Currency Demonetisation and Future course of Indian Economy

RajeshG · Post by **RajeshG** » 21 Nov 2016 14:51

http://timesofindia.indiatimes.com/city ... 533182.cms

AHMEDABAD: In the last eight days, some of the busiest, congested and bustling informal markets of Ahmedabad have off-and-on closed for an hour or two owing to rumours of commercial and income-tax raids. This comes at a time of demonetization, when small businesses are trying to thrive and do some business during the marriage season-which is largely a business in cash.

Rumours of tax raids can be felt at the Maskati market, Kalupur market, Madhupura, grain market, Kabutarkhana retail market for edible oil, Sindhi Kapad market, Gandhi road electric market, Relief Road electronics market, Kalupur cutlery market, Geetamandir timber market, Mirzapur automobile, Khadia's paper and sanitaryware bazaar and utensils bazaar of Manekchowk.

RajeshG · Post by **RajeshG** » 21 Nov 2016 14:56

http://www.business-standard.com/articl ... 752_1.html

Hobbling with a paucity of staff, the income tax (I-T) department might find it difficult to assess more than 600,000-700,000 cases a year, though the government has suggested that people depositing a minimum of Rs 2.5 lakh cash in their bank accounts during the ongoing demonetisation drive will come under scrutiny.

According to the sanctioned strength of the I-T department, there are 7,294 assessment officers up to the additional commissioner level, which includes 4,204 I-T officers. The additional commissioners and joint commissioners handle about 30-40 quality cases a year, while the I-T officers assess about 100-150 cases a year, but smaller ones.

RajeshG · Post by **RajeshG** » 21 Nov 2016 15:11

RajeshG wrote:I see a ticker tape on TV that says farmers can now use old currency to buy seeds. I think the other major piece is the markets where produce is sold. Those markets are still shutdown.

http://www.business-standard.com/articl ... 378_1.html

Here is the full statement issued by the finance ministry on Monday:

"To further support farmers for the current Rabi crop, the Government has decided to allow farmers to purchase seeds with the old high denomination bank notes of Rs.500 from the Centres,
Units or Outlets belonging to the Central or State Governments, PSUs, National or State Seeds Corporations, Central or State Agricultural Universities and the ICAR, on production of proof of identity.

Interesting that the stmt doesnt mention 1000 notes but only 500.

RajeshG · Post by **RajeshG** » 21 Nov 2016 15:45

http://www.businesstoday.in/current/eco ... 40658.html

Like millions of Indians fed up with corruption and counterfeiting, Vimal Somani cheered Prime Minister Narendra Modi's shock move to replace all high-value banknotes. Two weeks on, his business is being hammered by the ensuing cash crunch.

Sales at Somani's aluminium foil maker, Rockdude Impex, have fallen by roughly a quarter in the past week, and the cash shortage that followed the "demonetisation" drive has left his supply chain in tatters: his trucks are stranded with no money for fuel, workers won't load goods for free, and distributors can't pay up.

vijayk · Post by **vijayk** » 21 Nov 2016 15:45

KejrI is spreading rumour that bank robber who git caught and committed suicide as demonetisation victim

http://www.opindia.com/2016/11/rumour-m ... ank-death/

vina · Post by **vina** » 21 Nov 2016 15:47

RajeshG wrote: his trucks are stranded with no money for fuel, workers won't load goods for free, and distributors can't pay up.

I just did Chennai-BLR and back by road. There is NO stranded truck anywhere on this major arterial road. The rest stops and food outlets were packed as usual. I dont hear of that in the routes south, north and west of Bangalore as well. Nor of Chennai or Mumbai . I wonder what these guys are reporting when talking about stranded trucks because of lack of fuel . Why, the truckers can buy fuel as of TODAY with the old cash they have. No problems.

Rishi Verma · Post by **Rishi Verma** » 21 Nov 2016 15:57

vijayk wrote:KejrI is spreading rumour that bank robber who git caught and committed suicide as demonetisation victim

http://www.opindia.com/2016/11/rumour-m ... ank-death/

kejri spread then deleted another suicide rumor which turned out to be incorrect

Paul · Post by **Paul** » 21 Nov 2016 16:06

Sector by sector, textile and retail are hit hard by demonetization. Expect them to rise up in revolt. If other help them, then there will be hell to pay...

Gus · Post by **Gus** » 21 Nov 2016 16:08

Heh..I was on same road halfway ..and back. No stranded trucks or anything.

vinod · Post by **vinod** » 21 Nov 2016 16:16

Paul wrote:Sector by sector, textile and retail are hit hard by demonetization. Expect them to rise up in revolt. If other help them, then there will be hell to pay...

There is a concerted effort towards getting some kind of revolt up and running, so that the demonetisation can be rolled back.. basically anything that can be done to rollback. So, testing times for Modi ahead, especially as we inch closer towards Dec 31 deadline.

I think the worst of the cash crisis is over.. but the sales will be on the lower end which can make many traders nervous.

Bart S · Post by **Bart S** » 21 Nov 2016 17:22

Pratyush wrote:
Bart S wrote:
That's why with UPI you don't need to share bank account details to receive money though it goes straight into the bank account.
Personal request., Can any one point me to the process flow for upi activation in any bank account. I have attempted to activate for hdfc bank app. But have not been able to get it activated.

Sirjee, it's very simple.

Check if your bank has a UPI enabled app. A simple search for your app in the app store for your phone should tell you. ICICI and several others have them out, SBI is one that does not have at the moment. However with SBI you should still be able to use IMPS on which UPI is based. If your bank does not have a UPI app, you can still use a third party app like Phone Pe (Flipkart) or Pockets (ICICI, but a wallet app like Paytm) for UPI.

Install app

Follow the authentication process for your account in your app, and link your account(s) to the app. This would involve validating your mobile number and setting up an MPIN (password)

Create a unique identifier for yourself (should be part of the app initial configuration process). For e.g if your name is Pratyush and you bank with icici, you could have pratyusha@icici (if it is available). That is what you can give out to others so they can transfer money to you. Alternately, you can also raise a payment request to their UPI ID so it becomes as simple as approving the payment request, for them. And vice-versa.

That is it, it is that simple.

Yagnasri · Post by **Yagnasri** » 21 Nov 2016 17:22

http://www.business-standard.com/articl ... 378_1.html

Not exactly a role back but facility purchase from GOI, PSU and State government counters.

http://www.business-standard.com/articl ... 380_1.html

Increased limit from OD accounts.

Neela · Post by **Neela** » 21 Nov 2016 17:46

I wonder if peotrol stations can become another weak point here for those wishing to convert their stash to white.
Any possible ideas the crooked might use?

Yagnasri · Post by **Yagnasri** » 21 Nov 2016 17:55

Not so easy for petrol bunks. They have to sell that much. It is possible that they may show 100s given as 500/1000 and get away for some amount. But no one is giving that money and I also used the card for that.

RajeshG · Post by **RajeshG** » 21 Nov 2016 17:56

http://www.business-standard.com/articl ... 705_1.html

Exporters demanded an increase in the withdrawal limit from Rs 50,000 a week to up to Rs 5 lakh, she said.

Certain sectors informed that because of this cash limit "some of them have preferred closing of the units for a week and some of them reducing the capacities of production from 100 or 70% to about 35 or 40%".

panduranghari · Post by **panduranghari** » 21 Nov 2016 18:58

A tangential thought-

Demonetisation had another target too- Making rupee reasonably strong to make the joining of SDR a eventual certainty. I dont claim its happening in a year or two, but I think this is a long term game plan.

Sachin · Post by **Sachin** » 21 Nov 2016 20:11

Co-op issue: all-party delegation to meet PM, FM......
The Chief Minister said the co-operative sector was not for made launching any "war" with the Income Tax department and that the latter should stick to inspections...
Pinarayi alleged that BJP had reservations on the matter and wanted to know why the co-operative sector could not function as per RBI norms.......
....
The co-operative sector, besides extending credit, is also providing various other services like opening medical and consumer stores as part as part of its social commitment, he said.......
---
Looks like Co.Op banks in Kerala are just name sake "banks". Don't know if this delegation would be able to convince any one in RBI or the GoI.

Shankas · Post by **Shankas** » 21 Nov 2016 20:25

vina wrote:
RajeshG wrote: his trucks are stranded with no money for fuel, workers won't load goods for free, and distributors can't pay up.
I just did Chennai-BLR and back by road. There is NO stranded truck anywhere on this major arterial road. The rest stops and food outlets were packed as usual. I dont hear of that in the routes south, north and west of Bangalore as well. Nor of Chennai or Mumbai . I wonder what these guys are reporting when talking about stranded trucks because of lack of fuel . Why, the truckers can buy fuel as of TODAY with the old cash they have. No problems.

I know this guy and his modus operandi intricately. People like him are hurt and can't get their trucks to do a burnol run.

Marten · Post by **Marten** » 21 Nov 2016 20:26

Yagnasri wrote:Not so easy for petrol bunks. They have to sell that much. It is possible that they may show 100s given as 500/1000 and get away for some amount. But no one is giving that money and I also used the card for that.

The entire amount that is adulterated becomes their BM income. This is the amount that needs to be adjusted.
I'd imagine about 10-20% of all the fuel consumed as adulterated. i.e. every bunk does it, to a different level. This money used to be saved in large notes which must have already been switched over to smaller notes - it is easily amongst the largest outlets for laundering operations.

Shankas saar, please explain the MO so we understand it as well.

IndraD · Post by **IndraD** » 21 Nov 2016 20:38

Madras HC has accepted a PIL to declare 2000 note invalid :
Is it possible for courts to interfere on these issues ?

pankajs · Post by **pankajs** » 21 Nov 2016 20:48

When the SC refused to quash the PIL it was open house from then on.

They can try bringing back the old 500 and 1000 notes citing public hardship but they can't declare the Rs 2000 note invalid. How will it solve the currency shortage? They are not the monetary authority.

Added Later: The petition cites technical arguments. On that I am not sure.

Karthik S · Post by **Karthik S** » 21 Nov 2016 20:53

Although 5.4 lakh have been exchanged or deposited, that's still less than 40% for total value of Rs 500 and 1000 notes. I thought the deposit-exchange rate will be like a bell curve. Will be interesting to know by Dec 30 how much money has come to the banks.

kmkraoind · Post by **kmkraoind** » 21 Nov 2016 21:01

http://swarajyamag.com/politics/demonetisations-political-dividend-the-modi-calculus-and-how-it-connects-to-2019

I think Jaggi have a point here. With the present setup, he cant achieve much, so he might have resorted to this. Probably, he hatched this plan after seeing every Parliament session is washed out (especially RS). One has to admit Modi for guesstimating the problem and finding an unique solution, that can fetch rich dividends.

He would have had no need to reinvent himself again before 2019 except that the sluggishness of the economy was too structural to be cured by the midpoint in his tenure (which is this month, by the way). What the UPA had left behind was a poisoned chalice and a scorched earth, and Modi had no intention of letting this drag him down. With bank performance going from bad to worse, Indian Inc reeling from overleverage, and the Rajya Sabha preventing him from modifying growth-sapping laws like the Land Acquisition Act, Modi realised that there was going to be no easy way to create growth and jobs before 2018-19.

pankajs · Post by **pankajs** » 21 Nov 2016 21:40

If I were Modi, I would wait for the currency swap date to pass (31 Dec 2016). I would then setup a prisoner's dilemma game between the parties involved in laundering BM via JDY accounts or any account for that matter and watch the fun.

1. Announce that who ever comes forward as having helped launder money via their account will be allowed to keep 100% of the amount and escape penalty/jail if they give the BM hoarders name. This is applicable to the first one only.
2. If a bunch of folks came forward as a group all of them would be allowed to keep 50% of their respective amount.
3. The rest will loose 100% of such transfers plus prosecution if caught without disclosure.
4. The name of the person making the disclosure will be kept secret even while announcement to the tune of money made by folks helping catch BM hoarders will be made public daily to encourage more folks.

kmkraoind · Post by **kmkraoind** » 21 Nov 2016 21:49

Eternal Hitler war room speech now on Demonetisation.

chetak · Post by **chetak** » 21 Nov 2016 21:53

Bart S · Post by **Bart S** » 21 Nov 2016 22:31

chetak wrote:

Great to see that the exchange component is relatively small.

UlanBatori · Post by **UlanBatori** » 21 Nov 2016 22:35

Who is Ashish Agarwal of Nagpur?Photos circulating of huge stacks of currency notes seized at his home and office: 13,000 CRORE, considered the biggest BM haul ever in India.

Sonia and Jayalalithaa must be getting old, allowing this guy to surpass them?

Bart S · Post by **Bart S** » 21 Nov 2016 22:38

UlanBatori wrote:Who is Ashish Agarwal of Nagpur?Photos circulating of huge stacks of currency notes seized at his home and office: 13,000 CRORE, considered the biggest BM haul ever in India.

Sonia and Jayalalithaa must be getting old, allowing this guy to surpass them?

If there is a genuine haul that big, it will be all over the MSM. Ignore stuff you get on whatsapp or youtube videos.

disha · Post by **disha** » 21 Nov 2016 22:44

UlanBatori wrote:Who is Ashish Agarwal of Nagpur?Photos circulating of huge stacks of currency notes seized at his home and office: 13,000 CRORE, considered the biggest BM haul ever in India.

Sonia and Jayalalithaa must be getting old, allowing this guy to surpass them?

Or they are Back office BM aggregators and launderers. Several dime a dozen such persons will be found in dark alleys of all major cities. Their job is to launder money. They keep perfect accounts., all one has to do is raid them

Marten · Post by **Marten** » 21 Nov 2016 22:56

That was a haul worth reported at 10 cr + jewellery, at RK Marbles.
See here: Tax raids at RK Marbles premises in 4 states
Whoever Ashish Agarwal is, he's getting a bunch of free publicity. Must be angling to marry Motabhai's daughter.

LokeshC · Post by **LokeshC** » 21 Nov 2016 23:04

13k Crore = 260000000 x 500 notes. Lets say each note is 0.2 mm thick. that would be 52000 meters long stack. 52 km of stacked 500 notes. Add about 10km on top of it for the additional packaging materials etc.

You would need an enormous space to store that much money.

kmkraoind · Post by **kmkraoind** » 21 Nov 2016 23:10

Adding to what Disha had said. Only biggies like Dynasty have their own couriers to move their money in/out easily. Others have to depend upon somebody who has cross party links and can move easily move monies in/out. Probably Hasan Ali or that Agarawal chap may be off that group.

At best Hasan Ali type dealers would be a handful. Their existence is known to all. If you want to knock off one set of leaders-bizmen, just hit a person and you can neutralize a lot.

Hasan Ali was exposed by Soniga gang just to tame Andhra leaders including Jagan, and to some extent NCP. Probably this Agarawal chap was one such expose or just starting move Modi's Parashurama Yatra, only time can tell. I wish its a bait, then expect a big commotion in biz-political circle, and agencies must be hearing earful of chatter.

disha · Post by **disha** » 21 Nov 2016 23:10

IndraD wrote:Madras HC has accepted a PIL to declare 2000 note invalid :
Is it possible for courts to interfere on these issues ?

No it is not possible. But sometimes court wants to accept such frivolous PIL since they can reject others if they need to and the stats can be shown either way that the court "listens" to PIL.

This is window dressing by court., to accept the PIL for hearing and not hear anything. What happened to SC's hearing? Basically., SC just said "please do not make lives of poor difficult"., that is a nice window dressing on an issue where SC can at most suck thumb.

ShauryaT · Post by **ShauryaT** » 21 Nov 2016 23:23

Demonetisation–curbing black money or welfare shock? A CONVERSATION BETWEEN SENIOR FELLOW DR RAJIV KUMAR AND RICHA BANSAL

Bart S · Post by **Bart S** » 21 Nov 2016 23:31

This is a useful site to locate working ATMs:
https://cashnocash.com/

rsingh · Post by **rsingh** » 21 Nov 2016 23:57

Do not understand. We have taken out big chunk of 500 and 1000 notes that were in circulation. These denominations were favourite of BM money exchangers in India. How come $ and £ are not loosing value? Simple demand and supply.........there is not much cash but still $ is rising. Am I missing something?

g.sarkar · Post by **g.sarkar** » 22 Nov 2016 00:17

http://www.ndtv.com/india-news/why-no-b ... ee-1628332
Why No Bengal Tiger On New 2,000 Rupee Note, Asks Mamata Banerjee
All India | Written by Monideepa Banerjie | Updated: November 21, 2016 22:16 IST
KOLKATA: The new 2000 rupee note does not have the picture of the Royal Bengal Tiger on it and Mamata Banerjee believes it is missing not by accident but by design.
"Everyone knows about Sunderbans and the Royal Bengal Tiger. In the 2000 rupee note, the Royal Bengal Tiger is not there. The elephant is there. National heritage, they say. But the national animal is not there," the West Bengal Chief Minister said in Kolkata today.
....

She is desperate. Actually Bengal tigers are found all over the sub-continent not just Sunderbans. West Bengal has no exclusive claim on them.
Gautam

saip · Post by **saip** » 22 Nov 2016 00:53

About Jayalalitha, does she know she has no more black money? When she comes out won't that be a shock that would send her back into la la world? Then again are they just pretending that all is OK with her, just like they did way back with Salazar?

Marten · Post by **Marten** » 22 Nov 2016 00:54

The latest rumor is about all properties going the way of 1000. Basically, they will re-register every property all over again with the help of new KYC documents. If not submitted within the year, the property will be treated as benami and acquired by the Govt (this provision is being introduced). This will really set the cat amongst the pigeons. The sheer number of properties owned via benami trusts etc is huge. Having folks to re-register their properties will also entail explaining how they got the money to purchase the properties. Basically, cleaning up the RE sector after wiping out their war chests. Expect the whines to get shriller!