Currency Demonetisation and Future course of Indian Economy

shyamal · Post by **shyamal** » 15 Nov 2016 14:07

What is the situation with ATMs in your localities?
None are running in my locality since last 1 week now.

chandrasekaran · Post by **chandrasekaran** » 15 Nov 2016 14:10

No Stay from SC. Posted the matter for further hearing on Nov 25. As expected kapil Sibal appeared for the petitioner

kapilrdave · Post by **kapilrdave** » 15 Nov 2016 14:26

yensoy wrote: Phoren reports are often bums who like to frequent the various watering holes in Lootyens Delhi. You can hardly see them wander more than 100km from their comfortable environs. Even if they report on a "rural news story", it will be from some village or town a few km from Delhi-Agra or Delhi-Jaipur highway. That's their view of India, the rest of the country doesn't matter. If they really need to explore, they will zip over to Mumbai, Bengaluru, Goa, Darjeeling or Dharamsala. So their India-view is heavily conditioned by muffler et al, and for the dumbed-down phoren audience which doesn't have the bandwidth to think outside of two-party systems muffler is good enough. Let's at least be thankful this fellow is not projecting babyface in the same breath.

Actually I wouldn't mind the baby face projection too much since at least he still represents the largest opposition party in India. Kejriwal is a product of propaganda and nothing else. To the extent, I would have problem with kejri being projected as an alternative to even baby face or la-loo.

JayS · Post by **JayS** » 15 Nov 2016 14:30

Schmidt wrote:http://indianexpress.com/article/india/ ... e-penalty/

First Wicket down

Pawan Bansal, UPA Minister house raided in Chandigarh.

JayS · Post by **JayS** » 15 Nov 2016 14:31

shyamal wrote:What is the situation with ATMs in your localities?
None are running in my locality since last 1 week now.

5-6 ATMs were open on my way to office, in 8km stretch, mainly those right next to the bank branches. Medium crowd. like 30-50 per ATM.

manjgu · Post by **manjgu** » 15 Nov 2016 14:32

@sachin..it does not matter even if i withdraw my BM from the bank a/c before IT looks into it... IT can inspect the a/c any time and raise a query and call u in. I got a IT notice for transactions made in 2003/4 !!!! and was told to pay Rs 3L as outstanding tax. I had the relevant info and they cancelled the demand. Procedure for finding issues about Jan dhan a/c..the IT inspector calls the holder..gives him 1 slap and asks whose money did u deposit..and lo behold the name comes out..after that its between the IT and the BM man..bribes will be order of the day to settle the issues. CA's will have to work overtime on 'setting' the IT officer.

shiv · Post by **shiv** » 15 Nov 2016 14:34

chetak wrote:Difference between what they preach on TV & the actual reality
https://pbs.twimg.com/media/CxReM_qW8AAa-k9.jpg:large

In a poll of 28000 people 3000 people opposed Modi's move

Pratyush · Post by **Pratyush** » 15 Nov 2016 14:38

Blow to modi that 3000 people have opposed modi. Never mind the number of people who support the move.

manjgu · Post by **manjgu** » 15 Nov 2016 14:43

reporting from a small town called beas in pumjab... 2 ATM... 1 not working..crowds of approx 30 to 40 people at banks and on the working ATM... PNB, Canara Bank, HDFC

Sachin · Post by **Sachin** » 15 Nov 2016 14:46

manjgu wrote:@sachin..it does not matter even if i withdraw my BM from the bank a/c before IT looks into it... IT can inspect the a/c any time and raise a query and call u in. I got a IT notice for transactions made in 2003/4 !!!! and was told to pay Rs 3L as outstanding tax. I had the relevant info and they cancelled the demand. Procedure for finding issues about Jan dhan a/c..the IT inspector calls the holder..gives him 1 slap and asks whose money did u deposit..and lo behold the name comes out..after that its between the IT and the BM man..bribes will be order of the day to settle the issues. CA's will have to work overtime on 'setting' the IT officer.

My understanding is that GoI focus is on getting the money out of the hoarders. So if a BM is identified, but none of his accounts have any money left (to pay the penalties) what does the tax dept. do next? Put a freeze on his assets?? But then recovery of the tax dues using that assets would be time consuming. I was thinking whether the GoI plan was to get all the money into the banks, and when there is still money left there; start issuing notices. And when the BM hoarded "confesses", pull the penalty straight out of the account.

SaraLax · Post by **SaraLax** » 15 Nov 2016 14:50

How much truth is there in the below statement that HT has published in their day long reporting on demonetization ( http://www.hindustantimes.com/india-new ... bdlpL.html )

• On being asked about various videos of people showing the new wet notes losing colour, the economic affairs secretary (Shaktikantha) Das clarifies: The new currency notes leak colour when wet, because that’s the nature of the paper the notes are made from. If your note does not lose colour, it may be fake.

Chandragupta · Post by **Chandragupta** » 15 Nov 2016 14:57

kmkraoind wrote:Breaking – This businessman has surrendered Rs. 6000 crore in cash? Know who he is ! - Postcard.news

It seems Narendra Modi’s war on corruption and black money is paying rich dividends. If reports are to be believed, Lalji Bhai Patel who is a builder and diamond merchant from Surat , has surrendered cash of Rs. 6000 crore. If confirmed, Laljibhai Patel will also have to pay a sum of approx Rs. 5400 crore as tax on the money deposited by Laljibhai Patel (30 % as tax, which is 1800 crore and 200% fine on the tax, which is another 5400 crore).

This 6000 crore news, is this true? How can someone just walk away after depositing 6000 crore? Tax + penalty is all good but such massive amount will also attract jail time I'd think, no? It would be believable if somebody deposited 60 crore and walked away with 6 crore after tax and penalty but 6000 crore? I call bull on the story.

Pratyush · Post by **Pratyush** » 15 Nov 2016 15:24

This news of 6000 crs. Is a case of character assanation. As this guy has been gifting flats and cars to his employees for years the it guys did not find it strange?

manjgu · Post by **manjgu** » 15 Nov 2016 15:31

Sachin..everyone knows jan dhan a/c are being fuelled by BM. the IT chaps can easily find out who is funding. the IT wont go after jan dhan a/c holder..bhuke nange se kya milna hai..they will go after the BM source man but cases will be settled by CA;s with bribes.

Paul · Post by **Paul** » 15 Nov 2016 15:39

Yesterday I said the euphoria is wearing off. Today I went to the Bank near where I work. I got my 4k within 10 minutes (ATM not working), thanked the cashier for his hard work and also rest off the staff. As for the public, there was a snake catcher.....who was cackling with delight while standing in line at the agony faced by the wealthy. I guess the saying "Every dog has it's day" has significance after all.

One more point...someone was saying ICICI ATMs are full of cash while Axis Bank ATMs have no money...maybe the pull these banks have with RBI helps in these "100 year flood" situation.

SaraLax · Post by **SaraLax** » 15 Nov 2016 15:43

Paul wrote:Yesterday I said the euphoria is wearing off. Today I went to the Bank near where I work. I got my 4k within 10 minutes (ATM not working), thanked the cashier for his hard work and also rest off the staff. As for the public, there was a snake catcher.....who was cackling with delight while standing in line at the agony faced by the wealthy. I guess the saying "Every dog has it's day" has significance after all.

One more point...someone was saying ICICI ATMs are full of cash while Axis Bank ATMs have no money...maybe the pull these banks have with RBI helps in these "100 year flood" situation.

Regarding the bolded line - Are you meaning some special connection between ICICI Bank & RBI, akin to how it existed (maybe even continues to exist) between top honchos of Goldman Sachs and Federal Reserve/Bank of England heads ?

JayS · Post by **JayS** » 15 Nov 2016 15:44

SaraLax wrote:How much truth is there in the below statement that HT has published in their day long reporting on demonetization ( http://www.hindustantimes.com/india-new ... bdlpL.html )

• On being asked about various videos of people showing the new wet notes losing colour, the economic affairs secretary (Shaktikantha) Das clarifies: The new currency notes leak colour when wet, because that’s the nature of the paper the notes are made from. If your note does not lose colour, it may be fake.

DOn't know if Chief Eco Affaires Secy actually said this, but the 2000 Note does not leave any color. There are some videos on youtube showing the note soaked in water, sprite, boiling water and what not, but it doesn't show any wear. Even the older notes would never leave color if washed. In fact you could wash a dirty note, it would become clean like a new note. Personal experience of many times when a note left in pocket would get washed with the clothes.

Paul · Post by **Paul** » 15 Nov 2016 15:45

I dunno, my friend in BGL has a/c in both Axis and ICICI...he was saying ICICI ATMs have cash while Axis ATMs do not!

Nsmith · Post by **Nsmith** » 15 Nov 2016 15:49

To continue Suraj saar's argument, here's what is happening at ground level:

1. Many BM holders (corrupt babus, businessmen, holders/sellers of ancestral property etc.) have only some amount of their ill gotten wealth in cash. Most is anyway locked up in gold and real estate. They will have to take a haircut (depending on much BM they manage to launder via JDY accounts of their maids and employees).

2. A lot of the BM is not really hidden under mattresses, as they'd like you to believe. Case in point, the dude who sits next to me at work, his dad runs a saree shop in Kanpur. In any 'market' the traders 'run' their cash by giving short term credit to other traders. The rate is usually 5-10% week or so. Similarly, the business family that owns a score of english medium public schools in my hometown, keeps anything between 50-100 Cr. with a couple of their trusted jewellery stores. Same case for politicians, bureaucrats and anyone else who deals with cash. This *cash* is circulated in the market, mainly via the marwari network, and is the lubricant that provides liquidity to the parallel economy. These people have been busy calling up their customers asking them to collect their deposits.

3. There's an argument being made that even if the cash is deposited with banks it will still represent only 5% of the total black money stock as the majority is locked as real estate and gold. But that's a facetious argument. As soon as the liquidity disappears, *ALL* of these moneylenders, cash handlers, middlemen, dalals, brokers, market makers, cash-only-bankers go bust. That's actually crippling the entire black economy that I estimate to be approx. 10x the underlying cash stock. So for 2 lakh crore (hypothetically speaking, could be more or less) black money in circulation - It is financing 20 lakh crore worth of economic transactions in the business hubs across India.

4. What happens when the cash burns away overnight? There is nobody in the entire market who can arrange the cash for any high value transaction. How will any businessman convert his gold or real estate into cash when no counterparty can produce more than a couple of lakhs in cash?

kvraghav · Post by **kvraghav** » 15 Nov 2016 15:49

Yes, ICICI has cash. I think they are pushing the filling up of ATM while other banks are happy to deal in branches and reduce cost. Please use CMS ATM finder to find a ATM with cash nearby.

JayS · Post by **JayS** » 15 Nov 2016 15:51

TOI news yeaterday said, banks were told to prioritize cash for ATMs, but banks were mostly prioritizing cash for exchange OTC. Even the ATM filling guys would need to wait 1-2 hrs to get cash from banks. The ATM filling guys were operating at only 40% capacity even with full 100% manpower. The issue was cash crunch according to them, according to TOI. Which seems about right. The fraction of 100Rs monetary value was miniscule and they could not replace even 1/4th of 500/1000 notes. So unless new notes came it was always a losing battle. On top of it now people are seating with 2-4k cash at hand. In normal situation most would not have that much cash at any given time. And some businesses must be hoarding 100rs notes for sure. Hopefully with 500notes coming, the situation would be better.

Also saw news somewhere than GOI has activated more than 1lakh micro - ATMs.

shyamal · Post by **shyamal** » 15 Nov 2016 15:54

In Kolkata very few ICICI ATMs have cash - maybe 5%. Others are closed. Other Pvt bank ATMs are all closed.

Paul · Post by **Paul** » 15 Nov 2016 15:57

Also we need to brace ourselves for a wave of bankruptcies and foreclosures with personal tragedies with the the BM brouraha and accompanying collapse in RE. We are looking at the seths and business but middle class will be impacted too.

If prices go down in RE by 50%, lots of Middle class folks who have purchase Brigade/Prestige/Shobha etc...will not able to digest the loss of their valuations by 30%-40%. This is where the Middle class vulnerability is exposed. Just think you buy a 3 Bedroom aprtment for 1.5-2 cr and it loses value by 40%.

Wo to gaya na!

JayS · Post by **JayS** » 15 Nov 2016 16:00

Nsmith wrote:To continue Suraj saar's argument, here's what is happening at ground level:

3. There's an argument being made that even if the cash is deposited with banks it will still represent only 5% of the total black money stock as the majority is locked as real estate and gold. But that's a facetious argument. As soon as the liquidity disappears, *ALL* of these moneylenders, cash handlers, middlemen, dalals, brokers, market makers, cash-only-bankers go bust. That's actually crippling the entire black economy that I estimate to be approx. 10x the underlying cash stock. So for 2 lakh crore (hypothetically speaking, could be more or less) black money in circulation - It is financing 20 lakh crore worth of economic transactions in the business hubs across India.

4. What happens when the cash burns away overnight? There is nobody in the entire market who can arrange the cash for any high value transaction. How will any businessman convert his gold or real estate into cash when no counterparty can produce more than a couple of lakhs in cash?

The number I have seen for total worth of black assets is a whopping 400 lakh Crore which is like 3-3.5x of entire GDP. Which seems reasonable since its accumulated black wealth over the decades. Much of the gold is off the radar - may not be black, but off-the radar nevertheless. Most land dealings I have seen are where 90% price in in BM, so on record the value of that land is only 10% of actual market value. For apartments the black content is lesser. But a big chuck of the black assets are in overprized RE which is disappearing soon enough. Already you can see people posting incidences where 8Cr plot selling for 5Cr now or 5Cr apartment selling for 3Cr now.

SaraLax · Post by **SaraLax** » 15 Nov 2016 16:03

Nsmith wrote:To continue Suraj saar's argument, here's what is happening at ground level:

4. What happens when the cash burns away overnight? There is nobody in the entire market who can arrange the cash for any high value transaction. How will any businessman convert his gold or real estate into cash when no counterparty can produce more than a couple of lakhs in cash?

Well one way is for the BM holder to come out in the open with details of the black wealth (i.e undisclosed gold, valuable assets and benami properties) and offer to pay the penalty (whatever it may be ... whether 200% of taxed amount or maybe even jail). Quite difficult for this to happen and we need a good amount of people who come out in the open first up & thus make others change their BM mentality too and start herding into Income Tax offices in the subsequent waves to reveal their black wealth stash. Otherwise in tough times when money is required desperately - I don't know how these BM holders can liquidate their undisclosed gold/lands for prices nearby the market prices even.

The second way can be to .... keep things even more silent and try to once again dodge the next law that Modi will bring to confiscate Benami Property. Affected near & dear ones can even tip of the Income Tax folks about the BM Holder's unaccounted non-currency wealth too.

If the BJP is supposedly a bania/trader based party - Modi has surely hit most of these guys for a six and given heart attacks to many of them !!. Wonder what happens in the coming elections when this specific set of supposedly BJP supporting folks come to voting booth. Interesting times in the offing. I thought some of these same Bania folks in Delhi switched to AAP in last state elections... Is it not ?.

JayS · Post by **JayS** » 15 Nov 2016 16:05

Paul wrote:Also we need to brace ourselves for a wave of bankruptcies and foreclosures with personal tragedies with the the BM brouraha and accompanying collapse in RE. We are looking at the seths and business but middle class will be impacted too.

If prices go down in RE by 50%, lots of Middle class folks who have purchase Brigade/Prestige/Shobha etc...will not able to digest the loss of their valuations by 30%-40%. This is where the Middle class vulnerability is exposed. Just think you buy a 3 Bedroom aprtment for 1.5-2 cr and it loses value by 40%.

Wo to gaya na!

Majority of Middle class folks buy with little or no black money component. And RE is not gonna fall by 50%, not the apartments atleast. Land will see more depreciation but I don't think it will be anywhere near 50%. Say there is 20% reduction of 1Cr apartment, due to this drive, interest rates are expected to go down - means less EMI for home loan folks which means their effective investment in the apartment is less now. Also deflationary effect in the general life means more saving. So the saving from these two components, if invested properly they could compensate majority of the loss in long term. This move is only good in long term for lower/middle class folks.

Gus · Post by **Gus** » 15 Nov 2016 16:09

Well by Dec 31 we would know with certainty how much BM was withheld and not deposited for fear of questions. That much is indisputable. From the amount estimated to be on circulation, we would also know the baseline of BM held in cash.

Chandragupta · Post by **Chandragupta** » 15 Nov 2016 16:09

I am sure Modi is not sending thousands of traders or banias to Jail for having anything less than 5 cr. I think only 20-25 cr + might possibly be looking at jail time, nobody else. Penalty, however, will be applied evenly. Doctors, lawyers, traders, banias with upto 2-3 crore will be allowed to walk away after either losing their bm stash or with a haircut or penalty or all of them. Big fish will either die or fall in the net.

shyamal · Post by **shyamal** » 15 Nov 2016 16:11

Has distribution of Rs500 new notes started through banks?
Any idea of the timeline for recalibration of 20% ATMs in metros?

SaraLax · Post by **SaraLax** » 15 Nov 2016 16:12

shyamal wrote:In Kolkata very few ICICI ATMs have cash - maybe 5%. Others are closed. Other Pvt bank ATMs are all closed.

Seems folks - who need to move the coins for demonetization & currency replacement to happen - in WB are afraid to do their work and Is it due to the KALIness of Mamaata ?. Is this her way to oppose the Central Govt's Demonetization moves and hit back ... by hitting out at her own people's chances of re-monetizing their old notes ?.

[Ranting ON]
To think .. this was the land that gave us Swami Vivekananda, Rajaram Mohan Roy, Netaji Subash Chandra Bose, Aurobindo and other stalwarts. This was same land that gave Rabindranath Tagore who famously came up with the lines .... “Where the Mind is without Fear" .... So Antithetical seems to be the general condition in WB under Mamata's rule these days. The state appears to be squirming & groaning with fear under the grasp of a terrible lady CM and unable to express its various capabilities in a full fledged manner.
[Ranting OFF]

shyamal · Post by **shyamal** » 15 Nov 2016 16:15

I don't think its because of Mamata. Most bank employees are working till 8pm.
Transactions are going smoothly but the volumes are huge. Not many complains about bank. I do not know much about rural areas but no report of any largescale disturbance.

The issue is ATMs. Cash logistics are not controlled by mamata. 100 notes get exhausted very quickly and not replenished.
They do not need to fill up all ATMs. Even if they could mark out 10% ATMs and ensure cash replenishment thrice a day to each of them that would be a big factor in restoring confidence. At present there is no guarantee when the next replenishment will come - tomorrow or after 3 days.

TKiran · Post by **TKiran** » 15 Nov 2016 16:18

RE Price is a function of Demand and Supply. While there is always a demand for decent housing, the expensive houses there is fluctuating demand. That sector of housing RE may get affected, but if you are not looking to hoard your BM, the RE prices are not coming down anytime soon as long as there is demand

Supratik · Post by **Supratik** » 15 Nov 2016 16:23

Bania castes will be at most 5% of the population. Maybe 4% is in business. 3% BJP supporters. 2% dishonest. Other castes 1-2% in cash-only business. So BJP is looking at a loss of 3-5% vote share. But is hoping to make up elsewhere. Modi is clearly eyeing the poor, lower middle class, rural votebank to make up as judged from his speech. But BJP election funding will be impacted.

pankajs · Post by **pankajs** » 15 Nov 2016 16:25

Suraj wrote:
manjgu wrote:the real taste of the pudding will be known on 31st March 2017..when figures are tabulated. How much of the 14L crore 500,1000 notes come back into deposits?
Whatever doesn't come back is a free writeoff of RBI's liability on that note.

Another way to look at it is as follows. This mirrors what is happening on the ground except that GOI/RBI did not go to each house and take away the cash.

On the stroke of midnight ALL 14.L Cr was BACK with the RBI. What we are now seeing is some of it flowing back to Individuals as and when they claim it. And some of it flowing back into circulation via bank withdraw (OTC, Card, ATM, etc) and some of it by exchange OTC.

What ever is left with the RBI at the end of the whole exercise will be used by the RBI to either retire its liabilities or passed on to GOI.

SaraLax · Post by **SaraLax** » 15 Nov 2016 16:38

shyamal wrote:I don't think its because of Mamata. Most bank employees are working till 8pm.
Transactions are going smoothly but the volumes are huge. Not many complains about bank. I do not know much about rural areas but no report of any largescale disturbance.

The issue is ATMs. Cash logistics are not controlled by mamata. 100 notes get exhausted very quickly and not replenished.
They do not need to fill up all ATMs. Even if they could mark out 10% ATMs and ensure cash replenishment thrice a day to each of them that would be a big factor in restoring confidence. At present there is no guarantee when the next replenishment will come - tomorrow or after 3 days.

Hmm ... OK. Let us all come back to normal life as quick as possible with as much reduction in BM as possible and with accompanying deflation in the cost of important needs of us Indians.

vijayk · Post by **vijayk** » 15 Nov 2016 16:46

Will the Govt. reduce stamp paper duty and other indirect taxes to increase compliance?

Murugan · Post by **Murugan** » 15 Nov 2016 16:53

Kapil Sibal Argued in SC

"Under what right can you restrict my right to withdrawal?" he asked.

I intended a pun, but, jaane do
*****
SC refuses to stay Govs Demonetisation Notification

http://www.thehindu.com/news/national/d ... e?w=alauto

vijayk · Post by **vijayk** » 15 Nov 2016 16:59

কাঞ্চন গুপ্ত ‏@KanchanGupta 3h3 hours ago
Step into my parlour, the spider told the fly...

The fly discovered Jan Dhan is like Hotel California, you can step in but can't step out

Gus · Post by **Gus** » 15 Nov 2016 17:09

In my small town near erode TN, one out of 3 ATM working with a crowd of 40 to 50. Withdrawing from account is faster as my gran says. I personally am still surviving with the 4 100 rs notes I had since Nov 8.

SaraLax · Post by **SaraLax** » 15 Nov 2016 17:30

JayS wrote:
SaraLax wrote:How much truth is there in the below statement that HT has published in their day long reporting on demonetization ( http://www.hindustantimes.com/india-new ... bdlpL.html )

DOn't know if Chief Eco Affaires Secy actually said this, but the 2000 Note does not leave any color. There are some videos on youtube showing the note soaked in water, sprite, boiling water and what not, but it doesn't show any wear. Even the older notes would never leave color if washed. In fact you could wash a dirty note, it would become clean like a new note. Personal experience of many times when a note left in pocket would get washed with the clothes.

So it seems - Hindustan Times - is back to its deliberate mis-information tactics.