Currency Demonetisation and Future course of Indian Economy

siddhu · Post by **siddhu** » 18 Nov 2016 19:20

@Banglore
Exchanged 4k money without any hassle. Bank was empty.
Was able to with draw 2k from ATM at late night, I was the only one at the ATM.

pankajs · Post by **pankajs** » 18 Nov 2016 19:20

The one major downside that I see is related to the Real Estate sector both because of the current action and the proposed action against Benami properties. The concern here is that construction is a HUGE employment generator at the lowest levels.

GOI will have to counter this deflationary action with massive Infra spending as well as policy/incentive to promote CLEAN affordable real estate / housing development.

Arjunn · Post by **Arjunn** » 18 Nov 2016 19:25

.......

nandakumar · Post by **nandakumar** » 18 Nov 2016 19:27

Regarding workers being paid by cheque or through electronic transfer by small and medium enterprises the problem is this. Most of them have not registered their workers for PF or ESI. Now, if they start making bank payments the PF and ESI inspectors would be after them. They can't say all these workers were recruited only last month. Now failure to make PF contributions is not a compoundable offence. Imprisonment is the fallout.

pankajs · Post by **pankajs** » 18 Nov 2016 19:28

Arjunn wrote:..

So much BS in a single post! Let me start with Reddy .... he is no more in BJP.

Arjunn · Post by **Arjunn** » 18 Nov 2016 19:32

Then, why is he not being raided by the IT department?

kapilrdave · Post by **kapilrdave** » 18 Nov 2016 19:34

As far as my guess goes, none knew about the denomination beforehand. The biggies of Gujarat who are supposed to be BJP's supporters are also finding "ways". Even politicians including certain parliamentarian. And I guess that was the only way to do this successfully. It would have been a big farce if it was not like this.

pankajs · Post by **pankajs** » 18 Nov 2016 19:35

Arjunn wrote:Then, why is he not being raided by the IT department?

Why raid Reddy? Under what pretext? Just because he like Ambani is a Billionaire is he ENTITLED to a tax raid? How about Adani or Birla or Bajaj or DLF? I could go on and on.

If tomorrow I go out and buy a 100 cr flat will it also invite a raid just like that or because you wish it like that?

Arjunn · Post by **Arjunn** » 18 Nov 2016 19:38

kapilrdave · Post by **kapilrdave** » 18 Nov 2016 19:40

Arjunn wrote:Then, why is he not being raided by the IT department?

1. Why are you so sure that whatever money Reddy has is black? Are you an insider?

2. What the govt would get by raiding there? 30% tax on partly disclosed amount? 45%? 50%? By this action govt got the whole of 100% of your beloved Reddy

. That is IF he has the black money.

3. Why must the govt raid on every single BM holder before demonetization? Isn't just null-voiding their cash the best and easier option?

4. Last and ultimate question - kitna tha?

Arjunn · Post by **Arjunn** » 18 Nov 2016 19:40

pankajs wrote:
Arjunn wrote:Then, why is he not being raided by the IT department?
Why raid Reddy? Under what pretext? Just because he like Ambani is a Billionaire is he ENTITLED to a tax raid? How about Adani or Birla or Bajaj or DLF? I could go on and on.

If tomorrow I go out and buy a 100 cr flat will it also invite a raid just like that or because you wish it like that?

How did he get 500 plus crores in new currency?

pankajs · Post by **pankajs** » 18 Nov 2016 19:40

This is called conformation BIAS. YES there is such a term. You go out and search for confirming evidence and ignore anything that does not fit you narrative!

https://en.wikipedia.org/wiki/G._Janardhana_Reddy

Gali Janardhana Reddy(Kannada: ಗಾಲಿ ಜನಾರ್ಧನ್ ರೆಡ್ಡಿ ), born on 11 January 1967 is an Indian politician with the Badavara Shramikara Raitara Congress party and one of the richest politicians of Karnataka. He obtained his first iron ore mining license in Karnataka in 2004, when the Congress party led the state government. He has subsequently been implicated in the illegal mining scandal in Bellary and the related Belekeri port scam.[1] In 2009, a Supreme Court of India-appointed central empowerment committee recommended action against Reddy-owned Obulapuram Mining Company.[2] An FIR in the case was filed by the Central Bureau of Investigation. Also, Santosh Hegde, the Lokayukta or ombudsman of Karnataka state, had indicted Reddy and his two brothers, all of whom were cabinet ministers in the BJP's Karnataka state government at the time, in the mining scandal.

pankajs · Post by **pankajs** » 18 Nov 2016 19:41

Arjunn wrote:
pankajs wrote: Why raid Reddy? Under what pretext? Just because he like Ambani is a Billionaire is he ENTITLED to a tax raid? How about Adani or Birla or Bajaj or DLF? I could go on and on.

If tomorrow I go out and buy a 100 cr flat will it also invite a raid just like that or because you wish it like that?
How did he get 500 plus crores in new currency?

How do you know that he did not prepay before or pay by cheque?

kapilrdave · Post by **kapilrdave** » 18 Nov 2016 19:42

Arjunn wrote:Well...it seems some people knew about this...per this BJP MLA.

https://www.thequint.com/currency-ban/2 ... -rajasthan

LOL. Kindly explain what on earth Ambani and Adani do by knowing about the demonetization? Are you saying they have BM? How do you know? Are you an insider of Ambani and Adani?

kvraghav · Post by **kvraghav** » 18 Nov 2016 19:47

Do you know how many different agencies have raided reddy how many different times?
Should we raid ambani because he built antilia?
Lastly about 500 rs notes, marriages of people like reddy happen trough event management agencies which take cheques. Their marriages are not chillars to hold in 500 rs notes. Refer Kannada actor shivarajkumars daughters wedding.

Rahul M · Post by **Rahul M** » 18 Nov 2016 19:50

this is the demonetisation thread. keep politics to the thread meant for it.

manjgu · Post by **manjgu** » 18 Nov 2016 20:22

tomorrow is no exchange day. Only senior citizens allowed to exchange money. I hope deposits in a/c are allowed.

jamwal · Post by **jamwal** » 18 Nov 2016 20:34

http://timesofindia.indiatimes.com/indi ... s?from=mdr
Govt issues order to attach Rs 18,866 cr properties under PMLA

Government today said it has issued provisional orders to attach properties worth Rs 18,866 crore for offences under the Money Laundering law.
It has also taken a host of initiatives, including effective enforcement of law, to curb the menace of money laundering in the country, Minister of State for Finance Santosh Kumar Gangwar said in a written reply to a question in the Lok Sabha.
"As of October 31, 2016, 658 provisional attachment orders have been issued by attaching properties worth Rs 18,866 crore. Further, 283 prosecution complaints have been filed for the offence of money laundering (under Prevention of Money Laundering Act)," he said.
Referring to the steps taken by the government to deal with the menace of black money, Gangwar said the government recently demonetised 500 and 1,000 rupee notes "in a historical move that will add record strength in fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes".
The other initiatives, he said, include enactment of the Benami Transaction Act, amendments to FEMA and foreign black money law.
Under the Black Money (undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, 648 declarations involving undisclosed foreign assets worth Rs 4,164 crore were made. The amount collected by way of tax and penalty in such cases is about Rs 2,476 crore.
As part of enforcement measures, during April 2014 to October 2016, the Income Tax department has conducted searches in 1,242 groups of assessees, seizing undisclosed assets worth Rs 2,029 crore. These assessees admitted undisclosed income of Rs 28,567 crore.
During the same period, 13,690 surveys conducted resulted in detection of undisclosed income of Rs 30,001 crore. Also the I-T department has filed 1,514 prosecution complaints while offences were compounded in 2,244 cases and 75 persons have been convicted by the courts, Gangwar said.
Under the Income Declaration Scheme (IDS), the government has received 64,275 declarations disclosing undisclosed income of Rs 65,250 crore.

vijayk · Post by **vijayk** » 18 Nov 2016 20:38

Most of my friends in AP are saying notes problem is not that bad. Opposition is only doing this to cash their BM and for elections.

yensoy · Post by **yensoy** » 18 Nov 2016 20:58

Suraj wrote: So, the fastest way to fix the liquidity crunch is to withdraw a little, more frequently, and spend it all . Rinse, repeat. It's literally this activity that restores cash liquidity - people have to transact the smaller notes frequently and not hold it any longer than they have to. That is what restores liquidity. Every well meaning person withdrawing Rs.2000 and using debit cards, in fact becomes a counterproductive force against improving liquidity rapidly. Liquidity is created by transactional activity, not by safe holding of cash, and not by government diktat.

This is a very good point and excellent explanation. Shri Gurumurthy says something similar in his DD interview (everyone should watch it), but I didn't quite understand why he said that government employees etc should be paid in 50%+ cash for the next few months to address the liquidity crisis - now I do.

panduranghari · Post by **panduranghari** » 18 Nov 2016 21:12

Suraj wrote: So, the fastest way to fix the liquidity crunch is to withdraw a little, more frequently, and spend it all . Rinse, repeat. It's literally this activity that restores cash liquidity - people have to transact the smaller notes frequently and not hold it any longer than they have to. That is what restores liquidity. Every well meaning person withdrawing Rs.2000 and using debit cards, in fact becomes a counterproductive force against improving liquidity rapidly. Liquidity is created by transactional activity, not by safe holding of cash, and not by government diktat.

Exactly. DDM is complaining that this is a solvency issue for banks. Its a liquidity issue. Is the government also increasing the number of 100, 50, 20 and 10 rupee notes?

yensoy · Post by **yensoy** » 18 Nov 2016 21:25

SaraLax wrote:If my above sentences appear believeable - then Smart thinking from our PM Modi with regards to the timing of announcement of Demonetization and also his subsequent rallies to charge-up the common man to look forward in the near future to a less costlier economy !!. Even FM Jaitley indicated that he was aware of an impending demonetization but was caught unawares by the date of its announcement.

Timing of such an important announcement is like timing a war. There are dozens of inputs - economic cycle, festivals, harvest season, weather, exam season, holiday season, etc that determine when the switch is flipped. For instance, imagine if this had been in summer or during monsoons - people would be rioting by now after being subject to scorching heat or torrential rains while waiting in lines. It cannot be in the lead up to Diwali, Christmas or Id (Guru Nanak Jayanti does not have a big shopping component). It could not be during any major harvest period in the country, when millions have relocated to work on fields. It cannot interfere with our long series of exams - boards, entrance tests, IAS etc; or timed around the end of tax year which would make accounting very tricky. Trump's election was definitely very fortunate and well played by PM, but mostly serendipity.

kapilrdave · Post by **kapilrdave** » 18 Nov 2016 21:28

Regarding the decreasing Q's at bank...

I think the hoarders are giving a bit more thought to their strategy. They've heard threat from PM that he will not let anyone go even after the 30 dec., Jaitly specifically said yesterday that he is reducing the exchange limit because it is being misused. They now realize that govt is watching them which should have been obvious to begin with. Employing crowds in hundreds is risky business.

In any case that tactic was not going to help too much. With reduced limit you have to employ 100 people for 40 days to get only 80lakh converted. That is assuming one person does one exchange daily. If we consider two exchanges then it comes to 160 lakh with 100 people. Now discount that amount by whatever %age he pays to the hired people.

Is it really worth taking so much risk? I guess not.

Prasad · Post by **Prasad** » 18 Nov 2016 21:35

pankajs wrote:
JayS wrote:How reliable is this pices?? So it was leaked after all..?? If this is true and traders knew, then its pretty certain all BJP politicians knew. Which means many in Congress knew too and they got chance to save their assess. But guess Kejri/Mamata/Mulayam/Commie gang didn't get the memo...
My GUESS is that the message of strong action down the road MAY have been passed along without disclosing any details to preserve secrecy. CONgress and the Communists not only control the major bank unions but also have their folks inserted all levels in the PSU bank hierarchy. They will get most of their cash hoard laundered alright by the PSU employees.

The ones in a bind are the ones who haven't yet got enough of their supporters inside the PSU Banks.

Entirety of parents generation is in banks. Also some from grandfather generation. From >GM level to clerk level. So whenever they all get together, they only talk about one thing - stuff that happens in banks. Over the years, i've heard enough stories about ministry connections to realise justhow many bank personnel are beholden to bank associations and thereby communists and to higherups for greasing through loan proposals on higherup prodding/pushing/demanding. Absolutely rotten people end up high enough to pressurise poor lower level branch managers. And not just congress btw. Even one current cm garu and bjp mins. Nobodys hands are clean.

Primus · Post by **Primus** » 18 Nov 2016 21:45

RajeshG wrote:
people here take BM as evil and almost everybody who has 'black' money as kaffir.

in real world BM isnt quiet black - but there are shades of grey. even people with 'black' money have 'morals'.

There are NO shades of gray in corruption or black money. You can't pardon a thief who breaks into your house and simply steals 100Rs as opposed to the one who steals your wife's jewelry. Both are thieves although the former may get away (may) with a lesser sentence. I understand about the guy who means well and only avoids a 'little bit' of tax or the big tycoon who collects crores and then builds a temple or 'dharamshala'. However, from the legal, technical and IMHO moral perspective both are dealing in black money and thus are thieves, to a greater or lesser degree. Morality does not come into the picture because in every other respect the black marketeer may be a saint.

..........snip/
if for eg the same thing was incentivised by govt saying you can claim salaries paid to house-help etc as expenses then i am sure the baniya will become very interested and that much money will become more accountable. for govt it generates employment anyway - you want more of it anyway - so it does make sense to incentivise it ? i also suspect a huge amount of 'black' money is because of this "setting".

I am in the US so this may not apply to India but I think tax codes are similar.

I also run two businesses and of course have employees in the office. I also employ a housekeeper, a gardener and a handyman for home repairs. For work related employees, yes, all salaries are tax-deductible, but for people who work at home it is all from after-tax income. The tax codes are extremely strict and you get flagged for the slightest infringement. In fact for household employees in the US you even have to pay their social security and FICRA which amounts to another 20% over their pay.

However, there are many other incentives the GOI can provide for the small business owners. Having said that, India has a lower tax burden than most Western nations, as has been mentioned before.

manjgu · Post by **manjgu** » 18 Nov 2016 21:57

Prasad..things are not same under Modi sarkar wrt bank loans. my friend tried everything under the sun from Fin Secy, Chairman of PSU banks etc but could not move a loan. banks are very chary...

Rishi Verma · Post by **Rishi Verma** » 18 Nov 2016 22:22

From tomorrow only the bank account holders can exchange money. That too with the ink mark. Less queues now. NaMoJi's every two hour meetings paying off. Now let's see how many BM "exchange agents" can be seen crowding the banks, seniors can exchange at any bank.

Gan*deep Turdesai was in a Delhi standard charter branch. He tried his best to instigate a negative remark for TV cameras. People in lines dissapointed him, each said he/she supports the move. Then he bragged into the camera that "this happens to be my bank, but I don't need to stand in queue, I send my office staff" this bhen**od needs to be posthumously given a Bharat Ratna award as soon as possible.

Sicanta · Post by **Sicanta** » 18 Nov 2016 22:34

raj-senthil · Post by **raj-senthil** » 18 Nov 2016 22:36

Got this on whatsapp

Food for Thought : - In India today the situation is like a little bit of a stand still due to demonetisation. However we haven't seen any Bank getting burnt, No ATM burnt, No buses burnt, and there are no vandalism or violence. Does this mean these acts are not done by the common public? Are these paid events? So summary is when there is no money to sponsor such events who will do this for free? Think for a moment. Arise and Awake now !!

Karthik S · Post by **Karthik S** » 18 Nov 2016 22:51

Sicanta wrote:

In short, currency shortage in half of UP and entire UK. This is what we need with few months to go before the elections. Hope the situation is rectified soon.

bharotshontan · Post by **bharotshontan** » 18 Nov 2016 23:04

Good opinion piece here on dnaindia on benefits and necessity of the demonetization
http://www.dnaindia.com/analysis/column ... re-2274161

Bart S · Post by **Bart S** » 18 Nov 2016 23:07

pankajs wrote:
JayS wrote:How reliable is this pices?? So it was leaked after all..?? If this is true and traders knew, then its pretty certain all BJP politicians knew. Which means many in Congress knew too and they got chance to save their assess. But guess Kejri/Mamata/Mulayam/Commie gang didn't get the memo...
My GUESS is that the message of strong action down the road MAY have been passed along without disclosing any details to preserve secrecy. CONgress and the Communists not only control the major bank unions but also have their folks inserted all levels in the PSU bank hierarchy. They will get most of their cash hoard laundered alright by the PSU employees.

The ones in a bind are the ones who haven't yet got enough of their supporters inside the PSU Banks.

Beyond some isolated rogue incidents they can do diddly squat. Maybe it was possible in the pre core banking days but now everything is digitized and networked with the RBI having visibility into it.

Prasad · Post by **Prasad** » 18 Nov 2016 23:29

manjgu wrote:Prasad..things are not same under Modi sarkar wrt bank loans. my friend tried everything under the sun from Fin Secy, Chairman of PSU banks etc but could not move a loan. banks are very chary...

CBI grills like there is no tomorrow. Father, now retd, was asked to come to cbi office regarding some case from long long ago, since he was part of the proposal or something. Buggers treat everyone like a criminal and ask all sorts of questions about hte case.

vijayk · Post by **vijayk** » 18 Nov 2016 23:37

kapilrdave wrote:Regarding the decreasing Q's at bank...

I think the hoarders are giving a bit more thought to their strategy. They've heard threat from PM that he will not let anyone go even after the 30 dec., Jaitly specifically said yesterday that he is reducing the exchange limit because it is being misused. They now realize that govt is watching them which should have been obvious to begin with. Employing crowds in hundreds is risky business.

In any case that tactic was not going to help too much. With reduced limit you have to employ 100 people for 40 days to get only 80lakh converted. That is assuming one person does one exchange daily. If we consider two exchanges then it comes to 160 lakh with 100 people. Now discount that amount by whatever %age he pays to the hired people.

Is it really worth taking so much risk? I guess not.

Lot of people used JanDhan accounts to launder money.

But there is a strong rumour that Modi will transfer some of the savings into JD accounts. So there are refusing to allow their accounts to be used for 5K per 1 Lakh. They are no dummies.

One more thing... Looks like Guj,MH and Haryana got 500 but not anywhere else. Once 500 starts reaching, things will be better

Rishi Verma · Post by **Rishi Verma** » 18 Nov 2016 23:44

ATM machines need to start working asap. Whatever it takes.

RajeshG · Post by **RajeshG** » 18 Nov 2016 23:46

Akshay Kapoor wrote: I have had had the honour of meeting Arun Shourie twice

xxxxx snip xxxxxxxxx

- surprises me.

my only point was that he cannot practically even think of being a full time minister - his wife's health and son's situation wont even allow him to be a full time minister.. and people here are claiming he is saying all of this because he wants a khursi. he is made of different stuff.

pankajs · Post by **pankajs** » 18 Nov 2016 23:58

This is from memory so I could be mistaken.

On one program he was asked if he will become a minister in the Modi GOI. He side-stepped the Q. The impression that I got therefore was that he was not only interested but also expecting a call. Another thing I remember from that era was that he suddenly started appearing on channels discussing what Modi's economic policies will be. That gave the impression, at least to me, that he was angling for the Finance ministry.

Again, this is an impression that has lingered with me from that time. I cannot back this up with videos for it is not worth my time. Probably NDTV interview from just after NDA victory.

RajeshG · Post by **RajeshG** » 18 Nov 2016 23:59

Primus wrote: There are NO shades of gray in corruption or black money. You can't pardon a thief who breaks into your house and simply steals 100Rs as opposed to the one who steals your wife's jewelry.

Primusji, thats the disconnect i was mentioning. I dont think a lot of people are thinking in this manner. For eg in the US I have friends who own businesses as well. When we go out to have dinner etc and they pay using their business card they show that as a "business expense". You think they are morally wrong ? none of us think so. but i can see that a lot of people on this thread would take probably consider that as "black" money. thats what i mean by a disconnect. we hold different moral compasses.

RajeshG · Post by **RajeshG** » 19 Nov 2016 00:02

Pankaj, i feel bad discussing his family's issues but you will find the details if you google for it. i really doubt given the man's career he would actually be angling for something like this. i really dont know him all that well but like you that is the impression i have.

Rishi Verma · Post by **Rishi Verma** » 19 Nov 2016 00:09

Guys please please don't derail this thread with Arun Shourie in modi cabinet crap