Currency Demonetisation and Future course of Indian Economy

Gus · Post by **Gus** » 16 Nov 2016 14:44

In 5 stages of grief, are the haters still in stage 1. There was an excellent collection of tweets for the surgical strike. This one will have even more material

Gus · Post by **Gus** » 16 Nov 2016 14:47

RS TV live showing Sharad Yadav crying buckets.. with a vexed behenji constantly putting hands to cheeks and forehead

Gus · Post by **Gus** » 16 Nov 2016 14:50

He's repeating most of the lies you have probably seen already in your SM feeds - BJP knew, how come urjit Patel signs etc - with some smug laughter from d raja etc..but I can detect nervousness in the laughter as they all know there will be no rollback

kmkraoind · Post by **kmkraoind** » 16 Nov 2016 14:52

From Bloomberg Twitter feed.

Singha · Post by **Singha** » 16 Nov 2016 14:54

the finger ink thing will again take time to distribute to all banks. its special electoral ink. as of today only some 12 SBI branches in delhi are doing it.

shiv · Post by **shiv** » 16 Nov 2016 14:56

Singha wrote:the finger ink thing will again take time to distribute to all banks. its special electoral ink. as of today only some 12 SBI branches in delhi are doing it.

The funny part is that people who are standing for 2nd or 3rd time will not know until they go in..

srinebula · Post by **srinebula** » 16 Nov 2016 14:56

Similar situation in Hyd.
Lot of autos plying. I see small vegetable, fruit & flower vendors dotting the road side.
small road-side eateries are doing brisk business.
Office ATM has about 15-20 people queued.
I avoided withdrawing any cash so far, purely relying on card payments and online transfers.

However I do feel if the ATMs are replenished faster, there will be a better perception of "back to normal" feeling in people.
Seems like this handling is being done by Babus and Finance ministry; I hope Modi can depute one reliable lieutenant to handle this and improve situation fast.

[quote"]Signs of economic activity returning to Bengaluru. More people about in shops etc. Bank queues shorter.[/quote]

Gus · Post by **Gus** » 16 Nov 2016 14:59

S.yadav is piling on. I can't make out exactly what except that he is lot of butthurt. yechury and diggy and other generally useless folks grinning .

Jetli is watching very unamused . Not sure if he will reply today.

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

One thing Gus ji I can't understand, that both sharad yadav and ram gopal yadav are brown nosing Jailtley, saying on the lines, "...i believe even you jailtley ji were not told about it, otherwise it would have really remained a secret truly, and your punjab president's photo with Rs. 2000/- wouldn't have happened...."

Why the chamchagiri to jaitly?

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

Sitaram Yechury must have watched gladiator before coming to RS

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

Jetli said he did not know about the announcement - what he meant was he did not know PM picked that day for announcement. PM called cabinet and then announced.

Nirmala sitaraman said in another interview that modi and jetli were the only people in the cabinet who knew about the decision. I saw that and posted here. She is a very trustworthy person.

So the question of jetli did not know about the decision is baseless. He did not know about the specific day, that's all.

The haters are just trying some FUD and doing the modi dictator

Gus · Post by **Gus** » 16 Nov 2016 15:21

Haters first prop advani (suddenly he became kosher and not the vile communalist foil to "statesman" vajpayee) ..then sushma ..jetli..

Basically anybody to latch on to and start a

about modi dictator .. emergency

vina · Post by **vina** » 16 Nov 2016 15:26

Yechury is rambling on. He is confused between WRITE OFF and LOAN WAIVER. The treasury folks explained, but still doesnt get it.

Classic fruits of JNU EjjuKashun. And this is to think that he actually read ECONOMICS there! I can't believe that he can't do even fundamental basic accounting ! How do guys like him get to register for PhD in economics!

Gus · Post by **Gus** » 16 Nov 2016 15:34

Hackthoory spends way too much time on SM. Basically he covered almost all the memes and jokes posted there.

abhijitm · Post by **abhijitm** » 16 Nov 2016 15:42

shiv wrote:Signs of economic activity returning to Bengaluru. More people about in shops etc. Bank queues shorter.

Same in Mumbai.

JTull · Post by **JTull** » 16 Nov 2016 15:51

Opposition gambit in winter session will be to extend 30th Dec deadline and to get some concessions for rural folks. This gives them more flexibility to launder. Modi needs to stay firm on this.

On the issue of who knew and who didn't, well it doesn't matter. Who knew about the exact date is irrelevant. Still, hundreds of people must have know about Rs 2000 note (designer, printer, distribution channels, etc). Only speculation is whether someone knew about the withdrawal of 500/1000 notes. There must have been extended discussion on when is the right time (after previous voluntary disclosure deadline 30th Sept, after Diwali, after sufficient Rs 2000 notes have been printed, after Rs 500 notes have commenced printing, after critical mass in Jan Dhan accounts and Aadhar linked direct subsidy distribution). There could have been some immediate triggers, such as the unrest in Kashmir, which were compartmentalised and only PM had access to all moving parts. In the end PM, as head of govt, takes the final call. So no one else needs to know before that.

kvraghav · Post by **kvraghav** » 16 Nov 2016 16:12

One more message going on SM is that just add the amount to current year earnings and pay tax. Don't they ask for source?
I think more deposits will happen now after 500 is released. People will deposit older notes and create bills for them. When IT cones, they can actually say they were the newer notes unless banks introduce challan to differentiate them.

Chandragupta · Post by **Chandragupta** » 16 Nov 2016 16:17

They will ask for source if it is a big enough amount. I think above 10 lakh per account. Below that there will be tax and penalty may be. I read somewhere that IT will not wait for you to file returns to examine but slap a notice and fine immediatey after checking last year's IT return and cash deposited. No scrutiny of white money flowing into your account via Cheque or RTGS.

200% penalty will be on 10 lakh and above below that I think they will just slap 50% tax penalty and serve an ultimatum before which you need to pay or freeze the account.

IT dept guys will go after big and medium fishes - who are depositing crores via their own and workers account.

srinebula · Post by **srinebula** » 16 Nov 2016 16:31

Some people pointed out that banks may not accept deposits in new currency till Dec 30 exchange is over. That seems like a reasonable thing to enforce. By default any deposits in the window of opportunity can be assumed to be in old notes.

kvraghav wrote:One more message going on SM is that just add the amount to current year earnings and pay tax. Don't they ask for source?
I think more deposits will happen now after 500 is released. People will deposit older notes and create bills for them. When IT cones, they can actually say they were the newer notes unless banks introduce challan to differentiate them.

IndraD · Post by **IndraD** » 16 Nov 2016 16:35

Modi holds some high cards in this eyeball-to-eyeball with his political rivals. The chances are more than 50:50 that his opponents will blink first. For demonetisation cannot be undone, and if it is going to stand (even the apex court has declined to intervene), the only real point is to steadily reduce inconveniences to the public. Modi is already on to this.

Moreover, Modi is taking the propaganda battle to the people. And here he has an advantage. Few people believe that he is corrupt, which is not something that can be said about his opposition.

A story in Business Standard by Sai Manish suggests that Modi has been methodically building his arsenal to go after benami properties. He writes: “Modi’s plan to smoke out the real owners of benami properties rests on a three-pronged strategy – using information from digitised property records and verifying them, monitoring property transfers since sounding out his warning to benami property holders on 13 November, and a special monitoring of government officers with holdings much beyond their means.”

With the passing of the Benami Transactions (Prohibition) Amendment Act, 2016, Modi now has the statutory powers to go after property crooks, most of whom are either politicians or realtors connected to politicians. The law is draconian, and, as Manish explains, it can be used to confiscate benami properties. Demonetised money can be laundered sometimes, but confiscated property is gone forever.

http://swarajyamag.com/politics/demonet ... opposition

chandrasekaran · Post by **chandrasekaran** » 16 Nov 2016 16:46

Just came back from my bank. Went there to withdraw cash for sundry items. ATM was not working. There was a small queue to deposit and 3 or 4 people like me, who were seated waiting for the teller to announce our name. Two members of the peaceful community, no bath, white pajama till ankle level, no mustache, only beard and mulla cap, walked in with two huge bags...

My bank (private) keeps sending emails about fixing appointment for huge deposits. Must be one .

vijayk · Post by **vijayk** » 16 Nov 2016 16:47

Chandragupta wrote:They will ask for source if it is a big enough amount. I think above 10 lakh per account. Below that there will be tax and penalty may be. I read somewhere that IT will not wait for you to file returns to examine but slap a notice and fine immediatey after checking last year's IT return and cash deposited. No scrutiny of white money flowing into your account via Cheque or RTGS.

200% penalty will be on 10 lakh and above below that I think they will just slap 50% tax penalty and serve an ultimatum before which you need to pay or freeze the account.

IT dept guys will go after big and medium fishes - who are depositing crores via their own and workers account.

I would not harass citizens with upto 1-2 cr if they come and declare it as this year's income. Collet the tax and move on. Make sure to bring it into the system. Even though the guy who shows 5 lakh income shows 50 lakh, I would leave it because our IT guys are corrupt and can be harassing. Go after big fish. Someone shows 5 crore which is 10 times what they show.

vijayk · Post by **vijayk** » 16 Nov 2016 17:03

http://www.firstpost.com/india/demoneti ... 07658.html

Demonetisation: Modi nukes Pakistan’s ‘RBI’, cripples ISI’s fake note network

Pakistan’s code word for high quality Fake Indian Currency Notes (FICN) is ‘RBI’ — Reserve Bank of India — which controls the monetary policy of the Indian rupee. With Prime Minister Narendra Modi’s demonetisation policy abolishing Rs 500 and Rs 1,000 rupee notes, Faizabad bus stand in Rawalpindi, Pakistan has lost its charm for Lala, a former ISI officer, who coordinates the smuggling of FICN to India.

A retired brigadier-rank officer of the Pakistani Army, Lala, till last week was the key figure to procure and supply ‘RBI’ or FICN through an intricate network of couriers and smugglers. But, since Modi activated his ‘original RBI’ to junk high-denomination notes last week, there are virtually no takers for Lala’s ‘RBI bundles’ across the entire stretch of Muni Road in Rawalpindi, the northernmost part of Punjab province.

The chatter from across the border, intercepted by intelligence agencies, indicates that Modi’s action against black money in India has demolished a section of the ISI headquarters in Rawalpindi, where many fugitives from militant outfits like Babbar Khalsa, Khalistan Zinadabad Force and Indian Mujahideen used to hold meetings with ISI officials to infuse fake currency into Indian’s financial system with the twin motives of economic destabilisation and financing terror activities in India.

The ISI used to provide lucrative exchange rate with a profit of nearly Rs 300 per fake Rs 1,000 rupee note. A margin of these profits was paid by ISI to the field agents like Lala and underworld modules with multinational networks, popularly known in Pakistan as ‘office’.
Said ‘office’ was responsible for running an ‘hub and spoke’ business model that included smuggling FICN through both direct and indirect routes. The direct route was Munabao-Khakrapar and the Attari border, while the indirect route usually ran through the UAE, Thailand, Malaysia, Sri Lanka and Singapore before arriving in Kathmandu and Dhaka.

The top secret intelligence agencies dossier reviewed by this writer for Firstpost show that China was recently included in ISI’s smuggling route to exploit commercial courier services. Shenzhen, a major city in Guangdong Province, located north of Hong Kong, had become a major hub for 'office’ which used to export ethnic garment containers with carefully concealed FICN for onward transmission into India through Nepal and Bangladesh.
The ‘office’ used to run the operation with Suleman and Mulla in Bangladesh and Rana and Ansari in Nepal. Ansari, a Nepali politician from Lalitpur and close aide of Dawood Ibrahim, was arrested by Nepal Police in January 2014. However, until last year, Ansari was said to have maintained close links with ISI officials posted at the Pakistani embassy in Maharajgunj Chakrapath in Kathmandu.

It is no secret that Pakistani embassies abroad are using their diplomatic channels for FICN circulation and the crackdown started by Modi may perhaps render many undercover ISI officers jobless in South Asian countries. The secret dossier mentioned above said:

Primus · Post by **Primus** » 16 Nov 2016 17:08

Rammpal wrote:
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.

Ah yes, Choice. Of course everyone always has a choice, even one dying of hunger can choose not to eat.

But I get your point.

TKiran · Post by **TKiran** » 16 Nov 2016 17:09

Incredible, right now I am having my snacks break in Chennai, all crowd is eating snacks, too much crowd, loved last 4 days, no crowds, no traffic on roads, now all back to normal.

all emotions same time...

Chandragupta · Post by **Chandragupta** » 16 Nov 2016 17:11

vijayk wrote:
Chandragupta wrote:They will ask for source if it is a big enough amount. I think above 10 lakh per account. Below that there will be tax and penalty may be. I read somewhere that IT will not wait for you to file returns to examine but slap a notice and fine immediatey after checking last year's IT return and cash deposited. No scrutiny of white money flowing into your account via Cheque or RTGS.

200% penalty will be on 10 lakh and above below that I think they will just slap 50% tax penalty and serve an ultimatum before which you need to pay or freeze the account.

IT dept guys will go after big and medium fishes - who are depositing crores via their own and workers account.
I would not harass citizens with upto 1-2 cr if they come and declare it as this year's income. Collet the tax and move on. Make sure to bring it into the system. Even though the guy who shows 5 lakh income shows 50 lakh, I would leave it because our IT guys are corrupt and can be harassing. Go after big fish. Someone shows 5 crore which is 10 times what they show.

Amit Shah (according to gossipguru.in, posted a few pages back) apparently told some journalists that they have no intention to bother small businessmen & traders for income tax. So that's my guess too. Bania & trader fraternity funds BJP & RSS. 99% of people below 2 Cr will belong to this community. I don't think GoI will pursue them at all. Imho, the targets of this exercise have already been hit hard - political parties, Pakistan-ISI, hawala network, bhaiwood, commodity hoarders, RE goons and big fat jewellers. I don't think GoI is going to fire anymore salvos on BM anymore, next up is benami property & gold to hit the same targets again and hit hard where >60% of their stash is hidden.

IndraD · Post by **IndraD** » 16 Nov 2016 17:16

I read benami property is double edged sword, it is strongly linked with real estate property in total, which in turn is related with economy, jobs etc, hence attacking property benami etc may be moderate and less lethal.

Chandragupta · Post by **Chandragupta** » 16 Nov 2016 17:22

BM is a double edged sword too - I can argue that it causes collateral damage to a big percentage of SME sector. If a babu is worth 500 crore (peanuts actually), he will only have 30-40 crore in cash at most, 20-30 will be parked in Gold & jewellery and the rest in RE. If you dont go after these, there is no punishment. Any action against benami & gold will least affect anybody other than the intended target.

durairaaj · Post by **durairaaj** » 16 Nov 2016 17:24

A news article I liked very much.
Currency ban triggers panic attacks in hoarders

Rishi Verma · Post by **Rishi Verma** » 16 Nov 2016 17:55

Chandragupta wrote:BM is a double edged sword too - I can argue that it causes collateral damage to a big percentage of SME sector. If a babu is worth 500 crore (peanuts actually), he will only have 30-40 crore in cash at most, 20-30 will be parked in Gold & jewellery and the rest in RE. If you dont go after these, there is no punishment. Any action against benami & gold will least affect anybody other than the intended target.

This is step 1. Spray ddt in the rat hole and get the rats out. Step 2. would be to cook the rat using a proper Musahari rat-palak recipe.

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

All opposition may cry. The inconvenience to general public will subside completely by end of Nov. However all political rivals are completely torched. They will not be able to replenish their stock of black money anytime soon. Modi can ask RBI to provide the windfall gains to the government and give it directly to poor people which will make him electorally invincible.

JTull · Post by **JTull** » 16 Nov 2016 18:12

Chandragupta wrote:BM is a double edged sword too - I can argue that it causes collateral damage to a big percentage of SME sector. If a babu is worth 500 crore (peanuts actually), he will only have 30-40 crore in cash at most, 20-30 will be parked in Gold & jewellery and the rest in RE. If you dont go after these, there is no punishment. Any action against benami & gold will least affect anybody other than the intended target.

For babus, laundering to kids and other kin settled overseas thru the hawala route was the biggest share of all methods. That's been the most hit.

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

rohiths wrote:All opposition may cry. The inconvenience to general public will subside completely by end of Nov. However all political rivals are completely torched. They will not be able to replenish their stock of black money anytime soon. Modi can ask RBI to provide the windfall gains to the government and give it directly to poor people which will make him electorally invincible.

Why give it directly to the 'poor'? We need to do away with this mai baap sarkaar kind of Governance. Subsidies are okay but direct cash transfer absolutely not. Use the funds to build rural infra, the poor will automatically climb the ladder.

kvraghav · Post by **kvraghav** » 16 Nov 2016 18:20

Knowing Modi ji, there will be drama around this. The entire saved amount would be created as a fund and some pro-farmer or pro-poor scheme will be announced in the budget with that amount as fund. No wonder budget is pushed to Feb. This might be the primary reason for Kejriwals shrill sounds.

rohiths · Post by **rohiths** » 16 Nov 2016 18:35

Chandragupta wrote:
rohiths wrote:All opposition may cry. The inconvenience to general public will subside completely by end of Nov. However all political rivals are completely torched. They will not be able to replenish their stock of black money anytime soon. Modi can ask RBI to provide the windfall gains to the government and give it directly to poor people which will make him electorally invincible.
Why give it directly to the 'poor'? We need to do away with this mai baap sarkaar kind of Governance. Subsidies are okay but direct cash transfer absolutely not. Use the funds to build rural infra, the poor will automatically climb the ladder.

Given the magnitude of the political risk that Modiji has taken, he will be looking for rewards. He will be looking to get re-elected with full majority once again and he will definitely use the 3-4 Lakh crores windfall on a political project which would give him great mileage. Giving money directly to the 30-40 crore people will show him as a Robin hood figure and will generate atleast 20 crore votes which is more than sufficient to get full majority once again. He would announce it in the budget in Jan 2017 and transfer the amount on Aug 15 2017 when India completes 70 years of Independence. Modi might have been preparing for this from Day 1 with Jan Dhan scheme. Also direct cash transfers are way more efficient than subsidies as leakages are insignificant.
PS: If Modi does use the windfall for infrastructure my respect for him would multiply 10X. But I guess it will be unlikely and he will do all it takes to get re-elected with a bigger majority

jamwal · Post by **jamwal** » 16 Nov 2016 18:50

Karthik S · Post by **Karthik S** » 16 Nov 2016 18:51

Chandragupta wrote:
rohiths wrote:All opposition may cry. The inconvenience to general public will subside completely by end of Nov. However all political rivals are completely torched. They will not be able to replenish their stock of black money anytime soon. Modi can ask RBI to provide the windfall gains to the government and give it directly to poor people which will make him electorally invincible.
Why give it directly to the 'poor'? We need to do away with this mai baap sarkaar kind of Governance. Subsidies are okay but direct cash transfer absolutely not. Use the funds to build rural infra, the poor will automatically climb the ladder.

+1. We should use the money for the long term growth.

pankajs · Post by **pankajs** » 16 Nov 2016 18:56

Giving money to poor directly as bank transfer will be WORSE than MNEGRA where at least they had to dig a ditch and then fill it up. All the money will be used up for consumption and nothing to show for it after it is gone and forgotten. And what will happen when the poor look to the GOI for the next round of doleonomics?

Better is to spend on Infra. Build rural roads, schools, hospitals, water distribution, electricity distribution, Cold storage, etc. The money will go to the rural economy but we will have infra to show for it. And the Infra will help the rural economy for a long time to come.

People in general are already supportive of the move. Just get adequate liquidity into the market fast. Reduced inflation will be another direct benefit all of us will enjoy and that matters most to the poor.

That above will bring reward enough.

habal · Post by **habal** » 16 Nov 2016 18:57

bhai kisiko paanch sau ka note mila .. ??

It may be loaded into ATMs by tonight. Right now only Bhopal, MH have it I think.

essay · Post by **essay** » 16 Nov 2016 18:58

I don't think GoI gets to use the "undeposited share". Best case, RBI announces that x amount is not credited into accounts and therefore moves it off the liability side into a Special Reserve. They can draw down this reserve only a period of time; can't be done in one shot.
Worst case, RBI (in view of their obligation to pay the bearer) keeps a majority of this liability on their books.
Please note that what Modi had done is announce that at midnight on 8th the old series of 500 and 1000 notes have disappeared magically and been instantly replaced with new notes (sure logistics means the new currency is not available to transact; nevertheless wealth did not disappear; only the medium of exchange).

This is terra incognito for every one. A huge economic/social experiment that has never been done before at this scale. No one knows what will happen in next 1-6 months.

PS: Quick hello to everyone here. I'm a newbie on the forum