Currency Demonetisation and Future course of Indian Economy

yensoy · Post by **yensoy** » 12 Nov 2016 21:09

shiv wrote:A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore. Even if the money in black is a measly 5 crores they need to find 2000 people in that village and the local bank with 2 staff members to do the work. And if the MLA has 50 crores in black - well..

Sir you are off by factor of 10. Only 40 people @2.5L to make a crore, etc.

pankajs · Post by **pankajs** » 12 Nov 2016 21:11

S Sena want's the deadline for the withdrawn notes to be extended till 30 Dec.

suryag · Post by **suryag** » 12 Nov 2016 21:13

Cant the Army or CPMF fan out in different parts of the countries and dole out the cash to all the citizens in need.

What is needed
1. 1 X Army truck with 6-7 armed Jawans carrying cash
2. 1 X Army truck with generator and photocopying machine(for aadhar card copies) or a smart phone to take pictures of aadhar card
3. No need for any data connectivity

Workflow
1. Scan aadhar card
2. Scan ATM card or passbook of any bank to route money to the account if it is a deposit
3. RBI to receive cash or disburse cash at Army chavnis
4. RBI to grab images and machine reading software will route the money to the accounts and also keep track of people exchanging money

this temporary measure for 15 days will ease the situation considerably.

JayS · Post by **JayS** » 12 Nov 2016 21:14

Jet-lee says it will take 2-3 weeks to reconfigure all the ATM's.

SBI ex-Chairman said, in that NDTV program linked above that they could have done it overnight.

Not sure how possible, but filling 1000Rs slots with 2000 Notes and making a SW tweak on the central server to adjust the value being disbursed from 1000 to 2000, could be done?? Atleast SBI ATM's if they had reconfigured in the time when ATMs were closed, it might have been easier - assuming they could have done it.

Another thing is PM himself or maybe GOI officers immediately later could have appealed to people to go and exchange old notes only if they need it for immediate purpose. Else please wait for 3-4 days and let the absolutely needy ones to take first chance.

Also GOI could have warned people from depositing others money on their name explicitly. With some stern warning people would be less willing to help out goons/politicians/employers with BM.

yensoy · Post by **yensoy** » 12 Nov 2016 21:17

suryag wrote:Cant the Army or CPMF fan out in different parts of the countries and dole out the cash to all the citizens in need.

No, absolutely no, hell no.

The army is there to defend us from attack, and not to be a financial clerk. The logistics of what you are proposing are mind boggling, and make no sense at all given that the army is strategically located in places that need to be defended rather than being spread across the length and breadth of the country. Civil administration is far better equipped to handle it; in fact even the private sector can do a more efficient job (e.g. private companies handle refilling of ATMs).

Supratik · Post by **Supratik** » 12 Nov 2016 21:19

Yes, it is a possibility but only for politicians who can ask their cadre to take the risk. The next step should be for the IT and ED to take over.

Army has been called in emergency situations. Definitely possible if thins become difficult.

shiv · Post by **shiv** » 12 Nov 2016 21:24

yensoy wrote:
shiv wrote:A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore. Even if the money in black is a measly 5 crores they need to find 2000 people in that village and the local bank with 2 staff members to do the work. And if the MLA has 50 crores in black - well..
Sir you are off by factor of 10. Only 40 people @2.5L to make a crore, etc.

whoops

uddu · Post by **uddu** » 12 Nov 2016 21:25

No need of all that. They have to run atleast half of the ATM's full time. Now 99 percent of it is doing nothing all the time. Once half of these ATM's start to function, 70 percent of long queue's at the bank will disappear.
The refilling will be frequent when only notes of 100's are available. but surely can help reduce a lot of issues if half or all ATM's are run for atleast 5 days.

Paul · Post by **Paul** » 12 Nov 2016 21:28

What was the navy chief doing in the meeting?

yensoy · Post by **yensoy** » 12 Nov 2016 21:31

JayS wrote:Not sure how possible, but filling 1000Rs slots with 2000 Notes and making a SW tweak on the central server to adjust the value being disbursed from 1000 to 2000, could be done?? Atleast SBI ATM's if they had reconfigured in the time when ATMs were closed, it might have been easier - assuming they could have done it.

Individually each ATM reconfiguration should be at a minimum a 30 minute job (you still need to shut it down, tally the bills in it, open the innards, attach the secure reprogramming device, enter a bunch of passwords, run the reconfiguring script, close it, let it reboot, wait for the screen, validate the changes, load it with new money, run some tests and sign off the paperwork). At least that's my guess.

But the bigger issue is that each ATM will have to be visited in turn, with the engineer doing the reprogramming, and in presence of the bank manager, and treasury guy (who signs off on the money), and of course with security team in place. I think there may be only a few teams in each state, so it is a matter of physically reaching some of the remote ATMs which is limiting the speed.

Some references:
http://www.thehindubusinessline.com/mon ... 330291.ece
http://www.thehindu.com/news/national/h ... 333560.ece

vijayk · Post by **vijayk** » 12 Nov 2016 21:50

shiv wrote:
vijayk wrote:I heard that MLAs are distributing their money of 2.5 lakhs to every one in their villages because they can't spend it anymore.
If the villagers have to use that money they have to put it in a bank. If they put it in a bank they must first have a PAN number an other identity documents.

At the end of the year IT is going to as all the men who have 2.5 lakh plus other income to file a return and they will have to show where that income came from suddenly in Nov-Dec 2016. They can then name their MLA or simply allow themselves to be punished instead of him

A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore. Even if the money in black is a measly 5 crores they need to find 2000 people in that village and the local bank with 2 staff members to do the work. And if the MLA has 50 crores in black - well..

Sounds like a lot of fun for everyone

2.5 lakhs ... no questions asked ...
0 tax...

sanjayc · Post by **sanjayc** » 12 Nov 2016 21:54

A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore.

40 people, not 400

LokeshC · Post by **LokeshC** » 12 Nov 2016 21:55

Would there be any demand for data mining and AI engineers/ contractors? I might just have to do an r2i

sanjayc · Post by **sanjayc** » 12 Nov 2016 21:56

sanjayc wrote:
A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore.
40 people, not 400. Modi has announced that Rs 2.5 lakhs deposited in accounts of non-earning housewives will invite no questions as to the source. This much limit is tax exempt anyway

shiv · Post by **shiv** » 12 Nov 2016 22:06

sanjayc wrote:
A crore is a lot of money. 400 people need to get 2.5 lakhs to make a crore.
40 people, not 400

Yes - someone else also pointed out my stellar mathematical ability..

Deans · Post by **Deans** » 12 Nov 2016 22:07

yensoy wrote:
suryag wrote:Cant the Army or CPMF fan out in different parts of the countries and dole out the cash to all the citizens in need.
No, absolutely no, hell no.

The army is there to defend us from attack, and not to be a financial clerk. The logistics of what you are proposing are mind boggling, and make no sense at all given that the army is strategically located in places that need to be defended rather than being spread across the length and breadth of the country. Civil administration is far better equipped to handle it; in fact even the private sector can do a more efficient job (e.g. private companies handle refilling of ATMs).

The BJP/RSS cadre can handle this, backed up by a couple of armed paramilitary cops to guard the cash in each vehicle.
The bank processes can be handled better. There are 2 distinct operations:
1.1 Deposits ( existing account holders)
1.2 Deposits (new account holders)

2.1 Exchange
2.2 Withdrawal (ATM's).

New account opening, can be handled by an additional counter opened outside the bank with 1 bank employee backed up by a couple of the more educated cadre (ABVP), who can also help with currency exchange.
Exchange can similarly be done over a desk, for a fixed Rs 4000 amount (pre-counted). You need a guard (police / paramilitary) to guard the cash,
1 person to check docs (laptop linked to a central server) and one for data entry and cash handling.
Most of the bank staff then focus on deposits - checking docs, questioning proxies etc.

Central PSU's / Armed forces establishments /large listed companies etc, could all have been roped in for currency exchange
as well as deposits (equal to 1 month's salary).

Philip · Post by **Philip** » 12 Nov 2016 22:10

Chao ab order.A nightmare to be experienced.The amt of paperwork for getting jus 4K exchanged is pure babu delight! They will now demand another 10 lakh clerks to be employed to check the forms! Babudom rules ok!

Perfect time for the Pakis to strike while the army sends its special forces,"cash commandos" to help facilitate the exchange!

M_Joshi · Post by **M_Joshi** » 12 Nov 2016 22:24

pankajs wrote:
nachiket wrote:I haven't really understood this phenomenon of gold prices shooting up and people converting their BM to gold. Good for them if they do that. But what will the jewellery shops do? Aren't they left holding the bag (literally) of worthless notes? Depositing that money in the bank is a huge risk. But they have to, otherwise they would have given away their gold for free. What exactly is their gameplan?
They think they can manage it via some back dated book entry. Possible for small amounts. Taking risk for earning some mota maal. Some people will always try to game the system. To be expected on a small scale.

According to local chaiwalla, a local jeweller raked in Rs. 8 cr. in 2 days out of which Rs. 4 cr. is margin (selling as high as 61k/10mg). After paying 1-1.5 cr. taxes, adjusting the stock & cooking books 2.5-3 cr profit margin is not a bad deal, unless they're not raided by IT Dept.. Jewellers were the biggest beneficiary of this drive against BM (Of the lot who will not be raided due to sheer volume). Only problem is that all the sales of 8 cr have invoices less than 1.5 lakhs to avoid PAN card details.

hanumadu · Post by **hanumadu** » 12 Nov 2016 22:30

The rural folks may be better off in all this than city folks. There are less banks and ATMs but the population density is also low, so I am expecting smaller queues. Further more, their daily purchases are also small if there are any purchases at all. And since everybody knows everybody, the businesses will be willing to open a khata book for them. People travelling might face some problems though.

JohnTitor · Post by **JohnTitor** » 12 Nov 2016 22:53

The one thing I am quite annoyed about is the fact that the govt hasn't done anything to help NRIs. I have 8k rupees with me and I don't know what to do (yes I know you can go to india and exchange it, give it to someone who is going to india). But all of these are not possible for me as I am not going to India in the next few months and I don't know anyone who is.

It isn't a huge amount but 8k isn't a small sum either. I wish they provided some assistance at the embassy considering the rupee isn't freely convertible making it impossible to exchange at a bureau de change.

vera_k · Post by **vera_k** » 12 Nov 2016 22:56

RBI should put cash for sale on Flipkart and Amazon or sell directly on the internet. People can order using credit cards and settle up the CC bill later by depositing old notes in banks.

prahaar · Post by **prahaar** » 12 Nov 2016 22:58

I heard about adding IT monitoring patch servers to bank branches. Why was this not done in the past?

Rahul M · Post by **Rahul M** » 12 Nov 2016 23:01

JohnTitor wrote:The one thing I am quite annoyed about is the fact that the govt hasn't done anything to help NRIs. I have 8k rupees with me and I don't know what to do (yes I know you can go to india and exchange it, give it to someone who is going to india). But all of these are not possible for me as I am not going to India in the next few months and I don't know anyone who is.

It isn't a huge amount but 8k isn't a small sum either. I wish they provided some assistance at the embassy considering the rupee isn't freely convertible making it impossible to exchange at a bureau de change.

some banks will accept old notes beyond 31Dec. worry not.

JohnTitor · Post by **JohnTitor** » 12 Nov 2016 23:10

vera_k wrote:RBI should put cash for sale on Flipkart and Amazon or sell directly on the internet. People can order using credit cards and settle up the CC bill later by depositing old notes in banks.

Thanks for the sarcasm.. very useful.

But in all seriousness, embassies can be used to help. After all, the rupee belongs to the govt, not banks.

Rahul M wrote:some banks will accept old notes beyond 31Dec. worry not.

I thought after Dec31, it was only at the RBI you could do so. Do you know if this is possible at retail banks (in Blr)?

disha · Post by **disha** » 12 Nov 2016 23:25

M_Joshi wrote: According to local chaiwalla, a local jeweller raked in Rs. 8 cr. in 2 days out of which Rs. 4 cr. is margin (selling as high as 61k/10mg). After paying 1-1.5 cr. taxes, adjusting the stock & cooking books 2.5-3 cr profit margin is not a bad deal, unless they're not raided by IT Dept.. Jewellers were the biggest beneficiary of this drive against BM (Of the lot who will not be raided due to sheer volume). Only problem is that all the sales of 8 cr have invoices less than 1.5 lakhs to avoid PAN card details.

I think it is totally okay if the jeweler is going to pay taxes! Put it this way., the jeweler has 250 gm of gold in "white" and 750 gm of gold in "black". And Rs. 30 lakhs cash in "black".

Assume that the price of gold is Rs. 30k per 10 gm - in white. So the price of the total stash the jeweler above has Rs. 30 lakhs.

Now the jeweler sells all his stash for 60k per 10 gm and books in 60 lakhs of revenue - with duly noted pan card and even receipt! The jeweler will go to bank and deposit 90 lakhs (60 lakhs of revenue+30 lakhs of his own black money) and will pay taxes on his profit. Assuming his profit is 70 lakhs., the jeweler will pay 35 lakhs and go home. IT will duly note that lot of people purchased gold and rules of demand/supply happened one time.

In effect, the jeweler converted his/her BM stash of 30 lakhs + 750 gm of gold into white money (say 55 lakhs) and paid 35 lakhs of money. GOI is happy., since 55 lakhs of black money got uncovered and 35 lakhs came in tax.

The purchasers., ended up paying 50% "tax" - normally they would have paid half with their white money. Also IT can come and follow up on the jeweler's PAN card details if need be. Or the jeweler is under scanner in other ways, assuming that there are no invoices - and the money is back in circulation.

Assuming there are 100 jewelers in city., and each made an average sale of 1 cr. - 100 cr were raised through jewelers. For 30 such cities - 3000 cr will be raised nationwide. In effect., the GOI has mopped up the "lower middle and the middle class" of the Black money hoarders. Babooze and netas who are in the upper middle class and upper class range are the ones without any recourse.

madhu · Post by **madhu** » 12 Nov 2016 23:28

shyamal wrote:JDY news - Jan Dhan accounts with sudden influx to be looked at
http://economictimes.indiatimes.com/new ... 390173.cms

I am afraid if Modi has not thought properly this will doom not only NM but also BJP.

At my area JDY account BM holder that I know has invested 49,000 each day for last three days. This is not just one he has is using many such account. Problem I see is JDY has a limit seal of 50000 ... so now I don't know how BM guy can take it out with out pan card.

In one case an old pension person who draws 400 rs account Is credited with over 2 lack. Now if he gets pan card then pension stops.

This will benefit BM holder and push poor people even down. There by he looses votes of both poor, traders gov employee... interesting time.

I do not know I feel NM has taken too huge risk.

g.sarkar · Post by **g.sarkar** » 12 Nov 2016 23:31

http://www.business-standard.com/articl ... 929_1.html
Post offices in Maharashtra, Goa amass scrapped notes worth Rs 435 cr
Maharashtra and Goa have a vast mail network with 61 head offices, 2,154 sub-post offices and 10,644 village stations
November 12, 2016
Post offices across Maharashtra and Goa have collected as well as exchanged the demonetised currency notes worth around Rs 435 crore within two days, a senior official said on Saturday.
After Prime Minister Narendra Modi announced demonetisation of Rs 500 and Rs 1,000 notes, people have been thronging not only banks, but also post offices, to exchange the scrapped currency notes.
"On 10 November, our post offices collected savings deposits and exchanged demonetised notes worth around Rs 205 crore. On Friday, the day's collections went up to Rs 230 crore," Chief Post Master General of Maharashtra and Goa circle H C Agrawal told PTI.
........

Gautam

Gus · Post by **Gus** » 12 Nov 2016 23:39

disha wrote: In effect., the GOI has mopped up the "lower middle and the middle class" of the Black money hoarders. Babooze and netas who are in the upper middle class and upper class range are the ones without any recourse.

I think the small fish will salvage some but the big fish will take huge hits. Think JJ, MK etc with their many 10Kcrs...there is just no option but to stop applying pesticide and let termites do their thing at the godowns where it is hoarded.

shiv · Post by **shiv** » 12 Nov 2016 23:41

madhu wrote:
I am afraid if Modi has not thought properly this will doom not only NM but also BJP.

At my area JDY account BM holder that I know has invested 49,000 each day for last three days. This is not just one he has is using many such account. Problem I see is JDY has a limit seal of 50000 ... so now I don't know how BM guy can take it out with out pan card.

In one case an old pension person who draws 400 rs account Is credited with over 2 lack. Now if he gets pan card then pension stops.

This will benefit BM holder and push poor people even down. There by he looses votes of both poor, traders gov employee... interesting time.

I do not know I feel NM has taken too huge risk.

Sorry. Did not understand

madhu · Post by **madhu** » 12 Nov 2016 23:41

THIS CHARTERED ACCOUNTANT SENT A MIND BLOWING OPEN

Gus · Post by **Gus** » 12 Nov 2016 23:42

JohnTitor wrote:The one thing I am quite annoyed about is the fact that the govt hasn't done anything to help NRIs...

this is only the first few days and govt can still announce mechanisms to sort out NRI petty cash that's under allowable limits,

even after dec 31, RBI offices will still accept cash after declaration.

disha · Post by **disha** » 12 Nov 2016 23:44

hanumadu wrote:The rural folks may be better off in all this than city folks. There are less banks and ATMs but the population density is also low, so I am expecting smaller queues. Further more, their daily purchases are also small if there are any purchases at all. And since everybody knows everybody, the businesses will be willing to open a khata book for them. People travelling might face some problems though.

My uncle is happy - very happy., he paid off his entire electricity bill for the next year in advance. He also purchases his kirana in summer/winter (oil, daals, rice, wheat and any food item that can be stored for 6 months) - he paid it off for next season in advance (the kirana guy is also happy for receiving in advance. He has already book'ed his revenue for the next few months and can show it as such - including his own BM). The remaining he went and deposited in his account., just showed his PAN card and paid whatever taxes were required. Which according to him was not much! In a town., it was all in half a day's work.

Note the amounts are so minuscule., that they barely register even as a fraction on the record books. The total BM collection from all this? I doubt it will even cross 5 Crores from that town entirely.

disha · Post by **disha** » 12 Nov 2016 23:48

rahulm wrote: In Goa , teachers are telling me, they withdraw their entire salary from the bank once a month every month and keep the cash at home. They are the torch bearers- it goes down hill from there.

My QHS also used to do the same. Highly qualified engineer and all that.

Holding cash in hand is comforting to the human mind.

madhu · Post by **madhu** » 12 Nov 2016 23:49

Shiv, people are misusing illiterate people. People who are poor and getting pension under different government scheme for poverty there account are used for converting BM to W .
As per requirement these accounts should not have PAN . But if this account had more than 50k he had to give PAN in that case he will not get pension as he is above poverty line.

Paul · Post by **Paul** » 12 Nov 2016 23:55

Reaction of Indian people to Demonetization is similar to the time when Indira Gandhi nationalized the Banks in the 70s.

Prem · Post by **Prem** » 13 Nov 2016 00:24

hanumadu · Post by **hanumadu** » 13 Nov 2016 00:33

So far govt is expected to get 70k as taxes from amnesty schemes and black money detected. If another 3 lakh goes into govt kitty, that total 3.70 lakh crore which amounts to about 3000 Re per person.

nirav · Post by **nirav** » 13 Nov 2016 01:25

Once this cash exchange thing is complete, I hope the goberment cracks its whip on the CA community.

It's impossible to generate such high amounts of black money in the economy without the knowledge of chartered accountants of the guys dealing in 100/1000s of crores of black money.

Even small business, these CAs are the biggest enablers for "saving tax" tax evasion actually.. it's time we make an overhaul of the auditing and accounting system.

It's surprising that there's hardly any mention or discussion of the role of CAs wrt black money in the economy.

Rishi Verma · Post by **Rishi Verma** » 13 Nov 2016 01:31

madhu wrote:
At my area JDY account BM holder that I know has invested 49,000 each day for last three days. This is not just one he has is using many such account. Problem I see is JDY has a limit seal of 50000 ... so now I don't know how BM guy can take it out with out pan card.

In one case an old pension person who draws 400 rs account Is credited with over 2 lack. Now if he gets pan card then pension stops.

I ask this often, no one has an answer. If you know the person broke the law, why don't you report it?

Almost like saying, my uncle raped a girl, she feels terrible...what the hell, don't post on BRF, report the criminals and serve the country!!

JayS · Post by **JayS** » 13 Nov 2016 01:34

madhu wrote:THIS CHARTERED ACCOUNTANT SENT A MIND BLOWING OPEN

The "Peak Theory" this guy gave to explain why no 1000 note was issued just as yet, how can anyone show he recycled the same money when everytime he goes to save old notes, he will be flagged. Isn't it so?? My understanding is even if you deposit in own account the old notes, it will be recorded by the banks and not just note exchange directly.