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Currency Demonetisation and Future course of Indian Economy

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Vidur
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Vidur » 03 Sep 2017 14:56

nam wrote:May be I am naive, not sure why would people returning money or not returning would be a yardstick for success of demon.

If people return money, gov may not have a cash bonanza, but gets to record all those who had cash. Legal or illegal. Plus the cash missed will be taken as tax in future.

If people burn money, gov gets cash bonanza, but miss out on record people & crooks on IT and future taxes.

Either ways GoI wins!

May be someone can correct me.


Correct. The focus now is on harvesting this information and using it to ensure all those who need to pay taxes do. The IT department has to do the job now. It is a bold step by the government - trusting the system to deliver from within with existing staff without external reform. I would have done this differently but the PM believes that the bureacracy can deliver if political will is there.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 03 Sep 2017 19:18

nam wrote:


But he forgot to remind the previous government of stop the open loot on PSU banks. For someone who predicated 2008 crash could not see the obvious path to NPA.


These happened long before Rajan joined RBI in 2013. The NPA loans were from NDA1 and UPA1 era. Recall that since 2013 Rajan routinely spoke on the issue of NPA's.
Last edited by Dipanker on 03 Sep 2017 19:26, edited 1 time in total.

Dipanker
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 03 Sep 2017 19:23

nam wrote:
Dipanker wrote:Actually that was one of the reason touted for demonetization. In the end the amount of fake currency found was a mere 42 crore, or something like 0.0007% of the total. Interesting many of the fake notes were of the newly issued 2000 notes!

"Despite the rise the total value of counterfeit notes amounted to an insignificant Rs 42 crore."
Source


That would the FICN which was detected. No one will deposit large FICN in to banks and walk in to a obvious trap.


You can only count the fake note in circulation which which ended at the bank after demonetization. Somebody can print trillion rupees worth of fake not and keep it in his basement, unless and until that is put in circulation it has no "value" . Anything in circulation will end up at the bank after demo.

Fake currency gets into circulation because people are duped into believing that they are real. Total amount in circulation is always a very small fraction of total amount in circulation.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby uddu » 03 Sep 2017 19:56

Also those in circulation will not get in so easily. I heard people who had a 500 Rs note and was told that it's fake when they went to deposit it. They tried with some other person at another bank and same story. So the fakes also never made into the bank and that 42 crore were the extreme lucky ones. :D So may be many lost such fake currency turned white money all across rather than that money getting into the banking system or accounted for. Now don't know whether this 42 core will also be traced back to their owners.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby yensoy » 03 Sep 2017 22:00

^^^^ Exactly, most of the fake notes didn't even make it into the banking system, so it's unsurprising that their numbers in RBI's records are infinitesimal. This is basic statistics but of course most folks are too stupid to have the power of analysis or critical thinking, after all this is the land where Ram Rahim had (still has?) millions of followers.

But I have to add a disclaimer: all this fancy statistics are useless without real jobs on the ground. The kind of jobs which will keep people out of deras.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kiranA » 04 Sep 2017 00:44

hanumadu wrote:


Lastly, kitna gaya?


haha ..you are still asking me "Kitna gaya".Shouldnt you now be asking GoI that question. What GoI got from people of India is nothing short of boxing equivalent of uppercut knocking out its teeth. It now doddering around toothless gassing some IT buzzwords of "Big Data" and "Analytics" after taking a massive hit to its revenues and the economy it is supposed to manage.

Normally I would be sympathetic to GoI but in this case it deserved to lose every tooth it lost. But while I relish that it is also a tragedy for people of India.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 04 Sep 2017 01:14

Anything in circulation will end up at the bank after demo.


:rotfl: so out of touch of reality.

banks do not accept FICN. They'll notify police and tear it up immediately. If teller lets it through, he takes the hit.

The ones that made it through would be the ones that are so good that it slipped through the machine.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 04 Sep 2017 01:37

kiranA wrote:
hanumadu wrote:


Lastly, kitna gaya?


haha ..you are still asking me "Kitna gaya".Shouldnt you now be asking GoI that question. What GoI got from people of India is nothing short of boxing equivalent of uppercut knocking out its teeth. It now doddering around toothless gassing some IT buzzwords of "Big Data" and "Analytics" after taking a massive hit to its revenues and the economy it is supposed to manage.

Normally I would be sympathetic to GoI but in this case it deserved to lose every tooth it lost. But while I relish that it is also a tragedy for people of India.


Look at the increase in the number of people filing taxes and you will have an idea on the effect of DeMo. It's only the beginning.
There is an account of how much the govt lost and gained. I do hope you are keeping an account of your losses.

Dipanker
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 04 Sep 2017 02:20

Gus wrote:
Anything in circulation will end up at the bank after demo.


:rotfl: so out of touch of reality.

banks do not accept FICN. They'll notify police and tear it up immediately. If teller lets it through, he takes the hit.

The ones that made it through would be the ones that are so good that it slipped through the machine.



Think for a moment before you post.
Ending up at the bank does not mean Bank accepts it.

Bank counted 42 crores worth of fake currency. Bank could not have counted them unless and until they ended up at the bank.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 04 Sep 2017 02:40

Fine. But on what basis are you claiming that 42 CR FICN was all that there was in circulation?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 04 Sep 2017 03:10

Dipanker wrote:
nam wrote:
But he forgot to remind the previous government of stop the open loot on PSU banks. For someone who predicated 2008 crash could not see the obvious path to NPA.


These happened long before Rajan joined RBI in 2013. The NPA loans were from NDA1 and UPA1 era. Recall that since 2013 Rajan routinely spoke on the issue of NPA's.


This is how commies peddle lies till it becomes the truth. There were no NPA loans during NDA1 era. When NDA1 left, growth was high. Demand was high, capacity was insufficient. Most of the loans were during UPA and more so during UPA2. There were graphs on loan offtake during each year that were posted here on BRF.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kiranA » 04 Sep 2017 03:42

Gus wrote:Fine. But on what basis are you claiming that 42 CR FICN was all that there was in circulation?


Gus - If FICN is in circulation then that means somebody believes its genuine and it will end up at bank. Why wont it ? why would anyone trade his actual goods for fake currency knowing its fake currency ? . THe only people who know that a currency is FICN are the ones who print or stock it. And all they lost is just their paper nothing more. FICN is a problem only when in circulation and these end up with bank and as dipanker pointed out banks counted them . Practically speaking 42 cr is all that is there in circulation .

Its absolutely clear there is no major FICN problem in India . Though I did hear that the new 2k note is of rubbish quality and can be easily faked and it happens within India - even then I dont believe its a big deal.

FICN is a major myth peddled by GoI and reinforced by fools like Subbu Swamy, Gurumurthy for idelogical reasons.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Karan M » 04 Sep 2017 04:25

Sachin wrote:5. Real Estate tanking now complete. RE in Kerala is in the "unhealthy woman; now pregnant as well" mode.


Are there areas in Kerala to safely invest in RE? Plots, houses etc or is it all overpriced sham like Bengaluru?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 04 Sep 2017 05:03

Kiran - in our area there were folk who got suddenly rich by a scheme locally known as "two for one".

Those people did not turn in theirs.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kiranA » 04 Sep 2017 05:10

Gus wrote:Kiran - in our area there were folk who got suddenly rich by a scheme locally known as "two for one".

Those people did not turn in theirs.


what does that mean

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 04 Sep 2017 07:54

Two FICN for one real.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 05 Sep 2017 17:25

This is how commies peddle lies till it becomes the truth. There were no NPA loans during NDA1 era. When NDA1 left, growth was high. Demand was high, capacity was insufficient. Most of the loans were during UPA and more so during UPA2. There were graphs on loan offtake during each year that were posted here on BRF.



(i) A certain percentage of bank loans will turn out to be NPA's , that is a statistical fact. To say that during NDA1 no loans were given which later turned out to be NPA's will be a LIE.

(ii) NDA1 average GDP's growth rate was only 6%, that is pretty average growth rate, especially when compared to the UPA1+UPA2 average growth rate of 7.9% which more than doubled the economy.

(iii) NDA2 GDP growth rate again so far has been quite average, and when reduced to older standard (2004-05), quite uninspiring. A growth rate of ~10% is needed under the new base year (2011-12) to match a growth rate of 7.9% under the old base year (2004-05).

There is so much disconnect between rhetoric and actual performance.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby vinod » 05 Sep 2017 17:49

If Anything, Demonetisation Slowed the Rate of Increase in Income Tax Base

Year-to-year growth in the number of tax payers in 2016-17 was 26% (with demonetisation), which is less than 27.6% during 2015-16 (without demonetisation).
https://thewire.in/173706/demonetisatio ... -tax-base/


Has any one gone through the author's website: https://decipherdemon.blogspot.com

Anyone who is knowledgeable with these statistics, please comment.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 06 Sep 2017 00:51

access being restricted

http://www.thehindu.com/business/centre ... 625758.ece
On July 1, Prime Minister Narendra Modi had first revealed the government’s decision to cancel the registrations of one lakh companies that had suspicious and questionable operations, identified on the basis of data mined from the deposit of bank notes following last November’s demonetisation of ₹500 and ₹1,000 notes.

The PM had promised more action would follow on two lakh similar firms and 38,000 shell companies. Tuesday’s statement reveals that progress has been made in scrapping another 1,09,032 firms under the Companies Act since then.

“The existing directors and authorised signatories of such struck-off companies will now become ex-directors or ex-authorised signatories. These individuals will therefore not be able to operate bank accounts of such companies till such companies are legally restored under Section 252 of the Companies Act by an order of the National Company Law Tribunal,” the ministry said, disclosing ‘stepped up decisive action’ against errant companies.

“Since such ‘struck off’ companies have ceased to exist, action has been initiated to restrict the operation of [their] bank accounts. The Department of Financial Services has, through the Indian Banks Association, advised all banks ... [to] take immediate steps to put restrictions on bank accounts of such struck-off companies,” the ministry said, adding that the list of firms had been put up on the corporate affairs ministry’s website.

In addition, the statement said that banks had been advised to go in for ‘enhanced diligence while dealing with companies in general.’

“A company... even having an active status on the website of the Ministry of Corporate Affairs but defaulting in filing of its due financial statement/s or annual return/s in particular of charges on its assets on the secured loan should be seen with suspicion…” the ministry has told banks.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 06 Sep 2017 03:43

Dipanker wrote:
This is how commies peddle lies till it becomes the truth. There were no NPA loans during NDA1 era. When NDA1 left, growth was high. Demand was high, capacity was insufficient. Most of the loans were during UPA and more so during UPA2. There were graphs on loan offtake during each year that were posted here on BRF.



(i) A certain percentage of bank loans will turn out to be NPA's , that is a statistical fact. To say that during NDA1 no loans were given which later turned out to be NPA's will be a LIE.

(ii) NDA1 average GDP's growth rate was only 6%, that is pretty average growth rate, especially when compared to the UPA1+UPA2 average growth rate of 7.9% which more than doubled the economy.

(iii) NDA2 GDP growth rate again so far has been quite average, and when reduced to older standard (2004-05), quite uninspiring. A growth rate of ~10% is needed under the new base year (2011-12) to match a growth rate of 7.9% under the old base year (2004-05).

There is so much disconnect between rhetoric and actual performance.


You are just a troll, so I will ignore you.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 06 Sep 2017 03:57

hanumadu wrote:
You are just a troll, so I will ignore you.



Same to you.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby niran » 06 Sep 2017 10:24

Dipanker wrote:

(i) A certain percentage of bank loans will turn out to be NPA's , that is a statistical fact. To say that during NDA1 no loans were given which later turned out to be NPA's will be a LIE.

(ii) NDA1 average GDP's growth rate was only 6%, that is pretty average growth rate, especially when compared to the UPA1+UPA2 average growth rate of 7.9% which more than doubled the economy.

(iii) NDA2 GDP growth rate again so far has been quite average, and when reduced to older standard (2004-05), quite uninspiring. A growth rate of ~10% is needed under the new base year (2011-12) to match a growth rate of 7.9% under the old base year (2004-05).

There is so much disconnect between rhetoric and actual performance.

(i) during start of NDA1 NPA was 1.3% NDA1 brought it down to 0.3% by the end. then UPA2 brought it to 3.8% which rose to 6% in 2014. since then it is steadily climbing down despite 786% more loan amount disbursed by banks.This goes to show how useless UPA1 and 2 were.

(ii) NDA1 average growth was 6.9 to be precise and to be more precise both UPA1&2 was disgustingly measly 3.8%. if according to you 6plus is modest then under 4% is piss poor, no?
(iii) NDA2 inherited from UPA2 a growth rate of 2.8% which was pushed to dizzying height of 8+ percent quater 1 of 2017 is 6.7% still better than combined UPA reign, by quarter 4 it will again rise to 8 and beyond and no NDA2 will take care to not go above 10% for long, it is to prevent overheating, they will keep it between 8 and 10 percent.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby SaiK » 06 Sep 2017 13:12

Home Opinions Columns S Gurumurthy
De-mon — a multidimensional project
By S Gurumurthy | Published: 05th September 2017 05:00 AM |
Last Updated: 05th September 2017 07:34 AM | A+

http://www.newindianexpress.com/opinion ... 62--1.html

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Re: Currency Demonetisation and Future course of Indian Economy

Postby SaiK » 06 Sep 2017 13:25

SaiK wrote:Home Opinions Columns S Gurumurthy
De-mon — a multidimensional project
By S Gurumurthy | Published: 05th September 2017 05:00 AM |
Last Updated: 05th September 2017 07:34 AM | A+

http://www.newindianexpress.com/opinion ... 62--1.html



If I have violated copyrights please let me know on this copy/paste


That 99 per cent of the de-legalised Rs 500/1,000 denomination notes was returned back to the Reserve Bank of India (RBI) has been cited by opposition parties, experts and the media alike as the sole test of failure of demonetisation (which, for brevity, I shall henceforth refer to as de-mon). But it is a less than fair assessment of what was essentially a multipurpose project. The one-line conclusion certifying it as a failure judges a multidimensional corrective venture on the basis of one single parameter: the quantum of notes returned. This conclusion has become popular due to the tempestuous and irrational political debate we witnessed at the end of 2016. The media epilogue that Narendra Modi’s de-mon is a rout, based on superficial logic, is a bluff. But to call the bluff, we need a surgical analysis of de-mon, which was missing in the debate then and is missing even now.

The background to de-mon

A flashback to November 2016 when demonetisation was announced. The background to de-mon was the unprecedented rise in the circulation of high-value notes (500/1000) from Rs 1.5 lakh crore in 2004 to almost Rs 15.5 lakh crore when de-mon was announced — with their share in the total currency in circulation going up from 34 per cent to over 88 per cent. The Reserve Bank of India had told the government that a third of the high-value notes which moved out of the banking system, some Rs 6 lakh crore, never returned. They circulate outside the system — the inference being that this huge unmonitored cash was financing and building a massive black economy.

This was manifest in the steep rise in gold, stock and land prices by almost ten times in the six years from 2004 to 2010 as compared the previous five years, 1999-2004. That asset price rise was not stoked by any matching real growth. It was the other way round. The spurious rise in asset values generated the mirage of high growth in India like it happened in the USA prior to 2008. This was evident from the fact that despite the high growth of 8.6 per cent recorded in the six years [2004-2010], jobs rose by just 2.7 million as compared to the job growth of 60 million in the earlier five-year period (1999-2004) on the strength of a medium growth rate of 5.4 per cent.

And moreover, while the latter high-growth period witnessed an annual inflation rate of 6.5 per cent, the earlier five-year average growth period recorded an inflation rate of just 4.6 per cent. And further, the external sector did well in the medium-growth period with the closing years posting a current account surplus of $20 billion after 25 years of relentless current account deficit. But the latter six-year high-growth period accounted for a current account deficit of hundreds of billions of dollars.

It did not need a seer to say that the hyper GDP growth in the latter six years was just wealth-led growth — a mirage that yielded neither jobs nor gave external or internal comfort to the economy. The reason for this spurious growth clearly was the high asset prices, which were fuelled only by an unprecedented rise in high-denomination notes. No economist or commentator has disputed either the figures or the conclusions based on them. And yet none of these critical facts was noticed in the politically and ideologically surcharged debate on de-mon which was reduced to a single-point issue to the exclusion of its other critical dimensions.

Politics reduced de-mon to a single test

The debate on de-mon became utterly political, casting economics aside. Economists and camera-holding journos looked at people queuing up at banks to exchange or deposit the old notes and turned populist in opposing de-mon like politicians and media. De-mon was such an India-specific issue that it had no parallel elsewhere in the world. Foreign experts, who had no knowledge of India-specific issues, lambasted de-mon as a disaster. Local experts led by Dr Manmohan Singh said Narendra Modi has destroyed the economy. With the powerful national and global guild of economists, media and the opposition launching a war on him, Modi singlehandedly led the de-mon politics from the front, withstood the assault and went through the ordeal by fire.

He directly communicated with the people and requested them to bear with the trouble he was giving them. And they willingly endorsed him, as his huge electoral victories since he unveiled de-mon demonstrated. But in the process, Modi had to use the singularly popular logic, which they would easily understand — namely to detect and eliminate black money — to defend de-mon. And by inference, only the notes that did not return to the banks came to be regarded as black money detected and eliminated. The result was that a multi-dimensional correction to the economic drift came to be reduced by anti-Modi politics to the only proposition, that is: whether de-mon was a failure or success would depend on the sole test of how much black cash would or would not return to the banks. This reductionist logic has obscured a more wholesome view of the de-mon effect and has now demonised the project itself.


Multidimensional correction aimed and achieved



Apart from the fact that de-mon was aimed at puncturing the unprecedented high-denomination cash stock buildup that stoking an asset price rise and threatening the economy with an unmanageable future crisis, it was intended as a multidimensional correction to the economy. The multiple objectives inherent in the de-mon project were: (1) to catch black money; (2) to prevent its growth; (3) to expand the taxpayer base; (4) to arrest and deflate cash-stoked asset prices; (5) to bring down the burgeoning cash stock, particularly the high-denomination notes that had become the villain; (6) to suck up the excess cash with the public that was building a parallel economy to the banking system; (7) to enable the banks to multiply the additional deposits by fractional reserve model as lendable resources; (8) to bring down the interest rates; (9) to increase the share of financial savings in household savings; (10) to crash the unaffordable land prices to make housing affordable; (11) to organise the unorganised sector and provide organised support to it; (12) to shift from a jobless high growth to growth with jobs — namely growth of a real economy; and (13) eliminate fake currency and starve Kashmir terrorists and naxalites of funds.

The list is not exhaustive still. Against the background of a monumental cash-driven asset price-led deceptive growth, none of these goals could be attained except by sucking away the huge cash build-up through a high-value note ban. The ban would destroy the appetite for high-value notes, and transform the cash-led economy into a less-cash economy. So tested, Modi’s de-mon project has been a huge success in achieving its multiple objectives. But, unfortunately, the experts and the media who have taken a position against de-mon from the word go ceased to be objective to look at its multi-dimensional impact. Instead, they were actually waiting to pronounce it as a failure and once the RBI announced that 99 per cent of the de-legalised notes were returned, they clutched at it as the sole index of its failure. Equating the success of the anti-black money agenda of the de-mon project with only the quantum of de-legalised notes not returned is irrational and wrong. If black money holders daringly deposit the de-legalised notes in the banks, it becomes the subject of a tax probe. This aspect is completely ignored by the anti de-mon — read as anti-Modi — rhetoric which came to be regarded as a de-mon discourse.

Black money agenda a success, not failure

Before examining how far the de-mon project achieved its multi-dimensional objectives or the course correction it set as its goal, take the popular objective of unearthing black cash. The de-legalised notes not deposited in the banks, of course, give open-and-shut proof of black cash exposed by de-mon. But it does not mean that black cash deposited in the banks will go undetected. If the people who had black de-legalised notes took a risk and deposited them in banks, it only means that the income tax authority will have to scrutinise the deposits and collect taxes on such deposits — which of course takes time. And that is happening.

Some Rs 2.9 lakh crore deposits of cash is being investigated for tax. Black money detection under de-mon falls into three categories: (1) undisclosed income in de-legalised notes admitted Rs 29,000 cr; (2) old notes not deposited Rs 16,000 crore; and (3) most importantly, deposits of Rs 2.90 lakh crore under tax probe. The last component, which is huge, is being completely disregarded to conclude, totally unfairly, that the black money agenda of de-mon has bombed. The actual discovery of Rs 45,000 crore of black money and the potential discovery of Rs 2.9 lakh crore under probe — uncovering a total of Rs 3.35 lakh crore as actual and potential black money — has been achieved only because of de-mon. Even if half the potential black cash deposit is eventually taxed, that would mean detection of some Rs 1.5 lakh crore of black money, most of which would be recovered as tax and penalty.

None of the voluntary disclosure schemes attempted earlier was a success. The two such schemes which yielded a fair amount of tax were the one in 1997 which yielded Rs 9,500 crore and the latest in 2016 which yielded Rs 29,400 crore. De-mon is bound to yield multiples of the amount of tax extracted through voluntary disclosures in the past. Besides the uncovering of actual and potential black money of Rs 3.35 lakh crore, de-mon has expanded the individual income tax base. For 2016-17, as compared to the earlier year, some 57 lakh more assessees have filed returns, advance tax collections are up by 42 per cent and self assessment tax by 34 per cent. Ignoring such vital facts to conclude the de-mon project as a failure in uncovering black money is definitely superficial. It is also recklessly premature as, at any rate, one will have to wait till the tax probe is over to know how much the tax is recovered on the `2.9 lakh crore deposits under probe. By all counts the black money agenda of de-mon is a success, not a failure by any standard.

The author is a well-known commentator on political and economic affairs.



SaiK
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Re: Currency Demonetisation and Future course of Indian Economy

Postby SaiK » 06 Sep 2017 13:39


De-mon — huge, successful course-correction
By S Gurumurthy | Published: 06th September 2017 04:00 AM |
Last Updated: 06th September 2017 08:33 AM | A+A A- |

Of all the multidimensional corrective elements that were missed — actually, side-stepped if not suppressed — in the politically uproarious anti-Modi national discourse about the demonetization exercise, the most important element was the huge crisis which the note ban hedged and averted.

A huge crisis averted

To know what India escaped, one has to look at what the US got into. The fake asset prices that drove high growth in the US from 2001 to 2008 deceived the US and the world into believing it to be real and finally landed the whole world in the unprecedented financial and monetary crisis of 2008. The emergency measures to handle the crisis — nil to negative interest rates and printing money which sustain the show of growth even now but can trigger another crisis — are still on. But what is the relevance of what happened in the US prior to 2008 to the demonetization (in short, de-mon) discourse in India in 2016? Read on.

Asset prices in India rose by ten times in those six years as compared to the earlier five years — stocks by 311 per cent against 32 per cent in the earlier five years; gold by 320 per cent against 38 per cent; and land by 200-2,000 per cent, in different places, against 21 per cent. In India, the nation celebrated this mirror wealth effect growth of the US as real from 2004. But what really was the cause of the asset price rise? The normal rise in money supply from 15.3 per cent in the earlier five years to 18 per cent in the high-growth years cannot explain the towering asset prices. How then did India experience an unprecedented asset price rise? The answer lies in one word: cash — in particular, the unprecedented rise in high-value notes, a third of which, according to RBI, was circulating outside banks. The printed cash to GDP ratio too rose sharply during the asset inflation period. In just 18 months between April 2015 and September 2016, the stock of Rs 500/1000 notes rose by Rs 4.8 lakh crore! The bank indent — read the appetite — for Rs 1,000 notes, kept rising from 1,500 million pieces in 2014-15 to 1,800 million in 2015-16 and to 2,200 million in 2016-17. What reckless bank lending did to the US till 2008, reckless printing of high-value notes did to India. At the rate of printing notes recorded in 2015-16, in the next 72 months, by 2022, high-denomination notes would have doubled to Rs 36 lakh crore and, at the accelerating rate, to as high as Rs 41 lakh crore. This could have dynamited the nation’s financial order. De-mon became inevitable to avert the huge unmonitored cash-led crisis in the offing, to force the economy flooded by cash into a less-cash economy and to drive the excess cash circulating outside into banks. This extremely critical aspect was completely ignored in the irrationally noisy de-mon debate.

De-mon: A multidimensional success

Contrary to the widespread view, de-mon has been a success in bringing into tax account the unmonitored roaming cash amounting to some Rs 3.35 lakh crore — a large part of which is under a tax probe. De-mon has raised the individual tax base by 20 per cent, advance tax collections for 2017-18 by 42 per cent and self-assessment tax (paid now for last year) by 34 per cent. Both in bringing substantial black money of the past into account and in ensuring better tax compliance, de-mon has been a success. An incredible achievement of de-mon is the reduction in the total cash stock and the cash stock with the public. In absolute terms, cash stock has fallen from Rs 17.1 lakh crore to Rs 15.1 lakh crore — a reduction of Rs 2 lakh crore. Without de-mon, it would have topped Rs 22 lakh crore, that is, increased by Rs 4.9 lakh crore. Likewise, cash with the public fell by Rs 2.1 lakh crore. Had not de-mon intervened, cash with the public would have risen by Rs 6.6 lakh crore. Because of de-mon, as the cash with the public came down dramatically, the people’s deposits in the banks went up equally dramatically — from Rs 97 lakh crore to Rs 114.2 lakh crore.

The reduction of cash with the public and the rise in deposits with the banks will produce a dramatically opposite macro-economic impact. Cash with the public fuels and funds the black economy. Deposits in banks will fund the formal and organised sector. Moreover, by the fractional reserve model, money moving in and out of the banks multiplies as advances, by some six times. The flow of de-mon cash into banks — including black money — has already led to a cut in interest rates and a huge rise in lendable money, relieving banks that were stressed by illiquidity. With street cash in the banks, household financial savings rose steeply from an average of 10.5 per cent of the Gross National Disposable Income [GNDI] in the five years to 2016 to 11.8 per cent in 2017. Withdrawal of cash from fuelling asset prices will certainly hit GDP growth, but this near-term hit is necessary to shift the gear of the economy from jobless growth through asset price rise to growth with jobs. The impact of drawing money from the public and quarantining it in banks has crashed land prices in different parts of the country. The impact of this is clearly visible in the realty and housing sector, where asset price rise in land had stagnated the housing sector since at least 2012.

Crash spurious growth, trigger the real: The housing example

The first impact of de-mon was obviously on wealth effect-led growth itself. It is self-evident that when a huge volume of cash is withdrawn from the economy, growth will suffer. But what was implicit in de-mon itself became the charge against it. But this bitter pill was inevitable to course-correct the economy. See how it worked on the property market, the quality of growth in which is regarded as the index of real growth. A study by Liases Foras, an independent research company, showed that the gap between the index of housing affordability and prices which was equal at 100 in January 2005 began rising and reached a peak with the price index at 529 in March 2014 and affordability at 173 — showing a gap of almost three times. With unsustainable land prices stagnating the real estate economy, prices too stagnated later. Liases Foras said the gap between affordability and price was entirely due to speculation through the cash component which dominated the land market and also the secondary housing market that accounted for almost two-thirds of housing buys.

The study said, “the perfectly timed” de-mon would cut land prices by 30 per cent due to a reduced cash component, adding that making housing hit by speculative land prices affordable appears to have been achieved as the outcome showed a rise in demand for affordable housing. Liases Foras also pointed out that residential sales across the top eight cities of India had increased, taking the total growth to around 28 per cent post de-mon. Most of the rise is in the affordable range as the average loan disbursement of Rs 26 lakh per unit by HDFC showed. The World Property Guide (May 18, 2017) also saw a rise in affordable housing leading the housing recovery. The Confederation of Real Estate Developers’ Associations of India (CREDAI) said that in the long run de-mon would help organised developers procure land at more appropriate rates as such land will not be competing with buyers who were channeling their black money into land buying and holding. CREDAI said: “This will help in construction of more affordable houses and achieve the Housing For All objective by 2022.” The housing market has recovered despite disruption by the new real estate law and GST. This huge correction in the realty sector too has gone virtually unnoticed as the debate got reduced to merely the number of notes returned.

But, two caveats

But wrong follow up and irresponsible NPA norms could derail what de-mon has achieved. De-mon is a huge investment at current cost for future returns. Its hard-won advantages should not be frittered away. There was of course a costly miss in the conception of de-mon. The voluntary income disclosure scheme announced ahead of the de-mon project should have been clubbed with it so that those who had black cash would have disclosed it rather than risk depositing it in benami names, making tax collections time-consuming. This also would have avoided equating the success of the de-mon project to the quantum of de-legalised notes not deposited back and made collection of tax on black money as the real test. On the post-de-mon follow-up, two caveats. One, de-mon has sucked the entire cash stock into banks and it has also reduced the ratio of cash to GDP back from 13 per cent to less than 10 per cent of GDP. But this hit the informal sector which is funded almost entirely by black money. Closing the tap of black money that was funding the informal sector, which contributes to 50 per cent of the GDP and 90 per cent of non-farming jobs, has caused a dip in the growth rate and jobs. Had the Mudra finance scheme been implemented as originally conceived ahead of de-mon, this could have been avoided. But it did not happen then. And it has not happened even now. There is no follow-up of de-mon to relieve micro and small businesses of their distress.

This is telling on growth and jobs. Two, PSU banks, which control 70 per cent of bank de-posits, are paralysed because of the artificial NPA rules unsuitable to India, borrowed from Basel norms. The RBI is clearly responsible for the virtual stoppage of lending by PSU banks which has hit even medium and large industries. India needs a lending model based on future viability based on Indian conditions and not on the Basel rules of liquidity which is appropriate for countries which have capital account convertibility and which have opened the banking sector to foreign ownership. Neither is the case in India, and in addition state-owned banks control 70 per cent of bank assets. And yet RBI is virtually destroying Indian business by applying the Basel norms. And the government is just a mute spectator to this sad spectacle. Additionally, the forcible reference of the NPA cases of units viable for restructuring under the bankruptcy law is a disastrous way of dealing with NPAs.

The government and RBI have to forensically distinguish NPAs caused by financial dishonesty from policy- and market-forced NPAs and punish the former and restructure the latter if they are viable.
To end, unless Mudra is implemented forthwith as originally proposed, PSU banks begin lending again, and RBI frames restructured policies disregarding the Basel norms, the economy will slide into deep difficulties in the coming months and years. Are RBI and the Modi government listening?


(Concluded)

S Gurumurthy

The author is a well-known commentator on political and economic affairs

http://www.newindianexpress.com/opinion ... 53106.html

Aditya_V
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Aditya_V » 06 Sep 2017 13:48

Yes there is always NPA, but the record NPA achieved during UPA 1 and 2 is total mismanagement and a downright fraud, I have audited some of the NPA Bank Branches and some of the Practices followed in 2008-11 are truly shocking with Bank personal having no defence other than they had pressure from the finance ministry to give some of these loans.

Plus running 6% of GDP contiously ruined the economy.

plus see the report in today's papers how due to policies in 2004-14 1% of the population captured 60% off India's wealth

http://timesofindia.indiatimes.com/business/india-business/india-has-gone-from-british-raj-to-billionaire-raj-report/articleshow/60383805.cms

The paper added that the top 0.1% income earners represented less than 8 lakh individuals in 2013-14, which is less than the population of Gurgaon. "It is a sharp contrast with the 389 million individuals that made up the bottom half of the adult population in late 2013."


So NDA 2 has inherited a very high inequality in the economy thanks to UPA

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Vidur » 06 Sep 2017 14:25

SaiK wrote:

De-mon — huge, successful course-correction
By S Gurumurthy | Published: 06th September 2017 04:00 AM |
Last Updated: 06th September 2017 08:33 AM | A+A A- |

Of all the multidimensional corrective elements that were missed — actually, side-stepped if not suppressed — in the politically uproarious anti-Modi national discourse about the demonetization exercise, the most important element was the huge crisis which the note ban hedged and averted.

A huge crisis averted

To know what India escaped, one has to look at what the US got into. The fake asset prices that drove high growth in the US from 2001 to 2008 deceived the US and the world into believing it to be real and finally landed the whole world in the unprecedented financial and monetary crisis of 2008. The emergency measures to handle the crisis — nil to negative interest rates and printing money which sustain the show of growth even now but can trigger another crisis — are still on. But what is the relevance of what happened in the US prior to 2008 to the demonetization (in short, de-mon) discourse in India in 2016? Read on.

Asset prices in India rose by ten times in those six years as compared to the earlier five years — stocks by 311 per cent against 32 per cent in the earlier five years; gold by 320 per cent against 38 per cent; and land by 200-2,000 per cent, in different places, against 21 per cent. In India, the nation celebrated this mirror wealth effect growth of the US as real from 2004. But what really was the cause of the asset price rise? The normal rise in money supply from 15.3 per cent in the earlier five years to 18 per cent in the high-growth years cannot explain the towering asset prices. How then did India experience an unprecedented asset price rise? The answer lies in one word: cash — in particular, the unprecedented rise in high-value notes, a third of which, according to RBI, was circulating outside banks. The printed cash to GDP ratio too rose sharply during the asset inflation period. In just 18 months between April 2015 and September 2016, the stock of Rs 500/1000 notes rose by Rs 4.8 lakh crore! The bank indent — read the appetite — for Rs 1,000 notes, kept rising from 1,500 million pieces in 2014-15 to 1,800 million in 2015-16 and to 2,200 million in 2016-17. What reckless bank lending did to the US till 2008, reckless printing of high-value notes did to India. At the rate of printing notes recorded in 2015-16, in the next 72 months, by 2022, high-denomination notes would have doubled to Rs 36 lakh crore and, at the accelerating rate, to as high as Rs 41 lakh crore. This could have dynamited the nation’s financial order. De-mon became inevitable to avert the huge unmonitored cash-led crisis in the offing, to force the economy flooded by cash into a less-cash economy and to drive the excess cash circulating outside into banks. This extremely critical aspect was completely ignored in the irrationally noisy de-mon debate.

De-mon: A multidimensional success

Contrary to the widespread view, de-mon has been a success in bringing into tax account the unmonitored roaming cash amounting to some Rs 3.35 lakh crore — a large part of which is under a tax probe. De-mon has raised the individual tax base by 20 per cent, advance tax collections for 2017-18 by 42 per cent and self-assessment tax (paid now for last year) by 34 per cent. Both in bringing substantial black money of the past into account and in ensuring better tax compliance, de-mon has been a success. An incredible achievement of de-mon is the reduction in the total cash stock and the cash stock with the public. In absolute terms, cash stock has fallen from Rs 17.1 lakh crore to Rs 15.1 lakh crore — a reduction of Rs 2 lakh crore. Without de-mon, it would have topped Rs 22 lakh crore, that is, increased by Rs 4.9 lakh crore. Likewise, cash with the public fell by Rs 2.1 lakh crore. Had not de-mon intervened, cash with the public would have risen by Rs 6.6 lakh crore. Because of de-mon, as the cash with the public came down dramatically, the people’s deposits in the banks went up equally dramatically — from Rs 97 lakh crore to Rs 114.2 lakh crore.

The reduction of cash with the public and the rise in deposits with the banks will produce a dramatically opposite macro-economic impact. Cash with the public fuels and funds the black economy. Deposits in banks will fund the formal and organised sector. Moreover, by the fractional reserve model, money moving in and out of the banks multiplies as advances, by some six times. The flow of de-mon cash into banks — including black money — has already led to a cut in interest rates and a huge rise in lendable money, relieving banks that were stressed by illiquidity. With street cash in the banks, household financial savings rose steeply from an average of 10.5 per cent of the Gross National Disposable Income [GNDI] in the five years to 2016 to 11.8 per cent in 2017. Withdrawal of cash from fuelling asset prices will certainly hit GDP growth, but this near-term hit is necessary to shift the gear of the economy from jobless growth through asset price rise to growth with jobs. The impact of drawing money from the public and quarantining it in banks has crashed land prices in different parts of the country. The impact of this is clearly visible in the realty and housing sector, where asset price rise in land had stagnated the housing sector since at least 2012.

Crash spurious growth, trigger the real: The housing example

The first impact of de-mon was obviously on wealth effect-led growth itself. It is self-evident that when a huge volume of cash is withdrawn from the economy, growth will suffer. But what was implicit in de-mon itself became the charge against it. But this bitter pill was inevitable to course-correct the economy. See how it worked on the property market, the quality of growth in which is regarded as the index of real growth. A study by Liases Foras, an independent research company, showed that the gap between the index of housing affordability and prices which was equal at 100 in January 2005 began rising and reached a peak with the price index at 529 in March 2014 and affordability at 173 — showing a gap of almost three times. With unsustainable land prices stagnating the real estate economy, prices too stagnated later. Liases Foras said the gap between affordability and price was entirely due to speculation through the cash component which dominated the land market and also the secondary housing market that accounted for almost two-thirds of housing buys.

The study said, “the perfectly timed” de-mon would cut land prices by 30 per cent due to a reduced cash component, adding that making housing hit by speculative land prices affordable appears to have been achieved as the outcome showed a rise in demand for affordable housing. Liases Foras also pointed out that residential sales across the top eight cities of India had increased, taking the total growth to around 28 per cent post de-mon. Most of the rise is in the affordable range as the average loan disbursement of Rs 26 lakh per unit by HDFC showed. The World Property Guide (May 18, 2017) also saw a rise in affordable housing leading the housing recovery. The Confederation of Real Estate Developers’ Associations of India (CREDAI) said that in the long run de-mon would help organised developers procure land at more appropriate rates as such land will not be competing with buyers who were channeling their black money into land buying and holding. CREDAI said: “This will help in construction of more affordable houses and achieve the Housing For All objective by 2022.” The housing market has recovered despite disruption by the new real estate law and GST. This huge correction in the realty sector too has gone virtually unnoticed as the debate got reduced to merely the number of notes returned.

But, two caveats

But wrong follow up and irresponsible NPA norms could derail what de-mon has achieved. De-mon is a huge investment at current cost for future returns. Its hard-won advantages should not be frittered away. There was of course a costly miss in the conception of de-mon. The voluntary income disclosure scheme announced ahead of the de-mon project should have been clubbed with it so that those who had black cash would have disclosed it rather than risk depositing it in benami names, making tax collections time-consuming. This also would have avoided equating the success of the de-mon project to the quantum of de-legalised notes not deposited back and made collection of tax on black money as the real test. On the post-de-mon follow-up, two caveats. One, de-mon has sucked the entire cash stock into banks and it has also reduced the ratio of cash to GDP back from 13 per cent to less than 10 per cent of GDP. But this hit the informal sector which is funded almost entirely by black money. Closing the tap of black money that was funding the informal sector, which contributes to 50 per cent of the GDP and 90 per cent of non-farming jobs, has caused a dip in the growth rate and jobs. Had the Mudra finance scheme been implemented as originally conceived ahead of de-mon, this could have been avoided. But it did not happen then. And it has not happened even now. There is no follow-up of de-mon to relieve micro and small businesses of their distress.

This is telling on growth and jobs. Two, PSU banks, which control 70 per cent of bank de-posits, are paralysed because of the artificial NPA rules unsuitable to India, borrowed from Basel norms. The RBI is clearly responsible for the virtual stoppage of lending by PSU banks which has hit even medium and large industries. India needs a lending model based on future viability based on Indian conditions and not on the Basel rules of liquidity which is appropriate for countries which have capital account convertibility and which have opened the banking sector to foreign ownership. Neither is the case in India, and in addition state-owned banks control 70 per cent of bank assets. And yet RBI is virtually destroying Indian business by applying the Basel norms. And the government is just a mute spectator to this sad spectacle. Additionally, the forcible reference of the NPA cases of units viable for restructuring under the bankruptcy law is a disastrous way of dealing with NPAs.

The government and RBI have to forensically distinguish NPAs caused by financial dishonesty from policy- and market-forced NPAs and punish the former and restructure the latter if they are viable.
To end, unless Mudra is implemented forthwith as originally proposed, PSU banks begin lending again, and RBI frames restructured policies disregarding the Basel norms, the economy will slide into deep difficulties in the coming months and years. Are RBI and the Modi government listening?


(Concluded)

S Gurumurthy

The author is a well-known commentator on political and economic affairs

http://www.newindianexpress.com/opinion ... 53106.html


Correct. A good article. Enforcement action is just starting. There is political will so there is a reasonable chance of success. There are still big organizational issues in the tax administration and the corrupt are finding ways. But GST plus demo show will. I wouldn't underestimate chances of success.

Gus
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 06 Sep 2017 23:54

some more details. major aappu (wedge to hammer up youknowwhere..) is getting readied.

http://economictimes.indiatimes.com/new ... 395400.cms
Directors of shell companies which have not filed tax returns for three or more years will be barred from taking similar positions elsewhere or getting reappointed, the government said, as it intensified the crackdown on firms that exist only on paper.
..
Directors of the companies that were struck off the RoC could face up to 10 years in jail if they were found siphoning off funds, the government said on Wednesday. The government said it is compiling the profiles of the directors at such companies in collaboration with enforcement agencies and expects the move to cover 2-3 lakh people.

Professionals such as chartered accountants, company secretaries and cost accountants associated with shell companies and involved in illegal activities have also been identified, according to a statement.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Schmidt » 07 Sep 2017 17:24

R Jaggis take -
The only way so many people can be brought to book, assuming they evaded taxes, is to start another raid raj.

https://swarajyamag.com/economy/mountai ... ly-way-out

Gus
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Gus » 07 Sep 2017 20:34

numbers on PMGKY and the IDS before that.

http://economictimes.indiatimes.com/new ... 410466.cms
Black money worth Rs 4,900 crore was disclosed by 21,000 people under the Pradhan Mantri Garib Kalyan Yojna (PMGKY), the stash money declaration window announced by the government post demonetisation, an official said today.

The Income Tax Department, a top government official told PTI, has collected a tax of Rs 2,451 crore till now from these declarations.
..
Revenue Secretary Hasmukh Adhia, after the closure of the PMGKY window, had said that the response to the scheme has "not been so good."

Finance Minister Arun Jaitley had said that the PMGKY was preceded by similar schemes and hence the response to it by the public should not be seen in isolation.

"Keep in mind that PMGKY in that financial year was not an isolated scheme. You first had the IDS, then you had people depositing cash in banking system knowing it would incur a tax liability and PMGKY was over and above that.
..
The PMGKY was preceded by the Income Declaration Scheme (IDS), between June 1, 2016-September 30, 2016, where 71,726 declarations disclosing undisclosed income of Rs 67,382 crore were made by black money holders.

The government has collected over Rs 12,700 crore tax under the IDS till now.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby shaun » 07 Sep 2017 23:40

niran wrote:(i) during start of NDA1 NPA was 1.3% NDA1 brought it down to 0.3% by the end. then UPA2 brought it to 3.8% which rose to 6% in 2014. since then it is steadily climbing down despite 786% more loan amount disbursed by banks.This goes to show how useless UPA1 and 2 were.

(ii) NDA1 average growth was 6.9 to be precise and to be more precise both UPA1&2 was disgustingly measly 3.8%. if according to you 6plus is modest then under 4% is piss poor, no?
(iii) NDA2 inherited from UPA2 a growth rate of 2.8% which was pushed to dizzying height of 8+ percent quater 1 of 2017 is 6.7% still better than combined UPA reign, by quarter 4 it will again rise to 8 and beyond and no NDA2 will take care to not go above 10% for long, it is to prevent overheating, they will keep it between 8 and 10 percent.


Niran Saab ignore the troll , it will now question the methodology used for calculating GDP but will quote the same GDP figure at its convenience. Below, bit dated figures but got relevance


NDA VS UPA Facts
1.GDP growth: Average annual GDP growth in 1998-2004 (NDA) was 6% a year. Average annual GDP growth in 2004-2013 (UPA), up to June 30, 2013, was 7.9%.
Caveat 1: The Vajpayee-led NDA battled US-led economic sanctions following the Pokhran-II nuclear test in May 1998. It faced a short but expensive Kargil war in 1999 and the dotcom bust in 2000. When it took office, it had the lag effect of the East Asian financial crisis of 1997-98 to contend with.
Caveat 2: The UPA government, in contrast, benefited from the economic momentum of the high (8.1%) GDP growth rate of 2003-04 – the NDA government’s final year – and rode that wave. The global liquidity bubble in 2004-08 bouyed foreign inflows, helping UPA-I achieve a high GDP growth rate in its first term. The Lehman Brothers collapse in September 2008 did hurt the Indian economy but the ensuing US Federal Reserve asset buying programme attracted a steady flow of near-zero interest dollars into India from 2009. NDA left a growth rate of 8.6%. The UPA government’s average annual GDP growth rate of 7.9% in 2004-13 clearly scores over the NDA government’s average annual growth rate of 6% (though high inflation boosted the former significantly), however growth rate today is about 4%. First strike to UPA.
2. Current Account Deficit: 2004: (+) $7.36 billion (surplus). 2013: (-) $80 billion. The winner here is clearly NDA. It ran a current account surplus in 2002, 2003 and 2004. Under UPA this dipped into deficit from 2006 and has spun downwards since.
3. Trade deficit: 2004: (-) $13.16 billion. 2013: (-) $180 billion. Again, advantage NDA.
4. Fiscal deficit: 2004: 4.7% of GDP. 2013: 4.8% of GDP. Not much to choose between the two.
Caveat: This extract from the Asian Development Bank Institute (ADBI) report, published in 2010, explains why and when the UPA government’s fiscal deficit began to spiral out of control. “The central budget in 2008–2009, announced in February 2008, seemed to continue the progress towards FRBM targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008–2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission award and subsidies for food, fertilizer, and petroleum.” “These together pushed up the fiscal deficit sharply to higher levels. There were also off-budget items like the issue of oil and fertilizer bonds, which should be added to give a true picture of fiscal deficit in 2008–2009. The fiscal deficit shot up to 8.9% of GDP (10.7% including off-budget bonds) against 5.0% in 2007–2008 and the primary surplus turned into a deficit of 3.5% of GDP. “The huge increase in public expenditure in 2008–2009 of 31.2% that followed a 27.4% increase in 2007–2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget.” The recent announcement of the Seventh Pay Commission comes again, not unexpectedly, at the end of an electoral cycle.
5. Inflation: 1998-2004: 5%. 2004-2013: 9% (Both figures are averaged out over their respective tenures). Advantage again to NDA. Inflation under NDA was on average half that under UPA, leading to the RBI’s controversial tight money policy, high interest rates and rising EMIs.
6. External Debt: March 2004: $111.6 billion. March 2013: $390 billion. The UPA suffers badly in this comparision, a result of lack of confidence in India’s economy and currency following retrospective tax legislation and other regressive policies, especially during UPA-2.
7. Jobs: 1999-2004: 60 million new jobs created. 2004-11: 14.6 million jobs created. Clearly, the UPA’s big failure has been jobless growth – a bad electoral omen.
8. Rupee: 1998-2004: Variation: Rs. 39 to 49 per $. 2004-13: Variation: Rs. 39 to 68 per $.(Rupee rose from 40-plus to 39 between October 2007 and April 2008.) The NDA government’s economic and fiscal policies, despite the various crises of 1998-2000 pointed out earlier, evoked more global confidence, leading to a relatively stable rupee (Rs. 10 variation) compared to the Rs. 29 variation during UPA’s tenure.
9. HDI: 2004: India was ranked 123rd globally on the human development index (HDI) in 2004, with a score of 0.453. 2013: India has slipped 13 places to 136th globally on the HDI in 2013 with a score of 0.554.
10. Subsidies: 2004: Rs. 44,327 crore. 2013: Rs. 2,31,584 crore. Here again, profligate welfarism, as the ADBI report quoted earlier shows, has led to a rising subsidy bill. Worse, a significant amount is siphoned off by a corrupt nexus of politicians, officials and middlemen.
Conclusion: UPA scores above NDA on one of the 10 parameters (GDP growth), is level on one other parameter (fiscal deficit) while NDA does better than UPA on the remaining eight parameters.
The next time Finance Minister P. Chidambaram wishes to stage an encounter with facts, he would do well to be aware of those facts.
Sources: Planning Commission of India.


chetak
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Re: Currency Demonetisation and Future course of Indian Economy

Postby chetak » 09 Sep 2017 21:46



does anybody think that RR returning to India just at this opportune moment to hog TV face time on many channels, casting sly aspersions on the govt with Modi looming large in all discussions but carefully not mentioned by name, is a mere coincidence??

Him being the first RBI guv since independence not to have got an extension (and that too because of his big fat mouth).

he forgot that, first and foremost, he was a merely a paid employee of the GoI and his unprecedented and ungraceful public conduct and the entirely unwarranted criticism of the GoI's political persona was reprehensible.

He slyly tried to gloss over many wrongs and transgressions that he had committed as "consideration" of "risk factors" affecting the economy. His intellectual dishonesty in pushing his own political agenda and claiming that he did not know that his words would be misrepresented to attack the very person who allowed him to continue as RBI guv, when as a matter of convention, he should have been shown the door soonest on change of govt.

what has hit him hard is the fact that this govt has simply ignored him and not bothered to engage him in any discussion/debate on TV channels as he perhaps would have hoped that they would.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby suryag » 10 Sep 2017 00:48

Oh ohh wait he is a tam brahm and an iitian he can speak on anything and still get away, SS once said RR is not a macro economist but a glorified financial analyst with exposure to markets, his only leading claim to fame being prediction of the sub prime mortgage snafu. By that yardstick even a broken clock gets the time right twice a day

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dipanker » 10 Sep 2017 04:56

shaun wrote:
niran wrote:(i) during start of NDA1 NPA was 1.3% NDA1 brought it down to 0.3% by the end. then UPA2 brought it to 3.8% which rose to 6% in 2014. since then it is steadily climbing down despite 786% more loan amount disbursed by banks.This goes to show how useless UPA1 and 2 were.

(ii) NDA1 average growth was 6.9 to be precise and to be more precise both UPA1&2 was disgustingly measly 3.8%. if according to you 6plus is modest then under 4% is piss poor, no?
(iii) NDA2 inherited from UPA2 a growth rate of 2.8% which was pushed to dizzying height of 8+ percent quater 1 of 2017 is 6.7% still better than combined UPA reign, by quarter 4 it will again rise to 8 and beyond and no NDA2 will take care to not go above 10% for long, it is to prevent overheating, they will keep it between 8 and 10 percent.


Niran Saab ignore the troll , it will now question the methodology used for calculating GDP but will quote the same GDP figure at its convenience. Below, bit dated figures but got relevance


NDA VS UPA Facts
1.GDP growth: Average annual GDP growth in 1998-2004 (NDA) was 6% a year. Average annual GDP growth in 2004-2013 (UPA), up to June 30, 2013, was 7.9%.
Caveat 1: The Vajpayee-led NDA battled US-led economic sanctions following the Pokhran-II nuclear test in May 1998. It faced a short but expensive Kargil war in 1999 and the dotcom bust in 2000. When it took office, it had the lag effect of the East Asian financial crisis of 1997-98 to contend with.
Caveat 2: The UPA government, in contrast, benefited from the economic momentum of the high (8.1%) GDP growth rate of 2003-04 – the NDA government’s final year – and rode that wave. The global liquidity bubble in 2004-08 bouyed foreign inflows, helping UPA-I achieve a high GDP growth rate in its first term. The Lehman Brothers collapse in September 2008 did hurt the Indian economy but the ensuing US Federal Reserve asset buying programme attracted a steady flow of near-zero interest dollars into India from 2009. NDA left a growth rate of 8.6%. The UPA government’s average annual GDP growth rate of 7.9% in 2004-13 clearly scores over the NDA government’s average annual growth rate of 6% (though high inflation boosted the former significantly), however growth rate today is about 4%. First strike to UPA.
2. Current Account Deficit: 2004: (+) $7.36 billion (surplus). 2013: (-) $80 billion. The winner here is clearly NDA. It ran a current account surplus in 2002, 2003 and 2004. Under UPA this dipped into deficit from 2006 and has spun downwards since.
3. Trade deficit: 2004: (-) $13.16 billion. 2013: (-) $180 billion. Again, advantage NDA.
4. Fiscal deficit: 2004: 4.7% of GDP. 2013: 4.8% of GDP. Not much to choose between the two.
Caveat: This extract from the Asian Development Bank Institute (ADBI) report, published in 2010, explains why and when the UPA government’s fiscal deficit began to spiral out of control. “The central budget in 2008–2009, announced in February 2008, seemed to continue the progress towards FRBM targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008–2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission award and subsidies for food, fertilizer, and petroleum.” “These together pushed up the fiscal deficit sharply to higher levels. There were also off-budget items like the issue of oil and fertilizer bonds, which should be added to give a true picture of fiscal deficit in 2008–2009. The fiscal deficit shot up to 8.9% of GDP (10.7% including off-budget bonds) against 5.0% in 2007–2008 and the primary surplus turned into a deficit of 3.5% of GDP. “The huge increase in public expenditure in 2008–2009 of 31.2% that followed a 27.4% increase in 2007–2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget.” The recent announcement of the Seventh Pay Commission comes again, not unexpectedly, at the end of an electoral cycle.
5. Inflation: 1998-2004: 5%. 2004-2013: 9% (Both figures are averaged out over their respective tenures). Advantage again to NDA. Inflation under NDA was on average half that under UPA, leading to the RBI’s controversial tight money policy, high interest rates and rising EMIs.
6. External Debt: March 2004: $111.6 billion. March 2013: $390 billion. The UPA suffers badly in this comparision, a result of lack of confidence in India’s economy and currency following retrospective tax legislation and other regressive policies, especially during UPA-2.
7. Jobs: 1999-2004: 60 million new jobs created. 2004-11: 14.6 million jobs created. Clearly, the UPA’s big failure has been jobless growth – a bad electoral omen.
8. Rupee: 1998-2004: Variation: Rs. 39 to 49 per $. 2004-13: Variation: Rs. 39 to 68 per $.(Rupee rose from 40-plus to 39 between October 2007 and April 2008.) The NDA government’s economic and fiscal policies, despite the various crises of 1998-2000 pointed out earlier, evoked more global confidence, leading to a relatively stable rupee (Rs. 10 variation) compared to the Rs. 29 variation during UPA’s tenure.
9. HDI: 2004: India was ranked 123rd globally on the human development index (HDI) in 2004, with a score of 0.453. 2013: India has slipped 13 places to 136th globally on the HDI in 2013 with a score of 0.554.
10. Subsidies: 2004: Rs. 44,327 crore. 2013: Rs. 2,31,584 crore. Here again, profligate welfarism, as the ADBI report quoted earlier shows, has led to a rising subsidy bill. Worse, a significant amount is siphoned off by a corrupt nexus of politicians, officials and middlemen.
Conclusion: UPA scores above NDA on one of the 10 parameters (GDP growth), is level on one other parameter (fiscal deficit) while NDA does better than UPA on the remaining eight parameters.
The next time Finance Minister P. Chidambaram wishes to stage an encounter with facts, he would do well to be aware of those facts.
Sources: Planning Commission of India.


You post Minhaz Merchant "spin" as sourced from Planning commission of India, you don't even have guts to post the real source.

Now that is trolling of the highest order, guess that makes you a troll.

Next time you are copying and pasting somebody else "spin" have the courage to post a link too.

Karan M
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Karan M » 10 Sep 2017 06:59

Dipanker, if this was from Minhaz Merchant, it only adds to the credibility since it was published openly as a rejoinder to Chidambaram et al. And his link itself clearly states:

https://blogs.timesofindia.indiatimes.c ... -straight/
Sources: Economic Survey of India, UNDP, IMF, Planning Commission of India.

So where is the question of guts etc. You knew where the article was from and could have figured out easily the original article cited those very sources. Instead of making a case that the article was misinterpreting those sources, yet you accuse Shaun of lying (as versus being blase for not putting up a link). Clearly, the article itself mentions those sources. Try something else.

Manish_Sharma
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Manish_Sharma » 10 Sep 2017 07:56

Raghuram Rajan is a coward no. 1

In his interview to bdutt, when she asked "...but he is so popular, people have given him mandate..." This tam bram from gang of chrisiandambaram replied "....but so was Hitler..."

Imagine any RBI head alluding to Sonia being from country of fascist Mussolini.

But the moment Subbu Swami started attacking him. Jaitley and Modi came forward to protect him. rajan had no guts to take on Swami. He has some things in past to hide.

shaun
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Re: Currency Demonetisation and Future course of Indian Economy

Postby shaun » 10 Sep 2017 22:15

I sincerely apologise for not providing link as it is saved as word document in my system . I am more interested about the data provided , please if your guys can refute those points , i am all ears.

Marten
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Marten » 10 Sep 2017 22:43

Karan M wrote:Dipanker, if this was from Minhaz Merchant, it only adds to the credibility since it was published openly as a rejoinder to Chidambaram et al. And his link itself clearly states:

https://blogs.timesofindia.indiatimes.c ... -straight/
Sources: Economic Survey of India, UNDP, IMF, Planning Commission of India.

So where is the question of guts etc. You knew where the article was from and could have figured out easily the original article cited those very sources. Instead of making a case that the article was misinterpreting those sources, yet you accuse Shaun of lying (as versus being blase for not putting up a link). Clearly, the article itself mentions those sources. Try something else.

+1
The CPIM troll likes to call others names but will never share a link for whatever opinion or garbage he presents.

disha
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Re: Currency Demonetisation and Future course of Indian Economy

Postby disha » 11 Sep 2017 03:33

shaun wrote:I sincerely apologise for not providing link as it is saved as word document in my system . I am more interested about the data provided , please if your guys can refute those points , i am all ears.


No need to apologize., you responded with top-level facts and also cited the source material resource

Sources: Planning Commission of India.


If others want to refute your points by data., the can go to the above source and pull the data out and present it here. Till then calling you a troll is the worst form of trolling.


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