Currency Demonetisation and Future course of Indian Economy

shiv · Post by **shiv** » 05 Jan 2017 20:25

One thing people must understand is that Bengaluru is a massive con-job. It used to have a great climate and was forest covered but the IT revolution and the system of electing officials from various caste and interest groups ensured that the officials and builders could smell an NRI sucker from way off.

Builders paid hefty bribes to get government land where they would build fancy apartments or villas in areas with names like "Pinewood grove" and "Holloway Green" - names that are designed to sucker the Indian who has made money in dollars and has a healthy contempt for local Indians and understands the wholesomeness of western country suburb clones, but patriotically wants to come back and "invest" in his home country. All these developments are beautiful areas to live in but there are no access roads and there is no water supply (hence borewells). Electricity is supplied with bribes paid to the right people. Norms like "Only X people can be allowed to stay in an area where the access road is only 15 feet wide" are flouted by bribes from builder/developer to BBMP or BDA official . That means that if the road can only handle a maximum of 500 vehicles an hour - that fact is ignored and residential complexes of thousands of flats are built - so that the traffic load exceeds 2500 vehicles an hour causing sever jams. But the NRI on a lightning visit sees the place with his father who has lived in a small house is dazzled by "Grosvenor Enclave" and invests 2 crores even before the construction is complete - knowing that it will be 2 years before he returns to India. the builder himself retains dozens of flats/villas for later sale to politicians families or for rental to IT companies where firangis like Amrikis, Japanese and Koreans live while their spouses play golf in local clubs as corporate members

In a few years the roads are jammed. there is no way you can get in or out. It takes 1 hour to travel 5 km (that is 3 miles) and 2 hours to get to work and 2 more to get back.

But the BBMP and the state government are making loads and loads and loads of money

WELCOME TO BENGALURU - you stupid suckers - don't forget to bring your credit cards. LOL

ShauryaT · Post by **ShauryaT** » 05 Jan 2017 21:05

Shiv ji: Yes, can certify the above. My first visit to Bangalore was in early 80's in the month of May. Was in an overnight train from dusty and hot Coimbatore. What a pleasant surprise Banglore weather was. I remember wide red mud paths for walking near MG road. What a drastic change it is today. But then I am from Mumbai - the king of the royal urban mess - but in some aspects Bengaluru beats even Mumbai today.

Tying it back to devolution of power and local accountability - the ward that Shiv probably lives in, its governance is headed by an assistant commissioner - an IAS officer, appointed by the state government. The local judge is also appointed by the high court - in a chain that has NO state level elected intermediary and now not even central - there is no notion of federalism in the courts. The local ACP - Police this chain too goes straight to the state offices. Shiv as a resident has no local accountability over law and order and local administration for his ward. His only recourse is some pleading to the elected councillor, who represents the ward and has some soft power over the administration - but no hard powers. MLC's do pass the annual city budget but I think most states have control over this too.

Ideally, Shiv ji should be able to vote on the annual budget, elect his local judge, elect his "administrator" or at least for the city and the local elected councillor should have oversight of the local administration officials by law. Suffice to say, Bengaluru has no financial powers on its own, except those delegated by the state. A large majority of governance issues are local but it is precisely in local governance were democracy is in action the most, India lacks structural answers.

PS: Shiv ji using your name and city only as an example, the point can be replicated almost anywhere in India.

Rishi Verma · Post by **Rishi Verma** » 05 Jan 2017 21:20

^^ observing "fancy" names for enterprises to sucker Indians is my hobby. ShivJi has nailed it. Not just "English" sounding names of projects in Bangalore, Indians are doing it in every field every where across the globe. Restaurants like "Bombay Palace" mughlai food are abroad with equally fancy menu names with words like "authentic", "exotic" "royal".. The gora or even one with wheatish-complexion dont pause and think that there is no palace in Bombay and that Bombay has nothing to do with mughlai food.

In UP there are projects like Rishita-Manhatten etc etc

Singha · Post by **Singha** » 05 Jan 2017 21:20

BLR cannot be developed on logical lines unless its made a 200x200km union territory and all farmers evicted from the scene such that everything can be made urban infra.

now you tell me if/when that is feasible? it will result in a bloodbath in other parts of the state and be as big an issue as state partitioning. various warlords from outside blr sucking on the milk teets will squeal in pain and lash out.

under indian electoral system it can never be done.

BDA has not been able to form a new layout in some 12 years now

also - people and parasites both follow the jobs - whatever let to massive job growth here was the precursor and the parasites and warlords followed. it cannot have been always this corrupt in the old days of just PSUs and govt jobs. I recall being wowed in 1984 as a class6 kid on LTC at the leafy and wide MG road, KG road, cubbon park, well planned grids etc....coming from another state capital. blr was a notch above other unruly places like CCU back then. the KG road kids kemp man gave us each a cold drink - wow had never seen that. central cottage emporium was wow, kaveri emporium, barton center, taj hotel ... I gawked at the posh people having a lawn party in the taj..vidhana soudha was jaw dropping.

and blr continues to attract the countrys young in droves, despite the warts

KJo · Post by **KJo** » 05 Jan 2017 21:26

I think one of the problems is that Indian cities grow and grow and grow. So one set of people are in charge of an ever growing city and they do a sloppy job. BLR should be split into its constituent areas in a way that makes sense. Basavanagudi can be a town. Indiranagar can be a town. They all have their own mayor and independent of BLR which can be some old BLR areas. That way you vote for your local guy and the elected people feel more responsibility and ownership.

Yes Singha, BLR was awesome in the 80s. It's been totally ruined now because of greed of people and politicians. No one cares of quality of life, it is just about having a life regardless of how well off you are. The golden goose will lay no more eggs.

My relatives in Mumbai say that Mumbai is getting better as people are migrating to Thane and elsewhere.

nandakumar · Post by **nandakumar** » 05 Jan 2017 21:40

Shiv
Quote: This is the exact question I asked - but I got the impression that I as pushing it too far although the man is my friend. Maybe I could trick him into revealing names - but that will have to be some other day.But as a direct answer to your question here is the impression I got. I was told that the entire property development has occurred with a whole lot of bribes being paid over the years to the same gents who are back for more. The original bribe payer (the builder) is now totally out of the picture - having handed over the entire property to a local "society" of residents. But there is one "caretaker" who owns 15 unsold properties for which he is coughing up about 10 lakhs a year for upkeep alone - and he is also a member of this society. In order to "expedite" the legalization of this set of properties he has pulled in the original BBMP bribe takers who have promised to delay the regularization process forever unless a bribe of Rs 20k per property is paid up.Now my friend tells me "I have spent 1.5 crores on the property and am paying heavy EMIs. We (the society) are trying to get the bribe amount down to Rs 10,000 per property. I am not going to jeopardize my chances of regularizing the property for a mere 10,000 over and above the 1.5 crores that I have already committed.. We are afraid that if any complaint is made these men will simply freeze things and esnsue that nothing moves for years. This is fine for some people who want to stay there forever - but for those of us who may want to sell that would be a disaster"So the story is that the corrupt officials wield the power to make life difficult for a set of people who are already caught in a trap of illegal property that came up because of earlier bribes. Moving forward from here is a situation that can always be stopped by the Damocles sword of earlier irregularities for which bribes have been paid to overlook, not absolve or remove (that is typical) Those hurdles can be crossed only if the officials choose to ignore and forget earlier irregularities and sign on the dotted line - for a fee. As a digression I want to point out that there is in Karnataka - a scheme now in progress called "Aakrama-Sakrama". Under this scheme - previously illegal constructions - like exceeding the built up area, exceeding the minimum distance from the neighbouring property,or exceeding the number of floors one is allowed to build will be legalized, after paying a penalty. It is another matter that all the corrupt officials who took bribes years ago to allows those illegal transgressions get away scot free but the owners of those properties technically face the prospect of demolition of all irregular, illegal parts of their properties. The news is that if the transgressions are 25-50% in excess of what is allowed - the owners will be allowed to make it legal after paying a penalty. If it is over 50% they will face demolition of the excess if it is a residential property. If the property has been made commercial - then no regularization will be allowed and the excess will be demolished. Now guess what? All the buildings that have exceeded their limits who face demolition will pay hefty bribes and ensure that they remain untouched until, at some future date the BBMP wants to make more money. Yes I know its shameful. But this is the system that Modi hopes to change. He has allies. But we are weak. Unquote.

Someone who is a long time resident of Karnataka and also has deep family roots in TN posed this rhetorical question and answered it himself: What is the difference between corruption in TN and Karnataka? In TN, the State (official) will not do anything irregular (a-krama) but to do anything within the rules (sa-krama) but you will still have to pay a bribe for doing the 'sa-krama'. But in Karnataka the State (official) will do anything (a-krama) if the bribe is right. From what I can make out the whole system in Karnataka is made up of simple minded people who have no concept of risk or manned by people in upper layers who can not extract 'rent' from lower rungs in addition to making money on their own with their own discretionary decision making.

raj-senthil · Post by **raj-senthil** » 05 Jan 2017 21:45

Bit dated news..But another innovative way of washing the money busted..

EXCLUSIVE: Four Chartered Jets With ₹18 Crore In Cash Landed In Dimapur From Hissar

ShauryaT · Post by **ShauryaT** » 06 Jan 2017 00:20

Demonetisation will lead to a temporary slowdown in economy, says President

President Pranab Mukherjee on Thursday issued a note of caution that the Narendra Modi government's demonetisation decision could likely lead to a temporary slowdown in the economy and hurt the poor.

When the apex constitutional authority steps into the debate, things really have come to an inflection point. Expect the courts to jump in.

SBajwa · Post by **SBajwa** » 06 Jan 2017 01:47

What happened in/around north indian cities is

1. local muncipality expands the "lal dora" "Limits of the city" to include next square KM on the periphery of the city to whichever side of the city they want.
2. The farmers either are suckered away by rich builders (who knew of the coming of expansion of the city limits and by getting the farming land for little above market price) or once they have to sell their land they go to courts against farmers asking for land (after 2-3 court appeals farmers are barred from growing their crops on their own land as it is now part of city limits)., while farmers keep arguing for more money. Eventually farmers settle for whatever they can get from the builders/etc.

3. While Rich builders start building malls/hotels/apartments/houses/etc and the farmers/middle class builders/etc buys the next square km across of these new construction (who are still growing crops)., and do something like "Milk supply" business, create small "colonies", etc.

So! for example Karnal city (in Haryana) was expanded towards Kunjpura and now almost up to 5 KMs (which was previously farming land) is "New Karnal" akin to "Grid like Chandigarh". Some farmers become rich overnight (sold for 2+ crores an acre). The city limits of new karnal are fine with grid like structure, water lines, sewage and electric lines. The agriculture land across the city limits where farmers/middle builders see a quick cash creates these "illegal" colonies on "agricultural farming land" in no fashion., small streets, inadequate sewage/water/etc.

Why are all the luxury cars being sold at the periphery of Delhi/Chandigarh? because of these rich farmers. The agriculture land at mohali which is closer to the city was selling at 2-3 crores per acre . The two bedroom apartment on 3rd floor at Kharar (rural area that is 2 kms away from mohali) was 40 lakhs. (all before 11-8-2016). post november 8th., Builders will probably be more careful to not create "colonies" or "apartments" on agriculture land.

kiranA · Post by **kiranA** » 06 Jan 2017 05:54

shiv wrote:
kiranA wrote:
Just came to know car sales collapsed by 37% in Nov at an annualized rate. This was a growing industry and a bellweather of urban consumer spend.
Just finished reading the paper (ET) 15 minutes ago
Auto sector skirts demonetisation's deepest fears
MUMBAI: Investors, who had lost interest in auto stocks because of a sharp drop in demand post the November demonetisation, are warming up to the sector once again. The drop in sales volumes in the past two months has been less than what was feared.

But clearly investors aren't going to rush back to buy these stocks. An investor, for instance, is first likely to go for passenger car company stocks, followed by tractors and twowheeler stocks, and in the end, trucks.

What restored confidence among investors was the fact that the drop in retail sales -when dealer sells vehicles to a customer -was restricted to only 5% against an anticipated 15% post demonetisation.

India's largest car maker Maruti, which had recorded a drop of 4% in December, is picking up the pieces; even in the rural segment, Maruti grew more in December than what it did between April and November.

Car sales not auto sales. And retail sales not factory sales - thats what you mentioned about Maruti.
"Ajay Shah has noted, last November, even as car sales fell by 37 percent annualized, production rose"
http://economictimes.indiatimes.com/ind ... 345831.cms

Ofcourse the sales will inch up - I didnt say India will be overrun by Zombies. But its a tremendous business loss which can go up to thousands of crores.

shiv · Post by **shiv** » 06 Jan 2017 07:42

kiranA wrote: Ofcourse the sales will inch up - I didnt say India will be overrun by Zombies. But its a tremendous business loss which can go up to thousands of crores.

You know there is a difference between businessmen and those who are not. In the case of demonetization some of us don't give a damn about those losses as long as we know that portions of the black economy have taken a hit, even if temporary. The words "thousands of crores" or "lakhs of crores" have no real meaning to me. I don't even know what it means to lose one crore - I can't lose a crore even if I tried so who cares. Meaningless figures.

Why did auto sales go down due to demonetization? Surely people had money in banks and could have paid for auto purchases via bank draft or cheque as I have always done. Why did they not do that? Obviously because a large percentage of the sales were in cash. No cash no business. People who take and make much money in cash seldom bother about those who don't. But they cry a lot when they get hit. Those who don't make much money in cash and don't have much in cash have no need to cry so much. But the money makers simply say "Oh the poor are getting hit" Balls the poor are not getting hit so much as those who live in a cash economy. And that cash economy has made me and many others suffer so much that a temporary loss of business for someone does not worry many of us. It certainly does not bother me. I can't come on here and say that there was a 37% fall in the number of hernias and gall bladders I did because of demonetization and howl that it is bad for the economy. Yes I have lost a few thousands in lost medical practice - but I am not complaining. No one worries about my finances until they start hurting or bleeding and I really can't care about those who lost out

Kashi · Post by **Kashi** » 06 Jan 2017 07:51

About the auto/car sales, don't they usually peak around Diwali, since a lot of people feel this is an auspicious time to buy something?

Is it surprising that car sales would have slacked off after Diwali? Even then the Auto sales in Nov 2016 are comfortably up Nov 2015 levels.

kiranA · Post by **kiranA** » 06 Jan 2017 08:58

shiv wrote:
kiranA wrote: Ofcourse the sales will inch up - I didnt say India will be overrun by Zombies. But its a tremendous business loss which can go up to thousands of crores.
You know there is a difference between businessmen and those who are not. In the case of demonetization some of us don't give a damn about those losses as long as we know that portions of the black economy have taken a hit, even if temporary. The words "thousands of crores" or "lakhs of crores" have no real meaning to me. I don't even know what it means to lose one crore - I can't lose a crore even if I tried so who cares. Meaningless figures.

Why did auto sales go down due to demonetization? Surely people had money in banks and could have paid for auto purchases via bank draft or cheque as I have always done. Why did they not do that? Obviously because a large percentage of the sales were in cash. No cash no business. People who take and make much money in cash seldom bother about those who don't. But they cry a lot when they get hit. Those who don't make much money in cash and don't have much in cash have no need to cry so much. But the money makers simply say "Oh the poor are getting hit" Balls the poor are not getting hit so much as those who live in a cash economy. And that cash economy has made me and many others suffer so much that a temporary loss of business for someone does not worry many of us. It certainly does not bother me. I can't come on here and say that there was a 37% fall in the number of hernias and gall bladders I did because of demonetization and howl that it is bad for the economy. Yes I have lost a few thousands in lost medical practice - but I am not complaining. No one worries about my finances until they start hurting or bleeding and I really can't care about those who lost out

WHy do you say poor are not hurt ? they are the most hurt. Ofcourse the poor are the last to know they are hurt (if they had resources to be that aware that they are getting screwed they wont be poor in the first place). This makes it easy for everyone to declare demon a victory on behalf of poor.

Do you know farmers had to take heavy discounts due to demon ? they dont have the staying power if wholesaler says no money a farmer cant afford to play waiting game - his produce is there out in market and will rot in couple of days.

Let me give you a personal example. My mother stays by herself in the house my late father built back despite our invitations to stay with us. She is EXCELLENTLY served by local businesses. Groceries are delivered home, we have a couple of drivers at our beck and call in case she needs transport. Once the transport need is done the driver takes money (always hesitantly) and most of the time says a word or two in praise of my father. Thats the way business is done.

But the same driver to be a "swacch" citizen in Modi's India needs to whip out a card reader or mobile phone for payment in to the startled face of my mother. And if electricity, phone battery, gsm network, visa/mastercard/paytm servers, bank servers all of them simultaneously work record the payment as income. He also needs to record his cost of business, learn double entry accounting and file his taxes(all in English ofcourse). INSANE.

Ofcourse he owes zero taxes. But he needs to put on this massive dog and pony show to be "swacch". Demon is an attack not just on economy but the culture and way India does business- informally. This does not mean Indian should never pay taxes but Modi needs to get prioirities right. If Modi wants to disciple the nation - start with the entity he heads - central govt. Massive wastage there. Despite claims of increase in tax collections the govt is still failing in fiscal deficit because it cant discipline the spending.

Pratyush · Post by **Pratyush** » 06 Jan 2017 09:22

Kiran A, please look at the prices of agricultural produce at the mandi, in the harvest season for the last 10 years in a tabulated format and then speak of real impact of demonisation. I feel you will be unpleasantly surprised by the information you will have collected.

I further ask you to post the 10 year price data on this thread for verification.

A_Gupta · Post by **A_Gupta** » 06 Jan 2017 10:43

Auto-sales data for November 2016:
http://www.autocarpro.in/analysis-sales ... 2016-22808

There are more detailed data at the link, quotes below are illustrative - that it is a mixed bag.

Quote:

Maruti Suzuki India has announced sales of 135,550 units in November 2016, up 12.2% year on year (November 2015: 120,824). This includes 126,325 units in the domestic market (+14%) and 9,225 units of exports (-9.8%).

Hyundai Motor India registered domestic sales of 40,016 units in November 2016, down 8% compared to the same month last year when it sold 43,651 units.

Mahindra & Mahindra (M&M) has reported sales of 13,217 passenger vehicles (which includes UVs, cars and vans) in November 2016, down by 32.78% year on year (November 2015: 19,662).

Tata Motors passenger vehicles recorded sales at 12,736 units in the domestic market in November 2016, with a growth of 22% compared to 10,470 units sold in the same month last year.

Toyota Kirloskar Motor sold a total of 11,309 units in the domestic market in November 2016, up 10% YoY (November 2015: 10,278).

Honda Cars India has announced domestic wholesales of 8,029 units in November 2016, down 45.43% YoY (November 2015: 14,712).

German carmaker Volkswagen sold 4,014 units in the Indian market in November 2016 as compared to 1,942 units sold in the corresponding month of the previous year, up 107% YoY.

shiv · Post by **shiv** » 06 Jan 2017 10:43

kiranA wrote: WHy do you say poor are not hurt ?

I did not say that the poor are not hurt, but let me repeat something I said earlier. It really makes me laugh. Almost everyone was hurt by demonetization, but critics of demonetization rarely admit to themselves being hurt - they always say "The poor are hurt" as if they know what is happening to the poor. They certainly know what is happening to themselves and as long as they remained unhurt (before demonetization) they did not give a rats ass about the poor, They should have been saying "The poor are being hurt" all the time because the poor have been hurt for 70 years while the wealthy were hardly hurt the way the poor have been hurt

But now, suddenly - after demonetization there is sudden gyan about the poor. This sounds so fake and insincere to me that it is laughable. all the people who say "The poor are hurt" should first say that they are also hurt. If they are not hurt there is no need for them to complain about the poor with fraudulent post-demonetization tears

kiranA wrote: Let me give you a personal example. My mother stays by herself in the house my late father built back despite our invitations to stay with us. She is EXCELLENTLY served by local businesses. Groceries are delivered home, we have a couple of drivers at our beck and call in case she needs transport. Once the transport need is done the driver takes money (always hesitantly) and most of the time says a word or two in praise of my father. Thats the way business is done.

Your personal example says that your mother was not hit. Who are you complaining about? What do you know about the poor that you did not know pre-demonetization?

amit · Post by **amit** » 06 Jan 2017 11:21

shiv wrote:This sounds so fake and insincere to me that it is laughable. all the people who say "The poor are hurt" should first say that they are also hurt. If they are not hurt there is no need for them to complain about the poor with fraudulent post-demonetization tears

Shiv,

The poster is just repeating, like a drone the propaganda that's been going about about the poor being "hurt" by the demonetisation exercise. He doesn't have any personal experience. But he's got plenty of propaganda to go by. Just look at the kind of MSM that comes up when you do a Google search with: "Were the poor hurt by demonetisation

However, if you do some serious searching and know what you are looking for you'd get some interesting articles. For example this article by Live Mint which actually uses verifiable data to see if the "poor were really hurt" by demonetisation. It does not depend on gossip and talking heads on TV.

Let's take a look at some of the Live Mint findings, the article is a bit dated but the data should be the same even today.

... we make the following arguments. First, the poor are unlikely to have substantial savings stored in Rs500 and Rs1,000 notes. Second, the bottom half of the population ends up spending almost their entire earnings on consumption. Third, only two weeks have passed since the demonetisation was launched on 9 November. Therefore, the weekly earnings of the bottom half of India’s income earners provide us the estimate of the cash that the poor would have in their kitty, which they would have to exchange in a nearby bank or post office.

Finally, since the survey was conducted in 2011-12, we inflate the earnings by the average rate of inflation per annum during the period from financial years 2011-12 to 2016-17. This is likely to overstate the earnings of the bottom half of the population because, unlike salaried individuals and other richer sections of society, the earnings are unlikely to get adjusted for inflation in a consistent manner. However, the overestimation of earnings would only reinforce the bias against the inference that the poor are likely to have visited a bank branch at most once to exchange their earnings.

the bottom half—be it rural workers, daily wagers, weekly wage earners, or fortnightly wage earners—earn less than Rs1,350 per week. In fact, even the bottom half among the urban population earns at most Rs1,970 per week. Even if the bottom half of the population has saved up to two weeks of their earnings, the amount they have to exchange will be less than the Rs4,000 limit that was set by the government in the first week

The above inference assumes that the daily, weekly or fortnightly wage earners were fully employed in the past several weeks so that they could not only earn enough for their consumption but also to save. In practice, such wage earners are chronically underemployed. As a result, the total cash in the hands of the bottom half is likely to be less than Rs4,000. Thus, it is quite clear from this data that the bottom half of the country’s population would have by now visited the local bank or the local post office at most once to exchange their old currency.

... the long queues seen stem from two sections of the population: (i) people from the top half of the country’s income distribution, i.e. the richer folks, who want to exchange their honestly earned savings for new currency; and (ii) people who are acting as agents for the dishonest. The significant decrease in the queues after the government decided to use indelible ink to identify people that have exchanged their currency suggests large presence of the second category of people.

With respect to the difficulties that the country’s poor are likely to face till 30 December, note that around seven weeks of earnings are left before the deadline for depositing the demonetized notes. So, based on the estimates provided in the adjoining table, the maximum cash earnings of the bottom half would be around Rs8,000. Even if we suppose that they will be paid entirely using old currency till December, at most two more visits to the local bank or the local post office would suffice to deposit their old currency. Of course, it is quite likely that these workers refuse to accept their wage in old currency. In that case, they would not need to make the visit at all. As workers in this income category are likely to have been underemployed sometime in the past, they would have a bank account to receive Mahatma Gandhi National Rural Employment Guarantee Act payments. Therefore, future wage payments can be made via cheque by honest employers. In this case, such workers may have to visit the bank once to encash the cheque.

Now if an employer refused to pay by cheque, you can guess why.

Note, we are not arguing that poor people are not facing difficulty because of demonetisation. Of course, standing in the queue for a day can mean loss of a day’s earnings for the poor. However, using the large sample data and careful analysis, we would like to highlight the exaggerated claims of disingenuous politicians who profess to be fighting for the poor.

KiranA I would suggest you think through what you are posting here and also do some of your own research before you post. You'll be required to back up whatever argument you make.

Actually in comparable terms the poor have been less hurt by the demonetisation exercise than the rich, which is why they are quite happy that the rich faced some of the trials and tribulations that they face on a daily basis. IMO that's the reason behind all these survey which show there's a huge support base for the demonetisation exercise.

putnanja · Post by **putnanja** » 06 Jan 2017 11:33

amit wrote: ...
Actually in comparable terms the poor have been less hurt by the demonetisation exercise than the rich, which is why they are quite happy that the rich faced some of the trials and tribulations that they face on a daily basis. IMO that's the reason behind all these survey which show there's a huge support base for the demonetisation exercise.

Very true. If the poor had been hit hard, they would have been on the roads spontaneously protesting the move. However, for all their cajoling and paying, none of the parties could gather huge crowds to any anti-demonetization protests. Shows that the impact on the poor was less, and also they are happy with what the rich/corrupt are facing.

UlanBatori · Post by **UlanBatori** » 06 Jan 2017 11:39

Could someone pls educate me on why retail car sales would drop because 1000- and 500-rupee notes happened to be in short supply? The cheapest I have heard is the Tata Nano at 1 lakh. But if I were buying a Nano, I would hardly do that using a stack of 100 hajar-rupya note, hain? I'd probably try to finance it through a bank. If I were a bit higher up, my ambition would be a 7-lac Bolero. That would require 7 stacks of hajar-rupya notes. Or one bank cheque.

Or maybe a Mercedes, at 60 lacs to 1 karod. That would require an autoricksha full of suitcases containing currency notes. Or one cheque.

So hain, ji, I see no scenario where lack of (lacs of) 1000/500 rupee notes hinders CAR sales. For honest customers and dealers. So if u insist that such sales WERE hurt by 37 percent, I am tempted 2 say:

But I assume that I have not understood the real issue so pls educate me, thx.

Dipanker · Post by **Dipanker** » 06 Jan 2017 12:00

I think a lot of poor daily wagers were hurt by their employers inability to pay them in cash and thus had to stop working. The number of daily wagers working in the informal sector is apparently huge. Informal sector employment is over 90% of all employment and 80% of those are daily wagers.

sum · Post by **sum** » 06 Jan 2017 12:01

Could someone pls educate me on why retail car sales would drop because 1000- and 500-rupee notes happened to be in short supply?

^^+1
Didnt get the line of reasoning supposedly being employed by using the car sales logic.

rahulm · Post by **rahulm** » 06 Jan 2017 12:05

A good friend works for a car dealership in Pune.

Acccording to him, pre DEMON, the Jai Maharashtra types with solid red tilak on their forehead would stroll in, look around and buy an expensive car or more likely a top of the range SUV on the spot with 100% cash. BM cashed up framers who got very wealthy overnight after selling their agricultural land to builders. Common enough, not isolated incidents.

Such sales have simply ground to a halt. Have no idea about the percentage of such sales of the overall volume and if this is enough to cause a slump.

A_Gupta · Post by **A_Gupta** » 06 Jan 2017 13:49

^^^ As posted previously, lots of car makers have not had a slump in November.

Presumably, certain makes of car attract the cash-only clients and presumably it is mostly those that were hit the hardest.

There is also something called "consumer confidence". I read news-items on the electronic payments situation in the press, it seems that that the volume of transactions has gone up enormously, but the number of high-value transactions were down in November. Since these were cashless transactions to begin with, it can only be an indirect effect of demonetization - people become cautious, delay high-value purchases and so on when there is a sudden economic change, such as demonetization.

amit · Post by **amit** » 06 Jan 2017 13:59

Dipanker wrote:I think a lot of poor daily wagers were hurt by their employers inability to pay them in cash and thus had to stop working. The number of daily wagers working in the informal sector is apparently huge. Informal sector employment is over 90% of all employment and 80% of those are daily wagers.

Dipankar,

The point is not to deny that everybody including the poor were hurt in this exercise. The main factor is debunking this nonsense that goes about as argument: Oh see this shouldn't have been done, this exercise has hurt all the poor in the country and only the poor.

I would argue yes it has hurt the poor but to a lesser extent than it hurt the rich, particularly the non-tax paying rich. Serves the rich right. It's not without reason that so many MSM outlets were livid with the stat that only 2.4 million Indians have declared their income to be above 10 lakhs. It was like holding the mirror in front of their faces. Didn't like what they saw. I'm sure many of the writers of these farticles and their employers fall under this 10 lakh limit. I'm happy if they felt some pain.

PS: I was in India practically the whole of December and I also felt the "pain". It felt pretty good you know.

Suraj · Post by **Suraj** » 06 Jan 2017 14:12

Dipanker wrote:I think a lot of poor daily wagers were hurt by their employers inability to pay them in cash and thus had to stop working. The number of daily wagers working in the informal sector is apparently huge. Informal sector employment is over 90% of all employment and 80% of those are daily wagers.

Quantify how much the poor have been hurt by 60 years of price rise, lack of infrastructure, services and connectivity, the lack of access to formal banking, finance, insurance and social support, or even access to basic below poverty entitlements. Now add up their income losses in the past month. Compare the two.

The 'XYZ have been hurt!' argument is quite silly. What's the point exactly ? You're not telling anyone anything new at all. The entire emphasis of the demonetization exercise was to do this with as much finesse as ripping a band aid off an open wound, i.e. none at all. EVERYONE was intended to be affected. The entire way things were done were meant to be affected. The entire cash based informal economy was intended to be affected. The informal economy offers no safety to the poor. It preys on them, underpays them, denies them access to quality public goods and services, and keeps their lot collectively poor.

'The poor have been affected' is a useless rhetorical argument, not anymore meaningful than RaGa having a meal with a tribal in a hut, before jetting off to Europe. It insults them more than implies any sort of regard you claim to have for them.

Manish_P · Post by **Manish_P** » 06 Jan 2017 14:18

I would argue yes it has hurt the poor but to a lesser extent than it hurt the rich, particularly the non-tax paying rich.

Both have been hurt. Just that the poor have anyway been getting hurt, and will continue to be.

But with all respects, the effect, and levels, of hurts on the poor and the rich are very different.

The rich have or are given options on how much they can afford to lose and still survive, the poor have very limited or no options.

pankajs · Post by **pankajs** » 06 Jan 2017 14:19

Delay in transaction is a totally valid response and it does result in loss of sales in a particular period.

However, the *genuine* demand of Cars/White good/other durables has not gone down in aggregate, it has just shifted to the future. There is a loss BUT a small loss mostly related to the sales effort i.e showroom rent, inventory carrying cost, salary, etc. from genuine demand shifting.

There will however be a loss of demand that was directly financed by black money.

Added later: If the black economy turns white, most of the black money fueled demand too will come back.

UlanBatori · Post by **UlanBatori** » 06 Jan 2017 14:51

So I conclude that "car sales dropped" is a positive indicator of a BM area hit. Likewise, someone might find a statistic that says: "Mandrax sales w/o prescription dropped 90%". "RDX sales dropped 98%". Visits to LaHores dropped 97% (I assume they don't use credit cards a lot).

amit · Post by **amit** » 06 Jan 2017 15:02

Manish_P wrote:Both have been hurt. Just that the poor have anyway been getting hurt, and will continue to be.

But with all respects, the effect, and levels, of hurts on the poor and the rich are very different.

The rich have or are given options on how much they can afford to lose and still survive, the poor have very limited or no options.

I'm sorry but your comment fall in the airy fairy category. You have to quantify what you mean by "hurt".

For example you will also have to quantify what you mean by "how much they can afford to lose and still survive" when you are talking abou the rich.

For example I think many of the people I know would fall in the category of "rich" but they haven't lost any thing and are surviving merrily. The only thing they possibly "lost" was some time due to the mild inconvenience of having to stand in the line a bit longer than usual at banks. They seem to be just fine. Point to note is that these folks did not have any black money, either in cash or in benami property.

I've also personally talked with many of the "poor" who are supposed to be so hurt. One of them said she doesn't have any 1k or 500 notes and so did not need to go to the bank. Plus the Live Mint article that I posted showed empirically that poor were not as hurt as is popularly believe.

The "poor have very limited or no options" is also just... well it makes no sense. According to the latest Labour Bureau survey 92 per cent of households in India have bank accounts. If that's the case I don't see how they have/had no options.

Another point is that when you say the "poor have limited or no options" you need to explain whether pre-demonetisation they had, relatively speaking, more "options" which were less "limited". If that's the case then please give proof of that. And if that's not the case and the poor had "very limited or no options" even pre-demonetisation then that's a totally different issue unrelated to DeMo. You need to dig up a bit on that.

So you have to back up your post.

amit · Post by **amit** » 06 Jan 2017 15:07

UlanBatori wrote:So I conclude that "car sales dropped" is a positive indicator of a BM area hit. Likewise, someone might find a statistic that says: "Mandrax sales w/o prescription dropped 90%". "RDX sales dropped 98%". Visits to LaHores dropped 97% (I assume they don't use credit cards a lot).

One thing I can fully 400 per cent halal certify is that morning visits to Pakistan by the critics of the anti-poor DeMoN were not affected, save for taking a bit more time than usual due to BM constipation.

Manish_P · Post by **Manish_P** » 06 Jan 2017 15:42

amit wrote:
Manish_P wrote:Both have been hurt. Just that the poor have anyway been getting hurt, and will continue to be.

But with all respects, the effect, and levels, of hurts on the poor and the rich are very different.

The rich have or are given options on how much they can afford to lose and still survive, the poor have very limited or no options.
I'm sorry but your comment fall in the airy fairy category. You have to quantify what you mean by "hurt".

For example you will also have to quantify what you mean by "how much they can afford to lose and still survive" when you are talking abou the rich.

For example I think many of the people I know would fall in the category of "rich" but they haven't lost any thing and are surviving merrily. The only thing they possibly "lost" was some time due to the mild inconvenience of having to stand in the line a bit longer than usual at banks. They seem to be just fine. Point to note is that these folks did not have any black money, either in cash or in benami property.

I've also personally talked with many of the "poor" who are supposed to be so hurt. One of them said she doesn't have any 1k or 500 notes and so did not need to go to the bank. Plus the Live Mint article that I posted showed empirically that poor were not as hurt as is popularly believe.

The "poor have very limited or no options" is also just... well it makes no sense. According to the latest Labour Bureau survey 92 per cent of households in India have bank accounts. If that's the case I don't see how they have/had no options.

Another point is that when you say the "poor have limited or no options" you need to explain whether pre-demonetisation they had, relatively speaking, more "options" which were less "limited". If that's the case then please give proof of that. And if that's not the case and the poor had "very limited or no options" even pre-demonetisation then that's a totally different issue unrelated to DeMo. You need to dig up a bit on that.

So you have to back up your post.

Don't get so worked up. To the earlier posts stating one or the other have been exclusively 'hurt' i just put it that both the rich and poor have been affected.. and not all within the group.. and to varying degrees of 'quantifying'.

And that it is not demonitisation which has hurt the poor... they have always been at a disadvantage. Being poor will always leave you at a disadvantage as compared to being rich, since they have lesser options when faced with the same issue. It's just the way it is. Anyway my line of thought was more musings, OT for the topic and thread.

UlanBatori · Post by **UlanBatori** » 06 Jan 2017 16:39

The main effect is that everyone had to put up with reading, listening or watching a lot of oiseules pontificating and

Ugh! Seeing that "Thomas" Malloostan's straight-as-a-hairpin Finance Mantri, is torture. RaGa seems to have decided to go to Bilayat after being thoroughly

out even by the MSM when he managed to "nail" Sheila Dixit with his hammer blows that totally missed NaMo.
Steve Forbes got laughed off his own rag.

Everyone I have talked to personally, is either totally in support, or shrugs it off philosophically and cites how they adjusted. And everyone hates the 2000-rupee note.

A_Gupta · Post by **A_Gupta** » 06 Jan 2017 17:17

UlanBatori wrote:So I conclude that "car sales dropped" is a positive indicator of a BM area hit. Likewise, someone might find a statistic that says: "Mandrax sales w/o prescription dropped 90%". "RDX sales dropped 98%". Visits to LaHores dropped 97% (I assume they don't use credit cards a lot).

Our Nobel Laureate Kailash Sathyarthi is quoted in the press as saying that demonetization has brought human trafficking to a complete, if temporary, standstill.

From my point of view, just that single fact justifies demonetization. Everything else is bonus.

Supratik · Post by **Supratik** » 06 Jan 2017 17:26

Am I hearing the words "contraction" and "recession" from so-called experts including the likes of that Marxist economist Prabhat Pattnaik? There is no indication of either contraction or recession in the economy. What has contracted are the services and manufacturing indicators which is expected in the last and this quarter leading to "lower growth". It is still "Growth". So either the so-called experts are trying to scare everyone or are making things up.

shiv · Post by **shiv** » 06 Jan 2017 17:53

If one can mentally conjure up "how the poor must be feeling" it would be a good thought game to think up "How any given Indian might have felt about demonetization"

There can only be 3 possible reactions to demonetization
1. It did not affect me at all/much
or
2. I am short of cash/not earning enough/business down
or
3. Damn. All my hoarded cash is worthless now. Gotta do something

Now if every Indian was completely honest and stated up front what he felt the only reactions we would have seen in the media or on the forum would have been

1. It did not affect me at all/much
or
2. I am short of cash/not earning enough/business down
or
3. Damn. All my hoarded cash is worthless now. Gotta do something

But what are the reactions we are actually seeing?

We are seeing plenty of "It did not affect me at all/much" and we are seeing some people who say "I am short of cash/not earning enough/business down"

How come we are not seeing even ONE SINGLE TEENSY WEENSY complaint that goes:"Damn. All my hoarded cash is worthless now. Gotta do something"

Odd innit?

On the other hand we are seeing a whole lot of "Ohhhh the poor are badly affected. Its about the poor " etc But excuse me, I meet and deal with a lot of poor people too. Most of them are managing or saying "I am short of cash/not earning enough/business down"

Then who are these mysterious people who have no personal complaints about their own lives suffering but are able to see a whole lot of suffering poor people and are yet unable to see or speak of even one person who says "Damn. All my hoarded cash is worthless now. Gotta do something"

In fact there are people saying "There was no black cash. It is all converted. Demo was a mistake that hits only the poor".

But then there are other facts
1. Paki fake notes business is dead
2. Naxal funding is dead.
3, Human trafficking has been badly hit
4. Scores of people have been caught with illegal hoards of new notes
5. Many caches of burnt and discarded notes have been found
6. Tens of thousands of "poor" people's bank accounts have been filled with lakhs or crores (I guess that must be causing a lot of sadness?

)
7. Many big ticket businesses have been hit like real estate and automobiles. I guess these must be poor people's businesses?

Again not even one person coming out in the open and saying "heck I had a lot of cash and demonetization hit me". Does anyone get the feeling that some people are not telling the whole truth?

tandav · Post by **tandav** » 06 Jan 2017 17:59

So what is the official tally of DEMO money remitted back to RBI as on date. There was a Bloomberg report of Rs 14.97 lac Cr which I think does not account for double counting due to interbank transfers. But there is no official source of what the RBI tally of the taking?

jamwal · Post by **jamwal** » 06 Jan 2017 18:22

On an unrelated note:
Looting in Mexico spiraling out of control over 20% gas hike; 430 arrested
http://www.foxnews.com/world/2017/01/05 ... e.amp.html

VKumar · Post by **VKumar** » 06 Jan 2017 18:48

60 lakh accounts with deposits of more than 2 lakhs each, total nearly 8 lakh crores, are under IT scanner. You may think - why such a low figure as Rs. 2 Lakhs? These are Jhan Dhan accounts, not previously operated and suddenly a deposit of 2 lakhs or more. But many are with deposits in crores.

At the very least, 50% of this amount will go to Income Tax. Perhaps another 25% to 'service charges' for benami account holders. BM operators will realise that better to pay 30% IT in future (if their business is in legit areas).

From the investigation of these 60 lakh accounts a huge amount of leads to BM businesses will follow. Expect the law to hammer those.

People deposited money thinking " what is worst that can happen? At least we will get some money back" . Yes, they will get some money back but their nefarious businesses will have to shut down. Many may face criminal charges too.

Many, including Government Officers will absorb the blow and start collecting again in Rs. 2000 notes. To remove corruption, the discretionary power of government officers needs to be reduced and laws to be made simple and easy to follow.

ShauryaT · Post by **ShauryaT** » 06 Jan 2017 19:32

^About 3.5 lacs accounts are audited on a yearly basis today. IT audits are already known to be a harassment technique where pure white transactions are flagged for no good reason and bribes are paid to settle these cases. The BM flags are all settled with corruption money. Hardly any cases are prosecuted. Liens applied only on cases where settlement has not been done. People just do not want to deal with these buggers. Any increase in audits have to account for workload and more important better targeting of the people under audit. If it is just a continuation of the existing flagging mechanisms, harassment charges are not far off.

What will be appreciated is targeting of politicians and bureaucrats - first. It will be appreciated by regular trading communities of the government intent to clean up the system from within before asking the aam janta (non-government employed) to pay their fair share. There are all kinds of reports and anecdotal experiences of how many in government are corrupt. A targeted cleanup of this segment will be very popular with all. Na khaoonga, na khane dooonga message needs to filter down to the the local cop, labor and municipalities and panchayats. Does Modi have the political will and capability to execute upon this?

Any tax and administrative reforms - actually implemented would be further appreciated. There is a larger issue of indirect:direct tax ratio, tax rates and in general the role of the government and these can wait. Modi needs to execute upon his promise of government not being in the business of business. So far his solutions have been statist or government led.

Hopefully at the very least demonetization provides enough impetus to reduce some tax rates, which will improve the private investment climate and create much needed jobs. This is the very least the FM can do and is expected to do in the budget.

rahulm · Post by **rahulm** » 06 Jan 2017 19:39

That's a real concern. It's would be naive to think and nothing short of a miracle if tthe pre-DEMON corrupt, unethical and dishonest IT babus and officers have over night become the paragon and beacons of honesty and virtue.

NaMo would be aware of this and I wonder what steps, if any, he has taken in the background. I am skeptical about the Indian babu hyena's changing their rotten money eating habits.