Currency Demonetisation and Future course of Indian Economy

manjgu · Post by **manjgu** » 09 Dec 2016 15:25

@sdas .... there a max limit on withdrawls per week ..Rs 10000 ... why would someone send folks to bank everyday to withdraw Rs 1000 or 1500?? also such suspicious acitivty can be identified as withdrawls are from bank a/cs. people are short of cash and they will queue up every week till they meet their requirements atleast till dec 30th. Yes...GE 2019 will be litmus test but till then many other events can happen ..so attributing anything to Demo will be not so easy...the ATMS are still not working and/or dispensing Rs 500 in any quantity.

habal · Post by **habal** » 09 Dec 2016 15:36

sdas1645 wrote:Long queues tell us that people are coming back many times a week to the bank to get cash. Now this could be the same model used by the BM folks when they were exchanging. They are sending their troops to saturate the banks - denial of service or DOS attack on the banks. Banks should use inks to fight the DOS attack.

sir banks have stopped reloading ATMs because there is no money to be made there. No transation charges, no withdrawal charges etc. So what is there in it for banks. Everyone thus has to queue up in banks for even small change. Another matter is there are no ₹100 or ₹500 available to load ATMs in the first place. Most ATMs are loaded with ₹2000 notes only.

Nitesh · Post by **Nitesh** » 09 Dec 2016 15:43

ATMs are getting reloaded, but people are coming in with multiple cards and taking whatever hundred in no time. In some communication about ATM it was mentioned that max capacity for 100 rs note is 2.5 lakh, so thoritically only 100 people can finish off this in no time and over and above people who have 3-4 cards, and we have problems here

PS: I have seen people withdrawing in 1800-1900 just to make sure if they put 2500, they dont get 2k note. SOme ATMs just dont allow that

, in those you will not see queues.

Paul · Post by **Paul** » 09 Dec 2016 15:46

Then min withdrwarl should be 2000

RajeshG · Post by **RajeshG** » 09 Dec 2016 15:51

In last couple of days i have received multiple whatsapp msgs about some Javed Khanani committing suicide.

Googling his name comes up with articles about his brother ( Altaf ? ) getting arrested by US in november and pleading guilty a few days ago.

http://www.dawn.com/news/1219828

Maybe Sridharji can shed some more light on this.

RajeshG · Post by **RajeshG** » 09 Dec 2016 15:58

Another interesting article doing the rounds..

http://indianexpress.com/article/busine ... h-4377724/

The report, authored by SBI’s chief economic adviser Soumya Kanti Ghosh and his team, had cited an ‘unusual rise’ in currency with public, estimated to have risen 25 per cent year-on-year in April-January of 2015-16 fiscal. “Currency with public grew by 25 per cent during the period April-January FY16 as against corresponding period last year. Earlier to that, currency with public grew by 57.2 per cent during the same period in FY11. Even the YoY growth in currency with public increased by 12.3 per cent as of Jan 2016. This recent growth in currency with public is quite puzzling as none of the indicators validates this growth as nominal growth has collapsed,” the report stated.

The rise in currency with public, it said, “defies logic” and needs analysis. Popularisation of digital and electronic channels could be a possible way out as the total number of point of sale (POS) machines in the country is around 12,70,208 and ATMs are 1,92,208, which is highly inadequate for a population of 1.3 trillion people, the SBI report added.

RajeshG · Post by **RajeshG** » 09 Dec 2016 16:12

http://scroll.in/tags/55796/note-demonetisation

This link seems to have decent coverage on demo. I mostly read stories where they talk to people in remote areas etc.

Maybe i am drawing the wrong conclusion but from those stories atleast upto now it seems that aam-aadmi is going thru hell. But is still solidly in support of demo. Just like on this thread people are ok to go thru trouble if they perceive everybody else is going thru hell too. There are also a couple of stories where aam-aadmi is hopeful that audi-driving people will go thru hell. Personally i dont care for this type of emotion but its palpable in the stories.

for eg

http://scroll.in/article/823559/demonet ... pes-are-up

Paswan pointed towards a bridge to the left, just before the road reaches the village. “All the land from there till 2 km ahead belongs to one zamindar in our village,” he said. This is about 1,200 acres. In contrast, the rest of the households in this hamlet and the adjoining hamlet – about 140 households, according to Bhim Kumar – have no land at all. There has not been any land redistribution here.

....

“He has 100 cars rotting in his garage, and a house over 12 acres,” said Paswan, referring to the local zamindar, adding, if the government gave an acre each to 1,200 families imagine how many families would benefit. “With that, this problem of migration will be fixed.”

For that reason, he is hoping that Prime Minister Narendra Modi will follow up on demonetisation with land redistribution. “If Modi picks up land redistribution after demonetisation, then we will have Ram Rajya.”

http://scroll.in/article/823572/one-mon ... netisation

Despite the harsh impact on his business, Aalappan said, “Modi’s scheme is a super scheme.”

He added: “It is a very good scheme to bring out black money. Everybody is suffering, so it is okay. He has said that the situation will be better in January, so let us see...”

This sentiment was shared by other flower sellers too.

“I have been told that it will bring out black money, so it must be good,” said SVT Shankar, whose business has also been affected by demonetisation.

RajeshG · Post by **RajeshG** » 09 Dec 2016 16:18

Another interesting interview on same site

http://scroll.in/article/823231/intervi ... apocalypse

Anil Bhardwaj is the secretary general of the Federation of Indian Micro and Small and Medium Enterprises. It is to this group of enterprises, popularly referred to by the abbreviation MSMEs, that demonetisation has delivered a severe blow. It has devastated workers, brought the informal sector to a veritable standstill, and disrupted an economy greased by cash. In an interview to Scroll.in, Bhardwaj articulates the woes of his organisation’s members, why they run their businesses on cash, and what it would take for them to embrace cashless transactions.

One practical thing that might be lost on people..

Do these enterprises file tax returns?
Most of them don’t, or they underreport their incomes.

I will give you an example of how the system works. For instance, when we talk of labour in India, we have thresholds. There is a threshold of 10, then of 20, then of 100 and so on. Different laws apply depending how many workers a unit employs. There is only one exception – the minimum wage law. Thus, for instance, if you have 10 workers, you don’t have to pay provident fund, don’t have to have a group insurance scheme. Thus, if a unit employs 200 workers, it will show it has employed just nine.

A delegation recently told me that their association wants to switch, post-demonetisation, from do numbari kaam (illegal) to ek number kaam (legal). But they face certain problems in executing the contemplated switchover.

Like what?
The delegation said that for 15 years they have shown their units employing nine workers as against the 250 they have in reality. So, if they turn their business legal, the labour inspector would come to them and accuse them of not having paid provident fund for 15 years. Not only would there be a penalty imposed on them, they would certainly risk being jailed. There are such issues regarding the excise tax as well.

So what do you want?
Our organisation has prepared a document in which we have said that just as an amnesty system was created for those who possess black money, similarly, there should be an amnesty scheme for our enterprises – all past infraction of laws have to be condoned. Then only would there be benefits from demonetisation. You may take away black money but if you haven’t taken care of the machinery that generates black wealth, then what is the big point of amnesty?

Sachin · Post by **Sachin** » 09 Dec 2016 16:25

^^^ Okay, so now one more groups the "Federation of Indian Micro and Small and Medium Enterprises" have pleaded guilty and now wants an amnesty scheme for them as well. Hope the government would check and see if there is any merit in their claims. Most like now other shady folks like realtors etc would also start queuing up for amnesty scheme.

Subdas · Post by **Subdas** » 09 Dec 2016 16:31

manjgu wrote:@sdas .... there a max limit on withdrawls per week ..Rs 10000 ... why would someone send folks to bank everyday to withdraw Rs 1000 or 1500?? also such suspicious acitivty can be identified as withdrawls are from bank a/cs. people are short of cash and they will queue up every week till they meet their requirements atleast till dec 30th. Yes...GE 2019 will be litmus test but till then many other events can happen ..so attributing anything to Demo will be not so easy...the ATMS are still not working and/or dispensing Rs 500 in any quantity.

People are allowed to withdraw 40 - 100K per month. And u still think people need more cash? Mnago people donot earn that kind of money, last checked our PPP is around 20k per month if not less, let alone spend. So clearly people are coming back to bank for some other sinister reason. I think it is the habit of going to ATM as a loose changer. Even for 200 u visit the ATM. Now since ATM are not more working, they are putting the load on the banks.

Lilo · Post by **Lilo** » 09 Dec 2016 16:34

Rajeshg ji,
Please to not quote opinionated "news" farticles from online portals widely known to regularly employ "anecdotal" or "unamed source" tropes - if you want to keep your arguments credible.
This applies especially to the omidyar funded online propagandu "news" generators like scroll.in .

Subdas · Post by **Subdas** » 09 Dec 2016 16:34

Bull shit about SME. My wife runs a SME and she has faced no cash problem at all. The only diff - she is completely honest and keeps all her transactions in banks and pays 100% by check. Her annual sales is around 35L and she employs around 8 people.

Manish_Sharma · Post by **Manish_Sharma** » 09 Dec 2016 16:38

Hari Seldon · Post by **Hari Seldon** » 09 Dec 2016 16:41

This dhaga has met its 108, saars. At the right turning point too, when the mood of the nation appears poised to turn....

Kindly lock and start afresh. Humble request onlee.

Lilo · Post by **Lilo** » 09 Dec 2016 16:47

Manish_Sharma wrote:

^
GOI doesnt want to print "enough" bank notes in the first place.
Therefore forcing the adoption of cashless by a majority chunk of people who possess a bank a/c (currently 80% of population).

The future involving significantly reduced cash in circulation & most transactions done using e-payments is inevitable.

If sub-saharan kenya,tanzania etc can get even its illiterate women to adopt & persist to using m-pesa(using just feature phones) i dont see why the 80% of indian citizens having a bank a/c cannot do the same.

pankajs · Post by **pankajs** » 09 Dec 2016 16:52

^
Also the chart assumes that the printing started "on or after" 8th Nov. We know that Rs 2000 notes where available the next day. So some quantity of Rs 2000 notes was already printed though it is difficult to guess how much was done before without any official data.

JohnTitor · Post by **JohnTitor** » 09 Dec 2016 16:52

achoudhury wrote:Some of the tactical move has not gone well off late. My immediate family is big Modi supporter and support demonetization but their expectation was that it will give a big blow to BM holders. This does not seem likely. Yes, long term advantages are still there but this shock and awe required some spectacular results like 3-4 lac crore of bm getting extinguished and few big fish getting caught. Now we know that may be all of bm will find its way through bank. Theoretically, it can still be taxed by taxmen, but that will be at mercy of revenue officials. We all know how honest these guys have been. Public, at large, will demand some retribution or otherwise there will be political cost. Modi is astute politician and he will know which way the wind is blowing. Modi's hand is forced and now he must strike at Benami property ruthlessly, esp make some example of big politicians, bureaucrats and real estate guys. Basically an all out war needs to be fought. Yes, all of this will have economic cost but I think majority of people will absorb that cost if they see that system is getting transparent and culprits are being penalized.

The problem with a lot of people is that they want instant results. Everyone wants to become rich right now, no work, no effort. If it doesn't happen instantly there's no point doing it.

It's a very bad attitude and the country can not progress with such mentality

pankajs · Post by **pankajs** » 09 Dec 2016 17:02

http://www.business-standard.com/articl ... 643_1.html
All problems will end in 15 days: Govt reassures SC on note ban inconvenience

The government was responding to the apex court's question on why the former had not been able to give Rs 24,000 to every customer per week. "Should there be a minimum amount the bank should give to customer?" it asked.

<snip>

However, Attorney General Mukul Rohatgi told the Supreme Court that since November 8, deposits of around Rs 12 lakh crore have come back into the banking system, which is higher than government estimates. The deposits could go up by another Rs 1 lakh crore, Rohatgi told apex court, while assuring the SC that Rs 4 lakh crore worth of new notes have been printed. He added that about Rs 3.5 lakh crore notes of Rs 500 and Rs 2,000 denomination have been pumped back into the banking system.

Take the figures as estimates. RBI press release should have the actual figures.

pankajs · Post by **pankajs** » 09 Dec 2016 17:20

http://www.financialexpress.com/economy ... rs/467392/
RBI says supplied 19.1 bn notes of lower denomination, more than total of last 3 years

However, RBI on Wednesday said it has supplied 19.1 billion pieces of lower denominations to public. “As far as the lower denomination is concerned, between 10th Nov and 5th Dec 2016, notes of Rs 100, Rs 50, Rs 20 and Rs 10, RBI supplied 19.1 billion pieces of lower denominations to public, which is more than total of last 3 years.”

Stating that there is adequate supply of notes, RBI Deputy Governor R Gandhi further said that people should not try to hoard the new currency. He also said that Rs 4 lakh crore has been supplied in new notes.

jamwal · Post by **jamwal** » 09 Dec 2016 17:26

http://indianexpress.com/article/india/ ... h-4418608/
Demonetisation: I-T department discovers 15 fake bank accounts at Axis Bank’s Chandni Chowk branch

A survey conducted by the Income-Tax department on at the Chandni Chowk branch of Axis Bank on Friday lead to the discovery of 15 fake bank accounts, news agency ANI reported. A total of Rs 70 crore was allegedly found in these accounts. Tax authorities claimed that since the demonetisation of high tender notes, over Rs 450 crores has been deposited into these accounts. PM Narendra Modi had earlier appealed to people to not accept money from others to deposit in their account; and those who force them to do so would face consequences.

AdityaM · Post by **AdityaM** » 09 Dec 2016 17:36

Interesting twitter thread :
https://twitter.com/memeghnad/status/806381450694160385

This person is keepin track of seizures of illegally acquired new currency
https://docs.google.com/spreadsheets/d/ ... sp=sharing

shiv · Post by **shiv** » 09 Dec 2016 17:43

Sachin wrote:
AdityaM wrote:Are the bank automated machines capable of catching fake currency.
When the govt itself felt that the quality of deceit was very good, then do these machines catch the high quality fakes?
My understanding is that they can. From what I heard the machine stops counting when it feels a fake not has been found. SHQ had once said that they had tried to make the automated machine count a set of empty blank sheets (roughly the same size & thickness of a currency note), but it stopped. Can double check and get back.

I saw a counting machine stop dead with a fake note a few months ago. It was in a bundle of 500s.

shiv · Post by **shiv** » 09 Dec 2016 17:46

VikasRaina wrote:One year from Now, What would be the markers of a successful DeMo drive by Modi Ji.
No, lets not count election results since they are a different beast all together and in atleast Punjab, BJP is not a serious player while it is still a weak player in UP when compared with SP/BSP.

When I withdraw 5000 from an ATM and I get 2500 in 100s and 2.5 in 500s - it is probably a success.

A Deshmukh · Post by **A Deshmukh** » 09 Dec 2016 17:48

I was in the Pvt bank in Hyd yesterday. Q about 10 people. 1-2 mins per person. deposited old cash. Withdrew 2000/-.
I was out in maybe 15mins. no issues. any larger transaction, we should shift to electronic.

shiv · Post by **shiv** » 09 Dec 2016 17:56

Sachin wrote:^^^ Okay, so now one more groups the "Federation of Indian Micro and Small and Medium Enterprises" have pleaded guilty and now wants an amnesty scheme for them as well. Hope the government would check and see if there is any merit in their claims. Most like now other shady folks like realtors etc would also start queuing up for amnesty scheme.

Interesting.

Now here's a thought. Many enterprises complaining of "lack of cash to pay employees" may well be those who have declared 5 employees but employ 100. If they need 5 lakhs a month for 100 employees they will be hard put to show how 5 employees are getting 1 lakh each per month well above the tax exemption limit with no Tax Deduction at Source (TDS) which is mandatory. For these businesses - this is an ongoing thing. They will need that 5 lakhs every month - in cash.

I am certain these enterprises also claim that they provide lots of employment and celebrate Dussehra with great fervour.

Chandragupta · Post by **Chandragupta** » 09 Dec 2016 17:57

sdas1645 wrote:
manjgu wrote:@sdas .... there a max limit on withdrawls per week ..Rs 10000 ... why would someone send folks to bank everyday to withdraw Rs 1000 or 1500?? also such suspicious acitivty can be identified as withdrawls are from bank a/cs. people are short of cash and they will queue up every week till they meet their requirements atleast till dec 30th. Yes...GE 2019 will be litmus test but till then many other events can happen ..so attributing anything to Demo will be not so easy...the ATMS are still not working and/or dispensing Rs 500 in any quantity.
People are allowed to withdraw 40 - 100K per month. And u still think people need more cash? Mnago people donot earn that kind of money, last checked our PPP is around 20k per month if not less, let alone spend. So clearly people are coming back to bank for some other sinister reason. I think it is the habit of going to ATM as a loose changer. Even for 200 u visit the ATM. Now since ATM are not more working, they are putting the load on the banks.

Multiple reasons -

a. genuine people who need cash
b. people who have put other's money in their account and are being pushed to start paying back in new currency
c. people who are hoarding new currency and will exchange it for a premium with old currency. These people have family members or other people who can put upto 2.5 lakh of BM in their accounts, so they are keen to make a fast buck

ragupta · Post by **ragupta** » 09 Dec 2016 18:04

Sachin wrote:In the mean while the case filed by Co.Op banks seems to be going no where..
SC asks Centre if co-op banks can be allowed to accept demonetised notes......
The Supreme Court on Friday asked the Centre to respond to whether district cooperative banks can be allowed to accept deposits in demonetised currency

It is the District Co.Op banks which has gone and filed this case, and they are said to be working under RBI guide lines with enough focus on KYC etc. Why they were denied the rights to exchange old notes is still unclear to me. But my gut feeling is that when it comes to the dealings between District Co.Op banks and the Primary Co.Op societies (banks!?) may be a bit shady and not verifiable by RBI. So don't know if it is the association/link with Primary Co.Ops which is messing up things for District & State Co.Op banks.

Most are owned and controlled by Politicians and there benami crooks.
Maybe only after Benami issue is resolved, they will come into the mainstream.
many cooperatives collected common people money and vanished with it, by providing loans to shady guys.

manjgu · Post by **manjgu** » 09 Dec 2016 18:09

a) sdas...pray what is the sinister purpose? to explode bombs inside the bank? the limit has been set on weekly basis ie Rs 10000 per week. right now its not about the need of mango people..its need to hoard and collect as much cash as if some end of earth is going to come. b) there are 2 kinds of counting machines..one which just counts and one which counts+detects fake. Surprised bank people dont know this !!

shiv · Post by **shiv** » 09 Dec 2016 18:14

I wonder it it can be made illegal to carry and transact in cash in Rs 2000 notes alone above a cutoff value of Rs 50,000. Why 50,000 and not 2 lakhs

Because typically whenever an cutoff is implemented deals are done just under the radar. A decade (or more) ago some land I had bought was grabbed by land mafia in collusion with local police. I could do nothing but got paid what I originally paid (the value had quadrupled) - the payment was in bank drafts of Rs 49000 each made at a bank where the manager was surely in cahoots with this thug. A group of 15-20 people who had lost land along with us waitedat the bank while huge bundles of cash were produced and the cashier made out scores of bank drafts of Rs 49,000 each. The last 10,000 was paid to me in cash by the thug himself. He counted the notes in front of me and when I counted it later it was one note short

manjgu · Post by **manjgu** » 09 Dec 2016 18:16

12L crore received in deposits !! centre reports to SC

RajeshG · Post by **RajeshG** » 09 Dec 2016 18:29

Sachin ji the organization's website is this http://www.fisme.org.in/index.php

shiv · Post by **shiv** » 09 Dec 2016 19:34

manjgu wrote:12L crore received in deposits !! centre reports to SC

he he he he he he!

This is getting seriously interesting...

Rishi Verma · Post by **Rishi Verma** » 09 Dec 2016 20:05

IT Raids at Reddy's - The TN Bizmen

Again crores in cash found in new currency. Whoever facilitated this should get caught too.

Of the total seizure, Rs 96 crore was in old demonetised currencies and Rs 10 crore mostly in the newly introduced Rs 2,000 denomination currency.

The PWD departments of all states should be audited as most ministers and babus handling PWD area are milking the country since 1947.

Reddy is a contractor for Tamil Nadu state public works department (PWD) and has several contracts with PWD as well as other state government departments. "These include sand and road contracts. Since the raids are going on we could not say whether banks and their officials are also involved. But we will be checking that too in the coming day," he said.

Rishi Verma · Post by **Rishi Verma** » 09 Dec 2016 20:43

Tax-men Write to Modi post DeMo

As can be expected, they are working overtime but the letter has some proactive suggestions.

The associations claimed that after the November 8 declaration by the government scrapping Rs 500/1000 notes, the demonetised currencies are "coming back into banking channels in much higher proportion than what was initially expected, indicating the hoarders of black money are trying to circumvent the process of demonetisation by resorting to illegitimate means".

sudarshan · Post by **sudarshan** » 09 Dec 2016 20:58

shiv wrote:
manjgu wrote:12L crore received in deposits !! centre reports to SC
he he he he he he!

This is getting seriously interesting...

Ha, never thought of that angle. It would be interesting to see how much this "extra money" amounts to. A tally of official number of notes printed each year, against the serial numbers of the deposited notes (do the banks record serial numbers of all deposited notes? I hope so) would also reveal the years in which significant numbers of extra or unaccounted-for notes were printed. If there is a significant number of extra notes, I'm willing to bet (though not my left or right testimonial) that it would be during the years of 2004 to 2014.

yensoy · Post by **yensoy** » 09 Dec 2016 21:18

VikasRaina wrote:Would this be a fair matrix on which we can judge this Denom drive ?

1. Cost of capital (i.e. interest rate for loans) drops significantly
2. More percentage of population in the taxpayer base
3. GDP growth recovers to 8+%

The rest is all icing on the cake. Terrorists don't need fake notes when they can hold up banks (as they did yesterday).

Suraj · Post by **Suraj** » 09 Dec 2016 21:43

Prasad wrote:Suraj, per sbi, as on nov 8th cash value in 500s, 1000s was 15.5 lac crores. Not 14.xx.

Also in the removed value of 11.xx lac crore, SBI think there is a sizeable bit of double counting. So actual number will be even lesser.

I'll need references for both. I think the fact that RBI has only tweeted the 11.85 lakh crore and not posted it in a press release suggests they have not finalized the number yet, whereas previous figures like 8.11 lakh crore the week before that was firmly stated.

Deans · Post by **Deans** » 09 Dec 2016 21:44

Yensoy, I believe a fair matrix would be fairly similar to what you suggest.

1. Interest rates and inflation (inflation falls as cash element in the economy reduces and the two are linked).
2. Amount of tax collected from cash deposits / under-reported income. (the tax base may increase for other reasons like GST).
+ Amount of cash not returning to the banking system
3. GDP growth going to >8%

Deans · Post by **Deans** » 09 Dec 2016 21:54

Quite often for even minor procedural violations of the law, company directors are held responsible. When there is laundering taking place in a
big branch of Axis branch, in Delhi on a shocking scale, why have arrests stopped only with a couple of relatively low level management staff.
There will be no active cooperation from Axis bank unless the top management fears arrest - either there was some collusion at the top, or their
controls are terribly shoddy.

habal · Post by **habal** » 09 Dec 2016 22:12

i think axis bank cash is directly subverted from their currency chests, branches will have auditing etc at their level and it is not safe to pilfer from that level, here axis bank branches are mere accomplice, more like a courier, corruption is happening at GM/director/SVP level. my feeling.