everyone because of withdrawal ceiling, lack of bank accounts etc, and it will stabilise in couple of months,” he predicts.

‘Bank payment may not help the workers’
Hemanth Kumar, Founder of a city-based NGO Aashankura that works closely with the construction workers says that the workers have been severely hit because of demonetisation. “A lot of them have lost their jobs and returned to their villages, and those who continue to work are not paid. As 80 per cent of the construction workers do not have bank accounts, they remain unpaid,” he says.

He is even apprehensive of the online wage transaction helping the labourers in any manner. That is because, he says, when majority of these workers do not know to read and write they can be easily conned in the process of digital transaction by the employers.

Also, “the unorganised sector largely relies on daily or weekly wages. They cannot really afford to visit the bank every week to withdraw their wages. If they do so, they will end up losing their day’s work,” Hemanth Kumar says.

Nagaraj, an office-bearer at All India Trade Union Congress (AITUC) too feels it’s the unorganised sector workers including those from construction industry who are majorly hit by demonetisation.

“In most of the construction sites the workers are not paid in last two months and the situation is likely to continue for next two months. It is touted that opening of bank accounts will help the unorganised sectors as employers will be obliged to pay minimum wage of Rs 14,000, PF and ESI. But I am doubtful if it will happen in letter and spirit,” he wonders.

He finds it dubious, as there were examples in the past where employers find an easy way out from complying with regulations. “Take the case of BBMP (Bruhat Bengaluru Mahanagara Palike). It was mandated that the civic workers hired by contractors should be paid Rs 15,000 per month. But the contractors found out deceitful ways. They forced the workers to return half the money, failing which they threatened them of throwing them from work,” he adds.

He sees something similar would happen in the construction sector too in which case opening of bank accounts would not be of much help. Therefore, those working for the welfare of construction workers believe that simplifying the process of wage payment by fixing accountability on employers is the need of the hour.

Akshatha M
Akshatha M is a Staff Journalist at Citizen Matters. She tweets at @akshata1.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Philip » 11 Jan 2017 20:18

Construction industty worst hit.Many small
contractors badly affected closing shop.Larger ones may have obtained large bank ODs/loans but face the huge industry slowdown.With less cash in the pocket,every sector will collapse.Increasing service tax until GST arrives to 18% will kill off professionals especially if accompanied by the promised raid raj.2017 will be the worst yr. in our independent history.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Sachin » 11 Jan 2017 20:19

Singha wrote:some of this is not due to bank a/c but because builders themselves are short on funds. even civil engineers & office staff in some builders are not being paid regularly.

Same is the case in Kerala too, is what I heard. And same is my response. Job loss is some thing which I don't want to happen to any body. But it would be better to utilise this situation to know which are the industries/business which flourished due to unaccounted wealth. Real Estate for sure is one. We saw another post which spoke about automobile sales taking a dip. Why are builders short on funds?? It could also be because they "rolled" the money they got from the banks into other projects. Technically banks releases a person's loan amount directly to the builder after taking consensus from the loan taker. Builders regularly cajole the loan takers to allow release of funds. And that fund is mis-used by the builder. Now when they want more money to "roll" banks would say the loans have all been disbursed to them long time back. And what ever cash stashes they had are now in the bank.

My gut feeling is that now a "levelling" and course correction would happen. Even real estate market pick up, but most likely based on genuine demands and with better accountability. Same goes for other sectors like auto mobiles as well. Any business which solely relied on the ability for a section of society to throw liquid cash at them, will now have some tough time.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Subdas » 11 Jan 2017 20:28

This is bull s that due to note bandi these workers are suffering. This is the case of black business suffering and going kaput. I was watching a TV program few weeks ago where some top guys from labor intensive industries were present. They all said that they had intial problems but then came up with innovative ideas to pay their labor force even with out bank accounts such as pre-loaded debit cards and pre-loaded petrol cards etc. It is true that surgical strike on bm will destroy a lot of black business and will also take down the workers in these business such as the terror business or trafficing business. But there can be no justification for sustaining black business
Last edited by Subdas on 11 Jan 2017 20:32, edited 1 time in total.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Neela » 11 Jan 2017 20:31

Philip wrote:Construction industty worst hit.Many small
contractors badly affected closing shop.Larger ones may have obtained large bank ODs/loans but face the huge industry slowdown.With less cash in the pocket,every sector will collapse.Increasing service tax until GST arrives to 18% will kill off professionals especially if accompanied by the promised raid raj.2017 will be the worst yr. in our independent history.


Run people Run.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Subdas » 11 Jan 2017 20:35

Philip wrote:Construction industty worst hit.Many small
contractors badly affected closing shop.Larger ones may have obtained large bank ODs/loans but face the huge industry slowdown.With less cash in the pocket,every sector will collapse.Increasing service tax until GST arrives to 18% will kill off professionals especially if accompanied by the promised raid raj.2017 will be the worst yr. in our independent history.


Yet there is not a single case of riot in the last 60 days. We are indeed a very tolerant country!

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Primus » 11 Jan 2017 21:35

OT perhaps but our family home in India is undergoing the usual conversion to a multi-storey building since my father passed a few years ago. The builder has been going slow due to 'reduced demand' for the finished product as we insisted on getting it all 'white'.

There was a temporary stop during the past two months but now he is at work again with renewed vigor. We've told him we want to sell it all white, the funds for building it are all white so whatever it costs that's how we are going to do it. I don't know how he pays his workers, but the cash given out to him is all coming through bank checks, with a proper paper trail.

At the end of it, we are happy to get whatever we can as long as it is all above board and accounted for.

I think as the old saying goes, where there is a will.......

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Re: Currency Demonetisation and Future course of Indian Economy

Postby UlanBatori » 11 Jan 2017 22:24

Good 4 u.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby KL Dubey » 12 Jan 2017 01:38

sdas1645 wrote:
Philip wrote:Construction industty worst hit.Many small
contractors badly affected closing shop.Larger ones may have obtained large bank ODs/loans but face the huge industry slowdown.With less cash in the pocket,every sector will collapse.Increasing service tax until GST arrives to 18% will kill off professionals especially if accompanied by the promised raid raj.2017 will be the worst yr. in our independent history.


Yet there is not a single case of riot in the last 60 days. We are indeed a very tolerant country!


Listening to TV debates on the topic, it almost feels like these people believe the economy has contracted. Actually we are still growing at close to 7%, which is phenomenal among large economies right now. Riots and large-scale protests can hardly be expected to occur in a phase of 7% growth, whereas you might expect them if the economy contracted. It seems those common men who are hit know why they have been hit, i.e. because their paymasters are finally feeling the heat for operating in the "kala pani".

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 12 Jan 2017 02:50

Philip wrote:Construction industty worst hit.Many small
contractors badly affected closing shop.Larger ones may have obtained large bank ODs/loans but face the huge industry slowdown.With less cash in the pocket,every sector will collapse.Increasing service tax until GST arrives to 18% will kill off professionals especially if accompanied by the promised raid raj.2017 will be the worst yr. in our independent history.


manufacturing has not faired too well either:

Demonetisation: 35 per cent job losses, 50 per cent revenue dip, says study by largest organisation of manufacturers

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 12 Jan 2017 03:19

Good. All these companies need to start paying workers through bank accounts, following all labour and wage laws. The long era of casual labour for cash is over.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby UlanBatori » 12 Jan 2017 05:22

Exactly, but I don't see the BJP etc showing any golas to come out strongly with the needed propaganda. Except on BRF all I read is the gloom and doom whining, with the GOI apparently ducking for cover. THAT is a growing disaster with elections around the corner.

The messages to convey strongly are:
1. DeMO is FOR THE PEOPLE, and very good for business and growth.
2. The present problem is hoarding and sabotage by crooks.
3. Those who want a return to pre-Nov.8 are the crooks.
4. There is NO "demonetization" any more. There is a permanent switch to digital transactions, empowering all.
5. India is moving ahead with a 21st century digital economy that brings ALL people on board. Get on board or get left behind and run over.

Of course I realize that it is incredibly difficult to get Indian "experts" to think beyond the usual pathetic "What has the Bhesht done 10 saal pehle, yaar? Let us Transfer Technaalagy and collect baksheesh onlee!"

The Largest Asses of Manufacturers are no less corrupt than the Largest Asses of Real Estate Crooks, Baboon and Mantris, as our dear friend with the "NJBP" Model used to emphasize (where is he I wonder?)
Which reminds me: The "J" gang may be about to interfere. :eek:

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Re: Currency Demonetisation and Future course of Indian Economy

Postby shiv » 12 Jan 2017 06:56

There is enough cash in the system to give low wage workers and women a fair deal. It is the people who controlled the flow of cash that gave them a bad deal. The RBI has simply unzipped its fly to show who is the biggest controller of cash flow.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby NRao » 12 Jan 2017 07:16


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Re: Currency Demonetisation and Future course of Indian Economy

Postby disha » 12 Jan 2017 07:31

7% growth is WB projections. They are no better than an IT-Vity simple-wild-assed-guestimate on project duration. In fact a IT-Vity SWAG may get it more right than the WB projections.

I am expecting a growth of 8-10% and more towards 10% for the current fiscal. Why? The drop in sale of scooters/cars will bounce back. It is the capital infrastructure projects that are taking rapidly off the ground will provide substantial continuing growth. Currently (for 2016-2017) some $30-40 B was invested in infrastructure projects. I would expect the budgetary support for 2017-2018 will cross $40 B and another $20 B will be coming in as FDI. That will be $60 B for the next year invested in infrastructure projects.

RE will rebound towards 2019. Till then it is better that RE stays low and instead of going quantitative goes qualitative.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby A_Gupta » 12 Jan 2017 08:17



This following makes me doubt the report:
Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March.


Why should export-oriented industries be cash-driven???

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Re: Currency Demonetisation and Future course of Indian Economy

Postby UlanBatori » 12 Jan 2017 08:36

Why should export-oriented industries be cash-driven???

Ah! This is why ppl flock to UBCN's non-pareil reporting and anal-e-sys.

Dipanker's report did **NOT** say "export-oriented INDUSTRIES". Pls do not distort his report hain??
It said "export-oriented ACTIVITIES".
IOW, Hawala.
Human traffiking.
Organ trafficking.
Drug trades.
Fact-finding vijits by Mantris, Baboon and Bijnejppl to Caymans, Mauritius and Switjerland.
Q.E.D.

Makes me wonder exactly why RaGa went to Bilayat. :?:

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Deans » 12 Jan 2017 09:56

A_Gupta wrote:


This following makes me doubt the report:
Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March.


Why should export-oriented industries be cash-driven???


AIMO is unknown even within the industry (else I would have thought this is the usual pre-budget lobbying exercise) and the usual suspects seem
to be behind this report. Their first of the 3 `reports' on DeMo (though not mentioned here), came out 2 days after DeMo !

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Rishi Verma » 12 Jan 2017 11:09

DeMon: Mrs. Approves

To me her opinion carries more weight than that of Mayawati's, Mamata Yellergees, or kuttas like Kejri & Pappu's

The 64-year-old retired school teacher, who was in Udaipur on Wednesday to attend golden jubilee celebration of a private school at Dakan Kotda, said, "Modi ji has taken the correct step on notebandi. The banning of Rs 500 and Rs 1,000 notes has brought out all the black money from all over the country," Jashodaben said while addressing the audience. Jashodaben, who began her speech with `Vande Mataram', said that women from poor families are benefiting after Modi's appeal for voluntary surrender of gas subsidy. This has enabled the government to give free LPG connections to households below poverty line.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 12 Jan 2017 13:04

A_Gupta wrote:
This following makes me doubt the report:
Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March.


Why should export-oriented industries be cash-driven???


From the link.

According to the study, the factors that contributed to the impact are: zero cash inflow, rules curtailing cash withdrawals, staff absenteeism, a weaker rupee, choked fundraising options, inability of banks to work on proposals, derailed real estate sector, fear among foreigners, poor preparedness, and uncertain status of GST.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 12 Jan 2017 13:22

I think people get unneccesarily defensive about slowdowns. Bibek Debroy articulated really well in one of his interviews. He said its a given that there is going to be slowdown for one or two quarters no doubt and then things will start to normalize. He said its hard to estimate how much of a slowdown is going to happen. IIRC that interview was around the time MMS made some predictions about 2% slowdown. Debroy said its extremely hard to come up with those kind of numbers like 2% and 1%. Fact is there is no way to tell and nobody knows.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby A_Gupta » 12 Jan 2017 13:37

RajeshG wrote:
A_Gupta wrote:
This following makes me doubt the report:


Why should export-oriented industries be cash-driven???


From the link.

According to the study, the factors that contributed to the impact are: zero cash inflow, rules curtailing cash withdrawals, staff absenteeism, a weaker rupee, choked fundraising options, inability of banks to work on proposals, derailed real estate sector, fear among foreigners, poor preparedness, and uncertain status of GST.


Sorry, but quoting the report doesn't help, because I read it. Since you've quoted it, let's take just one quoted factor: weaker rupee A weaker rupee makes it better for export-oriented enterprises, each dollar, euro or pound they earn translates into more rupees.

And so on. E.g., I doubt foreigners pay for exports from India in cash, so "zero cash inflow" is irrelevant. What does GST have to do with demonetization (and GST would not affect exports, exporters do not collect GST from foreign buyers). Why would foreign market demand be hit by Indian demonetization?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby schinnas » 12 Jan 2017 14:03

A_Gupta wrote:
RajeshG wrote:
From the link.



Sorry, but quoting the report doesn't help, because I read it. Since you've quoted it, let's take just one quoted factor: weaker rupee A weaker rupee makes it better for export-oriented enterprises, each dollar, euro or pound they earn translates into more rupees.

And so on. E.g., I doubt foreigners pay for exports from India in cash, so "zero cash inflow" is irrelevant. What does GST have to do with demonetization (and GST would not affect exports, exporters do not collect GST from foreign buyers). Why would foreign market demand be hit by Indian demonetization?


Textiles and jewelery and handicrafts are key export industries in India outside of fully organized sectors such as pharma and IT. Both the jewelery and textile sectors are highly unorganized with multiple levels of outsourcing with actual work done mostly in several SMEs, who mostly run a cash-less enterprise. I have spoken to export supporting entrepreneurs in textile belt in TN and they indicate severe impact to business.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby RajeshG » 12 Jan 2017 14:38

Right. Also lot of these SMEs arent 100% export oriented units. Most of these factors, industries and individual businesses cannot be looked at in isolation IMO. Just like everyone has been claiming that cash is the grease that oils the shadow economy, the rest of the economy is ( or was ) oiled by the same cash. When that is starved its bound to have trickle/ripple effects in rest of the places. Again this was expected by everybody including govt so no point in disputing that. Bottlenecks simply have to be identified and fixed and a stimulus needs to be put in place to compensate for the slowdown.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kiranA » 12 Jan 2017 19:08

If a wholesale economic collapse with loss of income to millions, loss of thousands of jobs, hunger for thousands of people, deaths for few hundreds was "expected" from demon then not only does it make demon stupid but an act of crime to be prosecuted. I dont think they were expected just not thought through. Now govt is tring to spin its way out the mess.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kiranA » 12 Jan 2017 19:15

Suraj wrote:
kiranA wrote:They do think about yield - thats precisely why less than 6% of black money is held in cash which is negative yield (inflation). Owners of BM can fully wait until the economy is fully monetized again. The people who cant wait and will take losses due to demon are farmers, laborers etc.

Anyone with significant RE holdings with a substantial BM component cannot avoid significant taxation in future. The reason is that they cannot transact without reporting an official transaction, which requires them to submit a purchase record. A very low 'official' figure becomes a large capital gains tax event. If they have no record at all, i.e. benami, they're in even more trouble.

In other words, those holding BM property are better off selling into a weak market to curtail their losses. They cannot 'wait for economy to be fully monetized again', which assumes they can wait out for prior conditions to return. Those conditions are gone. They cannot collectively sell back into a cash BM market. Sure some states could deliberately be lax about enforcing RE transaction records and taxation, but that is to their own detriment, cutting their own noses off to spite their faces.


Why are those "conditions are gone" ? The bureaucrat represents the state. And it is certainly not to his "own detriment" to be paid nice sums as bribe.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Hari Seldon » 12 Jan 2017 19:27

kiranA wrote:If a wholesale economic collapse with loss of income to millions, loss of thousands of jobs, hunger for thousands of people, deaths for few hundreds was "expected" from demon then not only does it make demon stupid but an act of crime to be prosecuted. I dont think they were expected just not thought through. Now govt is tring to spin its way out the mess.


Are you saying the above has happened/is happening? And why do you say so? Just curious.


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