Currency Demonetisation and Future course of Indian Economy

[vinod]

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

All RBI has to do is ensure that all banks at least 1 bottle. Once the news spreads that a bank has ink, not many people will go in.

[SaraLax]

More information on the changes happening due to Demonetization and as expected - Common people starting to go digital ...

Credit/debit card usage surges on demonetisation

According to Innoviti Payment Solutions, a Bengaluru-based company that processes transactions worth $2 billion annually, the usage of cards for transactions of less than ₹500 value has increased 65 per cent since ₹500/1,000 notes were scrapped on November 8.

Overall, the usage of debit cards has gone up 70 per cent and of credit cards, by 40 per cent, suggesting a sharp jump in first-time users.

RBI data show that ATMs account for 88 per cent of debit card usage while PoS terminals and online transactions account for the remaining 12 per cent.

According to Innoviti, post demonetisation, people mostly used their cards to pay for essentials. Also, they postponed purchase of items such as apparel and jewellery. Rajeev Agrawal, CEO of Innoviti, said the average transaction size has dropped by around 30 per cent.

Priyambada Sarangi, a small time entrepreneur from a tier 3 town of Angul in Odisha, was perturbed by the demonetisation scheme announced by the government on November 8 evening. Owner of a small fashion boutique, Sarangi so far dealt in cash mostly as her average billing size does not exceed more than 1000 per transaction. However, the very next day she approached a nearby bank to get as POS (point of sale) machine and got one installed within two days fearing dip in sales because of the sudden cash crunch. She is happy as her customers are willing to pay by card now, something that makes her life easy.

"I had to personally visit a bank everyday to deposit the day's earnings but used to manage it somehow. The demonetisation announcement came as a jolt but also was an eye opener for me. I can now keep a check on my earnings and also there is no fear of theft of cash from the counter," said Sarangi. She also used her own debit card for the first to make the payment for the PoS machine.

Similarly, Soumya Das, a media professional from Kolkata, said he had never used a credit card earlier fearing that it would lead to overspending but the latest move forced him to make a big ticket purchase on credit card. He had promised to buy a smartphone for his daughter.

In Vasai, a surburb in Mumbai, a housemaid, Laxmi Bendre, used her debit card for the first time to make a purchase at a neighbourhood store for a product worth Rs. 450. Laxmi and her husband together have two bank accounts.

Seems many people had Debit Cards but were never using it and managing things in cash mode itself. Modi has forced these group of people to go digital and they may well stick to digital mode of money transactions. Hope that the RuPAY system is able to provide these people the digital transactions facility at lesser charges than the Visa/Mastercard type companies.

[yensoy]

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

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

As very eloquently pointed out by @rohitvats, there won't be a long term growth option if Modi doesn't get re-elected, so yes some of the proceeds will be and should be used to consolidate his standing in the electorate.

[Rishi Verma]

Another rumor worth spreading: Modi using armed drones looking for people digging holes to bury gold.

[Karthik S]

Further incentives and subsidies fine. But not direct money transfer. btw you think money transferred will last till 2019?

[essay]

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

As very eloquently pointed out by @rohitvats, there won't be a long term growth option if Modi doesn't get re-elected, so yes some of the proceeds will be and should be used to consolidate his standing in the electorate.

I don't believe this possibility exists. RBI cannot declare in March '17 or some other date that 30,000 crores of money (as an example) in 500/1000 denominations did not get deposited therefore they are striking that liability off their balance sheets.

RBI's liability will exist into foreseeable future and like a prudent manager of national economy, they will have to create contingency funds for this liability.

I'm sure there are a bunch of 2nd order effects from this move which will help Modi; but direct confiscation of this wealth would not be one of the options.

[naruto]

Has anyone used UPI? Which UPI app is better?

[Chandragupta]

ICICI Pockets has UPI I think, the best of the lot.

Can anyone use UPI's public API and come out with an e-wallet or needs approval from the RBI?

[shiv]

Another rumor worth spreading: Modi using armed drones looking for people digging holes to bury gold.

If I was an opposition politician I would spread this rumour myself to paint Modi as imposing emergency by backdoor using military to control population. IMO this is a bad idea.

[abhijitm]

ICICI Pockets has UPI I think, the best of the lot.

Can anyone use UPI's public API and come out with an e-wallet or needs approval from the RBI?

No.

You need a bank as payment service provider. If they allow your app as an additional TSP (as they are having their own apps like pockets, imobile etc) then you can use their upi gateway to connect to NPCI.

RBI has no role in this. Mainly the bank and NPCI.

PS: upi is Nandan Nilekani's baby not Raghuram Rajan as his fanboy media had portrayed.

[JTull]

ICICI Pockets has UPI I think, the best of the lot.

Can anyone use UPI's public API and come out with an e-wallet or needs approval from the RBI?

It doesn't allow linking NRO accounts. What a shame!

[JTull]

I was just wondering about the pink colour of Rs 2000 note. Just realised it's the same colour as the old Rs 2 note. Re 1 and Rs 100 notes have a common colour. Perhaps the new Rs 1000 will match them

[IndraD]

Another rumor worth spreading: Modi using armed drones looking for people digging holes to bury gold.

If I was an opposition politician I would spread this rumour myself to paint Modi as imposing emergency by backdoor using military to control population. IMO this is a bad idea.

after emergency comes forced sterilisation lets get a list ready starting from Diggy & Abhisex

[Primus]

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

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

Modi Ji's (yes, the honorific is well deserved, IMHO) stature keeps going up in my eyes. I very much doubt he has just the 2019 elections in the forefront of his vision for the nation. He is truly a Karmayogi and dedicated not only to the growth and prosperity of the country but also to the upliftment and betterment of the poor, in fact that I believe is his true goal. Coming from a very humble background himself, he well understands their plight. The only way to do well by them is to improve law and order, remove corruption, improve the infrastructure and create incentives and special schemes for the poor to finally be participants in their own destiny. Along the way the nation as a whole prospers. It is a 'trickle up' economy that will really work better for the future.

What is interesting to observe is that there is a gradual but palpable change in Indian society, working classes everywhere have got a bit more spine, become a bit more honest (even if it is for fear of the 'danda') and there is a sense of national pride that I have not seen or felt since the LBS days. I keep bringing him back into my thoughts because what I see today in India is very much reminiscent of those dark days when India was facing a huge threat and everybody tightened their belts and their resolve to fight the menace as one people. The huge difference this time is that the threat is not just from without but also from within and that we are much better prepared economically and militarily.

Finally, just giving dole to the poor is a very bad idea and I am sure Modi Ji is way smarter than this.

[Paul]

Some money will have to be given to the poor...& do not forget the babu's. They will ask for another pay commission.

[Sicanta]

Not for next few years another pay commission. But for bankers, one is due next year

[Rahul M]

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

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

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

That above will bring reward enough.

spending a lakh or two per BPL family (~ 5 people ? ) as a pension fund with lock-in period of 5 years (say) and/or health insurance (for example) might not be that bad an idea. the fund would offer some financial security while bringing a large chunk of deprived under health coverage indirectly improving productivity, HR quality, lowering malnutrition and reducing long term health costs.
people could also take out loans against such an amount for productive purposes like education or entrepreneurship.

India has about 20 Cr BPL citizens who are also on Aadhar. assuming 5 per family on avg, that's 4 Cr families. if GoI spends about 10k per head it would come to about 2 lakh Cr. might be doable.

[shiv]

Modi may demand that all poor women start bank accounts and ensure that there is money in those accounts - and have an arrangement where money can be paid directly for "woman things" - food, medicine and nutrition for kids, kitchen fuel etc. It is a known fact that men spend on themselves (often booze) and women spend on family in general and I bet my remaining testimonial that Modi knows this too damn well

[Supratik]

Modi had promised health care for the poor. I expect some kind of health insurance scheme for BPL to be announced.

[achoudhury]

This is my first post after a long long time. But I will restrict my views on the aftermath of this bold gamble which seems to have paid off. Economic aspects of demonetisation has already been discussed threadbare in this thread and advantage are so many, so I will try to see the political aspects of it. Let's assume that around 3 lakh crore of BM is wiped out and not returned. This is the average assessment with lower being 1 Lakh crore and higher goes upto 5 Lakh crore. Another core assumption for me is that Modi is a long term player and long term outlook. So, no, I dont expect him to use this one time bonanza to write off GOI's liability. Instead what will follow is a combination of extra dividend from RBI as well as fall in interest payment for GOI. He will have a game plan to how to use that in sustainable and irreversible manner but also with an eye on maximizing political benefit by spending on Social sector. Old age people suffered most in this exercise. He may raise Old age pension. Salaried Middle class were inconvenienced but did not suffer much so may be he will raise IT limit by 2018 budget to 4 Lakh or so. He will also do something for farmers which is excellent for optics like raise MSP. He is already doing so many things for Neo Middle Class like Ujala, Mudra but I expect he may create a large fund for funding housing for Poor and neo-middle class with some special provision for SC/ST, again very good for optics. For women, he may raise the Kanya Samridhi amount. Basically, he will use the kitty on social sector spending with targeted benefits. Also, this fight is not over. Modi took huge political gamble by betting the whole house and throwing the kitchen sink and now he will milk it by going ruthlessly after BM hoarders in Real Estate. He is armed with Real Estate bill and Benami properties Bill. Expect one time announcement by him to come clean like IDS but after that he will plan for another strike. No, Demonetisation was not surgical strike, It was nuclear strike.

Also, my respect to common citizen of India has gone up by multitude. In any other country, this would not have been possible. There would have been a civil war by now. Also, I will see banker in new light now. A huge respect to that community. Lastly the man himself. No one else could have pulled it off in except Modi. "Bhakt" will have a different meaning now.

[ragupta]

Modi had promised health care for the poor. I expect some kind of health insurance scheme for BPL to be announced.

During independence day he declared govt will bear the cost of medical expenses till 1L for poor people. It was never highlighted in the media, not sure what happened to it.

[ragupta]

Right time to push for Govt funded election. I am sure most political parties would be willing to pass such legislation under given circumstances.

[Rahul M]

Modi may demand that all poor women start bank accounts and ensure that there is money in those accounts - and have an arrangement where money can be paid directly for "woman things" - food, medicine and nutrition for kids, kitchen fuel etc. It is a known fact that men spend on themselves (often booze) and women spend on family in general and I bet my remaining testimonial that Modi knows this too damn well

the problem with that is the women might be forced to give up the money. most poverty alleviation programs do favour paying the women but have not been able to solve the issue of men taking that money away by force.

OTOH, a lock-in arrangement prevents that (at the cost of denying legitimate current demand) unless as a loan, which a bank would release only after due diligence. also, this would be a safe loan for banks, infusing both the rural economy and the banks with capital.

IOW, re-capitalization of banks might be achieved at the same time with empowering the poor. (RaGa please take note )

[Rishi Verma]

J. Reddy 500cr wedding is certainly a blotch on BJP image. Surely there are corrupt in BJP like Eknath Khadse of Maharashtra. Modi gov needs to weed them out soon by targeting them first.

[ragupta]

Finally, just giving dole to the poor is a very bad idea and I am sure Modi Ji is way smarter than this.

Agree fully, helping hand for sure, but no dole, empower them and make them feel proud of their effort then making them beggers.

[Karthik S]

I am sure NM will figure out a way to help common people benefit from demonetization. He is quite a few chanakyas around him to help him formulate strategies as well.

[manjgu]

a) the current rate is RS 300 for a days word of standing in Q b) current rate for changing is Rs 700 to 800 for Rs 1000 c) lot of bank people are into this racket... d) people standing in Q is not as widespread as people think... very hard to get a chance twice a day. a frnd of mine sent his driver to exchange Rs 2500 old notes..he stood the whole day without success..when returning was met by a tout who offered 800 per 1000 exchange.

[manjgu]

i think they should have had counter to exchange Rs 500 for the first 1 week without any proof.

[KJo]

J. Reddy 500cr wedding is certainly a blotch on BJP image. Surely there are corrupt in BJP like Eknath Khadse of Maharashtra. Modi gov needs to weed them out soon by targeting them first.

IT department needs to do quiet investigation into his sources of income and if any anomaly is seen, put an official raid and take action.
If not, Modi will look like he is protecting his people when he really is protecting no crook.

[JTull]

Finally, just giving dole to the poor is a very bad idea and I am sure Modi Ji is way smarter than this.

Agree fully, helping hand for sure, but no dole, empower them and make them feel proud of their effort then making them beggers.

One concern is that, in future political parties may milk this segment (25.5 crore JDY account holders) with promises of dole. Modi has to rig-fence this somehow, to prevent it from becoming vote bank politics. Otherwise we'll have a race of who can dole out more of tax-payers money.

[vijayk]

[vijayk]

http://indianexpress.com/article/india/ ... r-4373148/
CM Mamata Banerjee dials Sitaram Yechury, ‘desperate call’, says CPI(M) leader
A senior CPI(M) leader, however, gave her a rebuff, describing the call as a "desperate call" to save her own party leaders who were allegedly involved in corruption.

[shiv]

Modi had promised health care for the poor. I expect some kind of health insurance scheme for BPL to be announced.

In my experience all "health insurance" schemes by government are utter scams and Modi will not be able to make them work. Won't expand on what I know - but health insurance is a way of feeding the black money monster again

[Sachin]

SHQ in the evening remarked that situation is improving. They all closed down the shop at around 1800Hrs today. The line for exchanging notes, without using the accounts were less compared to yesterday. Their branch ATM could not be stocked today because no 100s came in. What ever they had, went for the exchange scheme. The staff was of the opinion that if the new Rs.500s hit the street, 90% of their problems would get resolved. Looks like the plan to mark the people doing the exchange seems to have some good effect. The opinion of the staff is that even after lining up an army of loafers the hoarders may have been able to launder around Rs.3 lakhs. Some of them had brought in even old men, totally sloshed up; without even knowing why they were standing in line . This is in a rural branch of a PSU bank, and situation may be different else where. The queues seems to be more at the ATMs.

There is another news report which says the Tax Departments are also asking detailed statements from various religious trusts, as there are intelligence reports that lots of hoarded money went to them.

All RBI has to do is ensure that all banks at least 1 bottle. Once the news spreads that a bank has ink, not many people will go in.

Kerala is planning to go for this "voting" big way tomorrow. The ink bottles have all been issued. Off course a whine is floating around that people being "stamped" for withdrawing their own money, and it is humiliating. Have advised a few that if this is a big humiliation, why bother do the exchange using the bank accounts held by the people. The chutzpah of the 100% literates some times amazes me.

[hanumadu]

J. Reddy 500cr wedding is certainly a blotch on BJP image. Surely there are corrupt in BJP like Eknath Khadse of Maharashtra. Modi gov needs to weed them out soon by targeting them first.

IT department needs to do quiet investigation into his sources of income and if any anomaly is seen, put an official raid and take action.
If not, Modi will look like he is protecting his people when he really is protecting no crook.

Is he still with the BJP?

[kvraghav]

Modi had promised health care for the poor. I expect some kind of health insurance scheme for BPL to be announced.

In my experience all "health insurance" schemes by government are utter scams and Modi will not be able to make them work. Won't expand on what I know - but health insurance is a way of feeding the black money monster again

Shiv sir, wanted to ask this question always, what is stopping india to move towards desease based insurance? A surgeon general?

[Singha]

J.Reddyji he is no more in BJP, he formed a small party with Sriramulu of BJP his close ballari friend.

[shiv]

Shiv sir, wanted to ask this question always, what is stopping india to move towards disease based insurance? A surgeon general?

You mean "disease based insurance"? Probably OT for this thread, but in India insurance is a scam to make money for various people. A recent report pointed out that most genuine car accident insurance claims are not met, and I recently sent an RTI application about how often doctors who are insured are helped in case they have to pay costs for some medical disaster. The reply was "We do not maintain any separate database"

The minute a patient declares a disease - that disease is no longer covered. Insurance companies want to make and keep as much money as poss and most Indians soon learn that LIC is one of the worst long term investments you can make.

[VKumar]

An unintended benefit has been that demonetisation has taught people to stand in queue!

[csubash]

Received on Whatsapp

"During passage of hard constipated stool, when whole body puts an effort to push it forward, it is only a**hol* that complains of pain"