Currency Demonetisation and Future course of Indian Economy

Rahul M · Post by **Rahul M** » 16 Nov 2016 01:19

I dont know about elsewhere but I am seeing a 5-10% drop in some noida properties. all firmly < 1 Cr. drop is higher for more pricier ones but that is hearsay.

vijayk · Post by **vijayk** » 16 Nov 2016 01:42

http://www.rediff.com/business/intervie ... 161109.htm

Though India may initially reel from the impact, the IIM Bangalore alumnus believes that "come December 31, we will be a better nation".

He spoke to Savera R Someshwar/Rediff.com soon after watching Modi’s stunning address to the nation on November 8.

As a banker, what is your reaction to Prime Minister Modi’s strike against black money?

It's brilliant. It is going to create some amount of chaos in the banking system in the next few days. The stock market will react. But I don't think this could have been done in any other way.

People will question the secrecy. They will question the timing just before the Uttar Pradesh elections (the state is expected to go to the polls between February and March next year, shortly after the presentation of the Union Budget). All that is rubbish. Any time is the right time to do this.

The government gave a couple of opportunities to declare undisclosed income till September 30. If people did not take advantage of that scheme and are now crying that they have no opportunity to exchange cash, then it is their problem.

This wipes out the entire black money in the nation in one stroke. Ninety per cent plus of the black money is kept in Rs 500, Rs 1,000 notes. What they have done is a brilliant move.

It is the first big, bold, dramatic move by the Modi government in the last two years. It hits where it hurts.

It may not permanently kill the black money problem but when you are bleeding to death, this is like stopping the bleeding completely and stitching up the wound. Going forward, you have to make sure that the stitches don’t come apart.

To ensure that this does not happen is in the government’s hands.

What do you think is going to happen next? People are already panicking.

People will panic. On Wednesday, banks are closed and that will cause further panic. ATMs will not function. People will struggle for cash.

For example, I have only thousand rupee notes at home. When I withdrew money a few days ago, the bank gave me only 1000 rupee notes.

A foreign friend just SMSed asking what he should do with the Rs 1,000 notes he had just withdrawn from the ICICI Bank.

In fact, I don’t know if the government has considered the foreign nationals and tourists in this country who have cash on hand.

But there is no other way to do this. When you do something like this, you will get it 95 per cent right and five per cent wrong. I think the pain that the five per cent go through for betterment of the 95 per cent is worth it.

What about the impact it will have on the day-to-day life of the aam janta?

Look, it’s going to be difficult for a while. For example, my driver wanted Rs 4,000 tonight because he has a payment to make. So I gave him the money in Rs 1000 notes. But I had to tell him to exchange the notes somewhere because this will not be legal tender on Wednesday morning.

For him, the notes that he is holding is very critical, so how will he manage it? But, as I said, there is no better way to do this. Irrespective of what you do, you will not be able to think though 100 per cent of the issues.

For example, consider the local, small shopkeepers who buy and sell in cash. They go to a bigger merchant, buy from him in cash, come and sell to the households in cash... how will they operate? They don’t have a bank account, they don’t have a debit card, they don’t accept a credit card, so how do you operate with them? You’ll not be able to.

Whether you do it now or six months down the line, that challenge will always be there.

But, if you don’t keep this a secret, if you discuss this policy before announcing it, it will lose its impact. Though there will be a little bit of pain now, come December 31, we will be a better nation.

How will it impact the middle class?

It will definitely not impact the salaried class except for some logistical issues. It will impact the corrupt in the salaried class who hoard cash, which is fine.

It will impact the middle class in a way that a few transactions will be affected on Wednesday, but they have actually thought through many of the factors in terms of petrol, in terms of hospitals, in terms of crematoriums... who will continue to accept the older notes for some time.

And it is not that the ATMs will not work. For a couple of days, there will be a problem but I think from the weekend onwards ATMs will again start working.

Overall, I don’t think the middle class will be impacted.

There will be two segments which will be impacted -- the merchants who live on day-to-day earnings and daily wage earners who’ll not get their money upfront. Not immediately.

For example, labour contractors pay their labourers in cash. But they will not be able to withdraw cash from the banks. So how will he pay his labourers?

Those parts of any business that run on cash will get impacted. These things might create a commotion.

Those who live at the grassroot level will get impacted. The middle class, in the worst case, can always manage reasonably comfortably for the next 15-20 days with their credit and debit cards. If your street corner kirana shop won’t supply you with stuff because you don’t have cash to pay him, you can always go to a larger store and buy things using a card. So even if you don’t give them cash, it’s fine.

The super rich, who have hoards of cash and who would, I am assuming, not have known about this, will suffer.

So it is the top end and the bottom end... the bottom end, because they will suddenly not have cash to survive; the top of the pyramid, simply because they will lose out on a lot of money.

Do you think the banning of Rs 500 and Rs 1,000 notes is enough to remove black money from circulation?

Maybe not, because black money will circulate again when the Rs 2,000 notes come in. But they (the government) are doing at least something. They are saying they are going to control the number of Rs 2,000 notes in circulation.

Till now, 80 per cent of the notes in circulation were in Rs 500 and Rs 1000. They are going to control and make sure that more Rs 100 and Rs 50 rupee notes are in circulation than Rs 2,000 notes.

When that change happens, it will become difficult to hoard money. And if it becomes difficult to hoard money, then you will end up becoming a largely a card based or a banking system based economy.

So it is a brilliant move before the UP elections.

It is a brilliant move before the UP elections, no doubt about it... calculated timing, execution yet to be seen but full marks to him. It’s like knocking off five players in the England cricket team before the Test match begins tomorrow.

I just wish he had allowed people to pay back their delinquent bank loans using Rs 1,000 and Rs 500 notes. The non-performing assets problem faced by the banks would have been solved.

How long will it take for the situation to stabilise for the economy and the aam janta...

Once the new notes come out and the restrictions on the Rs 10,000 a day cash withdrawal are removed, the system will bounce back.

Secondly, you don’t have an alternate fulfilment mechanism in place for places which used to accept cash in the past. These things need to be dealt with.

The credit card companies will be very happy. Visa, Mastercard, American Express and all the plastic companies will be really, really, really thrilled with this.

There will be tremendous pressure on Modi to reconsider his decision.

He has taken the high moral ground on this so there is no chance of him rolling this back.

UlanBatori · Post by **UlanBatori** » 16 Nov 2016 01:53

Could someone pls summarize the actual rules and scheme? As I understand (pls correct me) ppl have until Dec. 31 to exchange 500 and 1000 rupee notes for new notes or deposit them in the bank, hain? Maybe have to provide some indication of source?

IIRC, Supreme HQ and I together have like Rs. 17000 that we brought with us the last time we came from desh, and cannot take that to a bank until sometime in December. The money was basically withdrawn from our own accounts in desh banks, and we will be happy to go deposit back there. Is there an issue with this? Have to go 5 times to deposit less than 4000 rupees each time?

As for micro businesses, the govt's solution is to go to cellphones and Aadhar cards. Boost the credit and trust system (where one's credit rating depends on being trustable to pay). Had to happen sometime, but this may be a bit drastic.

No idea how visitors are to do this.

Marten · Post by **Marten** » 16 Nov 2016 01:56

Rahul M wrote:I dont know about elsewhere but I am seeing a 5-10% drop in some noida properties. all firmly < 1 Cr. drop is higher for more pricier ones but that is hearsay.

Sales in our complex dropped to zero. Every listing was pulled off! Asked my friend to make a few calls to check if anyone was interested in a hot sale, but a lot of folks backed out knowing that they will only full white amounts and at a massive discount. Even a 10% drop is an amazing value for prospective buyers like me. Hope it falls further - so we can enjoy the fruits of our honest reporting and taxes!

UlanBatori · Post by **UlanBatori** » 16 Nov 2016 02:00

From Wikipedia:

Citizens will have until 30 December 2016 to tender their old banknotes at any office of the RBI or any bank branch and credit the value into their respective bank accounts.[1]
Cash withdrawals from bank accounts were restricted to ₹10,000 per day and ₹20,000 per week per account from 10 to 13 November 2016.[1] This limit was increased to ₹24,000 per week from 14 November.[17][18]
For immediate cash needs, the old banknotes of value up to ₹4,000 per person could be exchanged for the new ₹500 and ₹2000 banknotes as well as ₹100 banknotes over the counter of bank branches by filling up a requisition form along with a valid ID proof.[1] This limit was increased to ₹4,500 from 14 November 2016 onwards.[17][18]
Initially, all ATMs were dispensing banknotes of only ₹50 and ₹100 denominations and cash withdrawals from ATMs were restricted to ₹2000 per day.[19] From 14 November onwards, ATMs recalibrated to dispense new ₹500 and ₹2000 notes will allow a maximum withdrawal of ₹2,500 per day, while other ATMs dispensing banknotes of only ₹50 and ₹100 denominations will allow a maximum withdrawal of ₹2,000 per day.[17][18]

However, exceptions were given to petrol, CNG and gas stations, government hospitals, railway and airline booking counters, state-government recognised dairies and ration stores, and crematoriums to accept the old ₹500 and ₹1000 banknotes until 11 November 2016, which was later extended to 14 November 2016 and once again to 24 November 2016.[20][21] International airports were also instructed to facilitate an exchange of notes amounting to a total value of ₹5000 for foreign tourists and out-bound passengers.[22]

UlanBatori · Post by **UlanBatori** » 16 Nov 2016 02:05

The real victims here are the Pakis who as I hear, import "Indian currency" printed in Pakistan, in SHIPPING CONTAINERS to Kozhikode and Mumbai. No wonder the guvrmand had to do this, the whole Indian currency was completely contaminated and Indian real estate and infrastructure was being bought up by the Ummah/Pakis.

KJo · Post by **KJo** » 16 Nov 2016 02:25

I am in India soon. Maybe I'll buy a 4 bd villa in BLR at a steep discount

Jokes aside, I have a friend who is planning R2I and bought a 4 bd villa near ORR near Accenture, Intuit etc. He is from the farmer community so sold off his lands in India to collect money. He has a nice big house here that he bought at the market high around 2007. It is still valued below what he paid for it. Now he has paid several crores for the villa over the last 3 years and upgraded it. The market value of that will crash and he will have to face some trouble on that account. I don't know if that will crimp his plans.

How complex life has become

UlanBatori · Post by **UlanBatori** » 16 Nov 2016 02:50

Real estate in India is fundamentally "Black" and bubbly. Its a chain reaction. Ppl can't buy at the advertised market rate, because there is a large "black" margin attached. So they have to fork over that margin. The stamp duty is only paid on the advertised value. The Panchayat crook knows that you are hooked because you have committed a crime. The govt can in principle come in and buy your property at the stamp value/ assessment, and you will eat the difference. When you try to sell, you cannot get the real value because the buyer, being crooked, will not want to pay stamp duty or declare income to match all that value, so you have to sell low, and HOPE that you don't get stiffed. The Panchayat, lawyers, inspectors, assessors all take their cuts from your weakness.

I cannot see how this makes for a healthy market. It's a bubble as long as it is expected to go on. But now that the govt seems likely to take drastic steps, would you want to get into this situation? I think the real estate prices have to come down at least 50% maybe 80 percent from the peaks before they become reasonable risks again.

Karthik S · Post by **Karthik S** » 16 Nov 2016 02:55

They would have if not by 50% then atleast 15 20% even without the demonetization. There are huge number of unsold apartments and villas in many cities as they went out of reach of many potential buyers. Each year it was guaranteed that RE would increase by 10% minimum, without any added infrastructure in the locality of the property. With this move by the govt. the decrease % will be higher and faster.

nachiket · Post by **nachiket** » 16 Nov 2016 03:11

RE depreciation will be limited and temporary. There are millions of salaried families having only white money who were priced out of the market by the BM holders. If interest rates go down as is hoped along with an initial fall in RE prices, they will get back into the market and the prices will stabilize.

ragupta · Post by **ragupta** » 16 Nov 2016 03:21

Karthik S wrote:They would have if not by 50% then atleast 15 20% even without the demonetization. There are huge number of unsold apartments and villas in many cities as they went out of reach of many potential buyers. Each year it was guaranteed that RE would increase by 10% minimum, without any added infrastructure in the locality of the property. With this move by the govt. the decrease % will be higher and faster.

Also the buying and selling rates where 10-20% wider, if you go to buy it is different rate, and when you want to sell it is different at 10 to 15% less. Hoarding and manipulation was the norm, as these people had enough BM to sustain it and force genuine buyers to pay more.

vijayk · Post by **vijayk** » 16 Nov 2016 03:26

They have to cut stamp duty drastically too to increase compliance. My worry is Jatiley/Modi/Sinha combination don't understand the importance of reducing taxes. They are asking for compliance and they are not willing to incentivize the people to comply the law from NO COMPLIANCE FOR CENTURIES.

They have to cut income taxes and even penalties too.

You can't stop DRUGS AT ONCE. You will have severe withdrawal syndrome. If they don't understand this, they will lose. They have to be bold on the reforms. They have been screwing common man with excise taxes and subsidy cuts on cooking gas etc. People complied with request. Now time to cut taxes

UlanBatori · Post by **UlanBatori** » 16 Nov 2016 03:29

A small calculation that has always mystified me: Suppose aam aadmi (AA) works for a salary that rises from say Rs. 50K pm (meaning 6L /yr) to say Rs. 2l/mo (24L/yr) over a 30 yr career (age 25 to age 55).
On average he gets 15L/yr for 30 yrs. (optimistic). That's 450L, or 4.5crore TOTAL. Let's say he saved 2 crore of that (pretty impossible..), and interest and stock gains after taxes, would leave him with 5 crores, untouched except for paying taxes? That is if he lived in his parents' home, never bought a car, never bought jewely for Bibi nor jilebis for nephews/nieces/ never take a phoren vacashun, did not pay dowry for beti's wedding, no TV except what he got when he got married, no medical bills, never went to a dentist, wore 400% pure khadi onlee...

How the heck does someone like that buy a 5 crore home? 1 crore home, realistically?
And what I described is probably a Top 2% salary-maker in India.
So what exactly is the chance of a White Money transaction at any level above 2 cr?

Without knowing the magic behind this, I don't see how to figure out any economics in India.

saip · Post by **saip** » 16 Nov 2016 03:37

If you go back 30 years it will be '86. Now in '86 how many you think were making 50k/month? So unless you factor in the inflation etc. the whole math is off.

ragupta · Post by **ragupta** » 16 Nov 2016 04:23

How to live cashless

http://economictimes.indiatimes.com/ind ... 445643.cms

Primus · Post by **Primus** » 16 Nov 2016 04:31

saip wrote:If you go back 30 years it will be '86. Now in '86 how many you think were making 50k/month? So unless you factor in the inflation etc. the whole math is off.

In '80 my first paycheck was Rs 425 pm. That same job now fetches around 45,000 pm (my figures are a few years old, it may be even higher now). You could buy a 300 sq yds piece of land for around 60K or less in Delhi at the time. It is now several crores. So while the salaries have gone up a hundred fold, the land has gone up a thousand fold, thanks to all the black money in the system.

Primus · Post by **Primus** » 16 Nov 2016 04:48

UlanBatori wrote:
How the heck does someone like that buy a 5 crore home? 1 crore home, realistically?
And what I described is probably a Top 2% salary-maker in India.
So what exactly is the chance of a White Money transaction at any level above 2 cr?

Without knowing the magic behind this, I don't see how to figure out any economics in India.

UB Ji, it depends upon when you got into the 'system'. So if you bought a home with white in say the 80s, then you are golden because your home appreciated in value way faster than the increase in your salary. A cousin of mine and his father (always in salaried jobs) managed to buy a very nice multi-crore property in South Delhi because they had bought two smaller pieces of land very early on and in addition, said uncle had the good fortune of being able to buy the small apartment allotted to him as a primary school teacher -you cannot get more 'middle class' than that.

They are 100% honest, tax-paying citizens and the salt of the earth. However, in order to be able to buy this SD property, they had to sell their other RE in black too, since the seller wanted mostly black. So even while they never evaded any taxes or took bribes, they had to get their hands dirty in the RE market because that is the nature of the beast. And that is the part I always detested, forcing honest and hardworking people to become a part of the rotten system.

That for me is one of the biggest side-effects of this demonetization drive. Reclaiming the pride that all honest Indians must feel in doing 'the right thing'. For far too long those with principles were forced to compromise with themselves to simply survive the rat race.

Rammpal · Post by **Rammpal** » 16 Nov 2016 05:10

Primus wrote:
They are 100% honest, tax-paying citizens and the salt of the earth. However, in order to be able to buy this SD property, they had to sell their other RE in black too, since the seller wanted mostly black. So even while they never evaded any taxes or took bribes, they had to get their hands dirty in the RE market because that is the nature of the beast. And that is the part I always detested, forcing honest and hardworking people to become a part of the rotten system.

"... forcing honest and hardworking people.."

Forcing ?
As in he had No choice ?
Doesn't look that way at all.

Marten · Post by **Marten** » 16 Nov 2016 05:14

^True. I bought my first house in 2003 when my salary was probably 3l/pa. I was underpaid, but had good luck. It is worth ~1cr assuming the value has dropped after the demonetization. The second house cost us 50L in 2010. It is worth 1.5 cr after account for the drop in values. My wife has another house which has lost value if you calculate what she paid vs. the rent received + maintenance/depreciation costs. We bought a plot of land (or two), which appreciated a bit. These were ALL paid for in white. Now, all of this put together might be about 3/4 cr or more later, after accounting for the drop in values. We got in when the values were rising. Folks had the same opportunity with penny stocks and I dare say Citibank which got bajaoed during the collapse. Those that dared to rush headlong in managed to make a bit of money.

Most of the folks who put in their life savings without gambling on it managed to see capital appreciation beyond our means. I mean, why keep praying for a collapse because you missed the bus? Instead, get on the next wave and see if you can ride it out. I am waiting for the next opportunity and would love to buy a house in the same area where we reside. Without a robust and reliable retirement fund, this is all that we can do! And that is the reason that real estate will, over the long run, outrun inflation in India.
PS: All the values are examples. Ignore the numbers because they are merely added for illustrating the possibilities in Bangalore, Karela vs. Duluth, Bongal.

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

From Twitter

Paresh Rawal Fan@Babu_Bhaiyaa

This morning I got up at night... My mother came to my room, cried & said "Beta white Money khatm ho gai, Kal 4 hazaar nikaal ke lana ~ Rahul Gandhi

http://tinyurl.com/htrxuos

Bart S · Post by **Bart S** » 16 Nov 2016 05:37

yensoy wrote:
Bart S wrote:Arundhati Bhattacharya (head of SBI) explained that point on a news channel - the instruction was apparently for one ATM per district to be configured that way, which was too small to make an actual dent in the issues.
IMHO it was to get the juices flowing, or prep the operations guys for what was to come. No way 10% or 1 ATM/district would be enough; but what would be required is for the engineers to know how to get this done so folks don't go into head scratching RTFM mode when the time comes.

Good point.

I think the media sensationalism about the 'banks failing to heed RBI instructions and hence landing us in this mess' is unfair though.

Rishirishi · Post by **Rishirishi** » 16 Nov 2016 05:39

harish_ch wrote:Saars,

I am trying to understand why real estate price will come down with this demonetization drive.

As I understand, there are two types of buyers. One who might have bought the property with considerable portion of black and the others who have done a completely white transaction (as happens with big gated community projects).

The one's who bought with black money wouldn't want to sell now obviously to avoid handling the resulting black money. Say they bought a flat worth 80Lacs using 50lacs white. Now they wouldn't want to sell it for less than that 80 Lacs. Even if they manage to sell it at 80Lacs white, they would have to pay tax on capital gains for the profit incurred on top of the white amount they paid earlier(i.e. 50 lacs) resulting in a net loss for them. So unless if they have some emergency unavoidable requirement, all these guys will sit tight and wait for long term hoping for new cycle of black money generation.

This results in lessening the overall supply in the market. But with the deluge of deposits, banks will be rearing to give bank loans at cheaper rates.

Now the properties which are bought with complete white are less in number comparably. It is easy to buy these properties with white, as banks will offer loan amount almost near the sale amount since the earlier transaction was entirely white. Because of the demand, and because that they have not involved any black money earlier, these owners may not sell for less than what they have bought.

Overall, I don't see real estate prices coming crashing down. Passing on to experts to puncture above theory.

property market was fuled by people who were trying to park black money. The salaried class only had black money when they sold off and bought new.

Now the black money has gone so are the people trying to park black money. So as of now there is no black money arround. But it gets worse. Because a lot of businesses has lost cash, they will need it from somewhere. some may try to raise it by selling property. Anyone who has to sell now, will have few byers.

For the common man this is really good news. Firstly the houses become affordable. Secondly increased taxation will lead to better infrastructure and life in general.

I say, it is time India becomes cashless. I would not be surprised if the e-walets replace cash.

Black money has so many bad sides with it. Corrupt politicians and babus, increase the price of services. India ends up sending billions and billions out of they country.

Would not surprise me if Modi comes up with one last amnesty for those who have cash abroad. Now everyone knows he means business. And the panama case shows that money may not be as safe as it once was.

Bart S · Post by **Bart S** » 16 Nov 2016 05:43

manjgu wrote:they can paint one finger per day..so a man can come for 10 days to withdraw 2500*10 =25000 over a 10 day period.

This is not for withdrawing money. It is only for over the counter exchange of notes. That is what is being abused or can potentially be abused.

No issue with withdrawing money from an account, and no need for that system either since you can easily limit withdrawals from a single account.

vina · Post by **vina** » 16 Nov 2016 05:44

UlanBatori wrote:Could someone pls summarize the actual rules and scheme? As I understand (pls correct me) ppl have until Dec. 31 to exchange 500 and 1000 rupee notes for new notes or deposit them in the bank, hain? Maybe have to provide some indication of source?

IIRC, Supreme HQ and I together have like Rs. 17000 that we brought with us the last time we came from desh, and cannot take that to a bank until sometime in December. The money was basically withdrawn from our own accounts in desh banks, and we will be happy to go deposit back there. Is there an issue with this? Have to go 5 times to deposit less than 4000 rupees each time?

As for micro businesses, the govt's solution is to go to cellphones and Aadhar cards. Boost the credit and trust system (where one's credit rating depends on being trustable to pay). Had to happen sometime, but this may be a bit drastic.

No idea how visitors are to do this.

You can deposit as much cash as you want directly to your account. The Dec deadline is only for cash exchange. After that you still have time until March to do it at RBI. The Rs 17000 you have is absolutely fine.

Furriners -- My aunt (82 years old and US Citizen) is visiting from Texas and she was with us in BLR over the weekend. She changed dollars to rupees in Madras some two days before the currency exchange thing and now she is left holding it . Okay , she can probably change it back at the airport. But even then, she cannot change dollars to rupees immeidately . ICICI Forex asked her for a week's time to change into cash, which they promised when she went back to Madras ! Anyways, bulk of spend of Furriners visiting is on boarding, lodging and travel, most of which is card based. Casual daily spend has taken it in the gonads.

narmad · Post by **narmad** » 16 Nov 2016 05:50

UlanBatori wrote:Could someone pls summarize the actual rules and scheme? As I understand (pls correct me) ppl have until Dec. 31 to exchange 500 and 1000 rupee notes for new notes or deposit them in the bank, hain? Maybe have to provide some indication of source?

IIRC, Supreme HQ and I together have like Rs. 17000 that we brought with us the last time we came from desh, and cannot take that to a bank until sometime in December. The money was basically withdrawn from our own accounts in desh banks, and we will be happy to go deposit back there. Is there an issue with this? Have to go 5 times to deposit less than 4000 rupees each time?

As for micro businesses, the govt's solution is to go to cellphones and Aadhar cards. Boost the credit and trust system (where one's credit rating depends on being trustable to pay). Had to happen sometime, but this may be a bit drastic.

No idea how visitors are to do this.

As an NRI, You have till APR 2017 to travel back to India and deposit in any RBI regional offices.

Pathik · Post by **Pathik** » 16 Nov 2016 05:52

^^^^RE prices at least in metros will not come down more than 8-10% if at all. The big players will maintain quid pro with their asset and inventory power

added: some already have been dealing in 100% white

shiv · Post by **shiv** » 16 Nov 2016 06:15

Suraj wrote:What kind of analysis does one expect from business sectors that kept its business off the books ? Let them come forward themselves and quantify what sort of losses they'd take. 'Losses' here are really the gap between how much business they did, and how much they're willing to admit they did. "I have lost Rs.N in business" translates roughly as "I used to do Rs.N business I didn't report".

If anyone notices - this is exactly how Pakistan calculates how much is owed by the world. just sayin..

shiv · Post by **shiv** » 16 Nov 2016 06:18

UlanBatori wrote:
IIRC, Supreme HQ and I together have like Rs. 17000 that we brought with us the last time we came from desh, and cannot take that to a bank until sometime in December. The money was basically withdrawn from our own accounts in desh banks, and we will be happy to go deposit back there. Is there an issue with this?

Most people who had cash to amounting to a few 1000s like my SHQ simply went to the bank and deposited it in her own account. As long as you have an account and put it into your account the process is straightforward and mostly quick because the queues are separate. I had a grand total of 4x500 rupee notes and blew it on petrol

Suraj · Post by **Suraj** » 16 Nov 2016 06:19

Pathik wrote:^^^^RE prices at least in metros will not come down more than 8-10% if at all. The big players will maintain quid pro with their asset and inventory power

Could you please explain, who's the counterparty in the quid pro quo ?

Suraj · Post by **Suraj** » 16 Nov 2016 06:23

For NRIs in Yoo Ess, there's talk that branches of SBI and ICICI will accept old currency 'soon' . I probably have a thousand or two lying about. There's no pressing urgency - the domestic situation needs to stabilize before the NRIs are handled. If any NRI is traveling before January, nothing needs to be done - just go home and exchange. For the rest, there's still another 1.5 months for RBI to send out a circular on what to do.

shiv · Post by **shiv** » 16 Nov 2016 06:28

Anyone who has witnessed a political rally in Bengaluru will know that 20-50,000 people are trucked in from outside in buses (lucky ones) and lorries (normal). These people lose an entire day and are at least fed - and probably paid Rs 500 a head. The vehicles probably cost Rs 5000 for a day. So for a day's political rally party functionaries have to cough up a crore or 2 in cash.

I wonder if the opposition parties have the funds to organize a huge political rally to oppose demonetization?

Primus · Post by **Primus** » 16 Nov 2016 06:34

Rammpal wrote:
Primus wrote:
They are 100% honest, tax-paying citizens and the salt of the earth. However, in order to be able to buy this SD property, they had to sell their other RE in black too, since the seller wanted mostly black. So even while they never evaded any taxes or took bribes, they had to get their hands dirty in the RE market because that is the nature of the beast. And that is the part I always detested, forcing honest and hardworking people to become a part of the rotten system.

"... forcing honest and hardworking people.."

Forcing ?
As in he had No choice ?
Doesn't look that way at all.

Depends on where you are coming from.

There was no other way for somebody who owned a property to buy another one without getting into the system. Imagine you paid 25K for your home, all white, at a time when the land was being sold by the government. Over 10 yrs you managed to buy two more properties at a low price. Gradually over time there is no more land for sale in white, everything is already owned by people like you.

20 yrs later (30 yrs from your original purchase of your home) your kids are grown and have kids of their own, you need a bigger house (since you all live together). The house you are looking for costs 3 cr (80% to be paid in black) while your various assets have also grown to be close to that, BUT only if you sell them on the open market where 80% of the value is in black.

So you can either live where you are in a house that is now too small for your grown up family or you can become part of the system even if you know it is painful to do so. Very few people would choose the former.

Rammpal · Post by **Rammpal** » 16 Nov 2016 06:43

Primus wrote:
So you can either live where you are in a house that is now too small for your grown up family or you can become part of the system even if you know it is painful to do so. Very few people would choose the former.

Totally understand what you said, and neither am I challenging his decision.
More importantly, he Did have options before him.
That, is my point.
Whether others would have Likely done the same, is irrelevant.

Primus · Post by **Primus** » 16 Nov 2016 06:57

Things are not all doom and gloom either.

A nephew just bought an apartment in BLR. Got a loan from the bank, put down a small amount as downpayment. Everything in white. No hassles. Closed last week, even as the crisis was going on.

saip · Post by **saip** » 16 Nov 2016 07:01

Suraj wrote:For NRIs in Yoo Ess, there's talk that branches of SBI and ICICI will accept old currency 'soon' . I probably have a thousand or two lying about. There's no pressing urgency - the domestic situation needs to stabilize before the NRIs are handled. If any NRI is traveling before January, nothing needs to be done - just go home and exchange. For the rest, there's still another 1.5 months for RBI to send out a circular on what to do.

I called theth SBI, San Jose about that. They said even though their bank is wholly owned subsidiary of SBI, India it is a chartered in CA. So they can not accept rupee deposits. Al least that is the reason the lady gave me. I was wondering if our consulates will accept.

tsarkar · Post by **tsarkar** » 16 Nov 2016 07:13

Not related, but the termites are emerging

http://www.oneindia.com/india/taxman-bi ... 62237.html

New Delhi, Nov 15: The Income Tax department has slapped a penalty of Rs.57 crore on Congress leader and senior advocate Abhishek Manu Singhvi after he was unable to furnish documentary proof to back his claim of expenses. The department has rejected Singhvi's claim that a termite attack on the premises of his chartered accountant destroyed all records, said reports.

The department has also raised doubts over the advocate's claim that he purchased laptops worth Rs 5 crore for his staff, which entitled him to 30 per cent depreciation.

The Income Tax department and the Commission, had earlier, added a sum over his declared professional income of Rs. 91.95 crore over three years between 2010-11 to 2012-13 and slapped a penalty. The order was then stayed by the Rajasthan Court, said reports.

The commission has also contended Singhvi's claim that he spent Rs 35.98 crore on purchase of solar panels for his company, Rishab Enterprises. According to reports, the Jodhpur Income Tax Commissioner also came across cash ranging between Rs.7 crore to Rs. 32 crore in Singhvi's account. The Congress leader said that it was meant to pay fees of his legal assitants. Singhvi has reportedly alleged that he was being trapped in a "cat and mouse game" and argued that the Commission did not have the jurisdiction to impose penalty on him

An indication how crooked the media is can be gauged by the fact that none of the larger media companies are publishing this news.

Paul · Post by **Paul** » 16 Nov 2016 07:21

Next 20 days are heavy going. Government should pull in additional resources to complete the transition.

Banks alone cannot do this on their own

chetak · Post by **chetak** » 16 Nov 2016 07:40

Paul wrote: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!

AXIS is the one which is sending a continuous stream of SMS to their account holders that their ATMs have cash.

Are they victims of some inter bank rivalry??

Paul · Post by **Paul** » 16 Nov 2016 07:44

Singhvi's case is not directly related to demonetization. He has received IT notice on this before as well.

rahul_r · Post by **rahul_r** » 16 Nov 2016 07:56

A really good interview of the SBI governor that goes into some detail around how they are handling the demonetization.

http://www.ndtv.com/video/exclusive/the ... o-featured