Currency Demonetisation and Future course of Indian Economy

Singha · Post by **Singha** » 13 Dec 2016 20:14

ANI ‏@ANI_news 3h3 hours ago
Old notes of Rs 500 and Rs 1000 which have been returned back to RBI and currency chest, amounted to be 12.44 lakh crore as of Dec 10: RBI

ANI ‏@ANI_news 3h3 hours ago
From 10 Nov till 10 Dec, banks have issued notes worth 4,61,000 cr to the public over their counters and through ATMs :R Gandhi, RBI

Singha · Post by **Singha** » 13 Dec 2016 20:15

so around 30% of the lost currency reinjected back into the system so far.

by december end probably 50% and 100% by Feb end perhaps

Singha · Post by **Singha** » 13 Dec 2016 20:16

ANI ‏@ANI_news 3h3 hours ago
RBI supervisors carrying out similar exercise on various data points of banks: SS Mundra, RBI

ANI ‏@ANI_news 3h3 hours ago
And whenever they find any inconsistency it should be pursued further through their internal audit mechanisms: SS Mundra, RBI

ANI ‏@ANI_news 3h3 hours ago
We have issued elaborate instructions to all bank managements to do the central data checking: SS Mundra, RBI

Singha · Post by **Singha** » 13 Dec 2016 20:17

ANI ‏@ANI_news 6h6 hours ago
Gujarat: Police seize Rs 19.67 Lakh from a house in Vadodara, Rs 13 Lakh in new notes.

Singha · Post by **Singha** » 13 Dec 2016 20:18

ANI ‏@ANI_news 6h6 hours ago
Madhya Pradesh: Police seize Rs. 15.40 Lakh from two people in Balaghat. Rs. 14.40 Lakh in new Rs. 2000 notes

SaiK · Post by **SaiK** » 13 Dec 2016 20:18

UlanBatori wrote:I-witnej ...
....
So much for wonderful cashless transactions, I immediately decided to skip plans to get the phone-based USSD etc until I have seen more people use such things.

The max limit for this I read as 5K per tran with 50 paisa txn fee.
I have not read clearly on the beneficiary MMID /MPIN and auth code.. seams okay.. but may be some security concerns especially with MiM (man in the middle attacks) or Man as Proxy attacks., needs further study.

Whatever, it is not an easy step like swiping your debit card. darn.. you will get frustrated with so many punchings to pay.

shravanp · Post by **shravanp** » 13 Dec 2016 20:22

One can only imagine how extended arms are of Congoon tentacles. Mind boggling!

Singha · Post by **Singha** » 13 Dec 2016 20:24

turn over any rock and out crawls a roach hauling his / her bag of 2K notes!! amazing

JohnTitor · Post by **JohnTitor** » 13 Dec 2016 20:30

Singha wrote:so around 30% of the lost currency reinjected back into the system so far.

by december end probably 50% and 100% by Feb end perhaps

I'm not sure that is correct. I thought the plan was to inject just 20-25% of recalled currency back into the system. Re-injecting all of it will mean inflation does not fall.

Shivaji · Post by **Shivaji** » 13 Dec 2016 20:31

Have been reading some excellent posts for last few weeks. Here are few observations from family, friends, colleagues, people I interacted with.

I have seen 4 kind of reactions.

There are people who have wholeheartedly accepted this as a positive step and are ready to go to any extent for this. This lot jumps in all debates on social media in support of demonetization, are discipline enforcers in bank queues, strive to boost moral of cribbing lot around them. Kind of people you see on BRF.

There is another lot that welcomes the move but complains at the slightest inconvenience. These are not opposed to demonetization, but inconvenience. They do not get swayed by economics and have confidence in Modiji. This lot cribs, but changes track if they see no takers for their cribbing. Mostly aged, pensioners, pampered kids, white collar jobwalas.

Majority of people that includes my mom, wife, sisters, maid, daily-wagers working in brother-in-law's farm etc have no opinion on this. They are so engrossed in their routine that they find too little time for this. For them demonetization is just another hurdle that needs to be crossed. They are always calculating/planning as to how to arrange cash to pay maid or sabjiwala or laundrywala. They have accepted demonetization. They have realized that it may not be the same again. They are coming to terms with this new reality. Deep within they know irrespective of outcome, intention behind the decision has been good. This category is still not showing signs of weariness.

Last category is of people who see this whole exercise as just another gimmick or politically motivated decision without economic sense by Modi ji. These people always share posts on whatsapp showing demonetization as failed exercise or some economist's one-sided views on this. In my circle of friends from Maharashtra hinterland, favorite share of these people is how farmers from XYZ area are burning their produce or share some personal example of how marriage of XYZ's daughter got affected. These people are not against possible shortfalls in execution, but idea of demonetization itself. Mostly those committed to some political ideology and few show-offs / status-quoist.

Just my 2 cents.

Shaktimaan · Post by **Shaktimaan** » 13 Dec 2016 20:53

Hopefully with all these raids the narrative can now shift to "Currency shortage made much worse due to money laundering and hoarding of new notes".

jamwal · Post by **jamwal** » 13 Dec 2016 20:56

Higher denomination of Rs 2000 and 500, we have issued 1.7 billion notes in this period: R Gandhi, RBI #DeMonetisation Of which 20.1 billion pieces belong to small denominations of Rs 10, 20s, 50s, 100s: R Gandhi, RBI

ragupta · Post by **ragupta** » 13 Dec 2016 21:10

JohnTitor wrote:
Singha wrote:so around 30% of the lost currency reinjected back into the system so far.

by december end probably 50% and 100% by Feb end perhaps
I'm not sure that is correct. I thought the plan was to inject just 20-25% of recalled currency back into the system. Re-injecting all of it will mean inflation does not fall.

I think it is being done to avoid inconvenience or at least complain of inconvenience.
As the less-cash economy picks pace, some notes may be withdrawn.

Sachin · Post by **Sachin** » 13 Dec 2016 21:17

Shaktimaan wrote:Hopefully with all these raids the narrative can now shift to "Currency shortage made much worse due to money laundering and hoarding of new notes".

Unfortunately, in the media sources which I read through the narrative which is getting built is - "Hey look, the money laundering did happen and all rich bourgeoisie have managed to launder their money with ease. Modi has failed, or has helped his industry big-wigs to escape. The poor man was made to suffer for this mindless exercise". Off course, my local language news papers are in Malayalam, and as we all know there is no love lost for Modi in the state. For getting a pan-India picture, perhaps we need to sample the news reports in vernacular languages of all states. It is only in very few reports which I even see, where it is reported that Bank staff are rolling out the new money for their friends & well wishers first.

UlanBatori · Post by **UlanBatori** » 13 Dec 2016 21:24

SaiK wrote:phone-based USSD:
The max limit for this I read as 5K per tran with 50 paisa txn fee.
I have not read clearly on the beneficiary MMID /MPIN and auth code.. seams okay.. but may be some security concerns especially with MiM (man in the middle attacks) or Man as Proxy attacks., needs further study. Whatever, it is not an easy step like swiping your debit card. darn.. you will get frustrated with so many punchings to pay.

Govt says transaction fee waived for now. What really caught my attention was the prospect that you could just "refill" same as refilling the BSNL phone, but use the money for many other transactions, no involvement of bank except at the refill point. Require a PIN to do the transaction as well.

But what they are doing is much more complicated. You go to the baink, you get your SIM registered (small problem for some of us...

) by the bank, then link phone to account, then etc etc. This is the phone transaction model of JPMorgan Chase etc. So the entire bank acct is at risk.

I don't see why they don't go to the former: allow ppl to spend money directly uploaded to phone acct, not to bank acct. If bank can allow Rs. 5000 to be loaded to a phone, why not allow Rs. 20,000 to be loaded, then used however, either for phone calls or to buy chai-iddly etc.

Maybe add a QR code way of completing the transaction. Oh well, the Dilli air is just not as pure dung-fragrant as that of Ulan Bator (sigh!)

Manish_Sharma · Post by **Manish_Sharma** » 13 Dec 2016 21:36

Watch Aaj Tak channel now sting operations on SP and BSP leaders in UP on converting black to white running live now....

Virendra Jadhav says to reporter posing as BM guy "....for 10 crore rupees old notes I will give 6 crore notes in 1 hour...."

Singha · Post by **Singha** » 13 Dec 2016 21:43

anyone with a domestic account already has his mobile number linked in for USSD banking.

its fatkat NRIs who might have a issue there

Manish_Sharma · Post by **Manish_Sharma** » 13 Dec 2016 21:44

Wow this is huuuuuge Tarik Siddique of congress party caught on camera in Congress headquarter at Akbar road who says, "....no worries I'll make congress party purchasing bills in old date and you can convert any amount...."

Reporter says "....we will test first with 10 crore and then if it works we bring more...."

Tarik siddiqi "....yes bring, when you are satisfied bring more..."

Manish_Sharma · Post by **Manish_Sharma** » 13 Dec 2016 21:46

Ho ho hoa haaaadehaarr harrrr haaaarr !

NCP Kunwar Pratap singh says, "...elections are coming, we will hire you as our advertisers in the campaign and you can show as payment..."

Shweta Singh of Aaj Tak is presenter!

UlanBatori · Post by **UlanBatori** » 13 Dec 2016 21:50

Singhaji:

The last-dissed category does not legally have such a thing as "his/her mobile number". TRAI says one has to appear in person and revive the account once every 90 din or 6 mahine, which is not possible for any except REAL FatKats who zip back and forth 4 or 6 times a year.
Aam yakerders have to depend on kindness of relatives to get "permanent" number that works at 4AM when one lands and gets ready to board at desh airports, after a year or 2 on the steppes.

madhu · Post by **madhu** » 13 Dec 2016 21:52

Any body keeping track of all the rides and cash seized?

shiv · Post by **shiv** » 13 Dec 2016 21:54

NGOs converting Black to white for 40% commission
http://indiatoday.intoday.in/story/cash ... 33683.html

ragupta · Post by **ragupta** » 13 Dec 2016 21:58

Congress, SP, BSP, NCP, JD(U) leaders laundering black money, reveals TV sting
http://zeenews.india.com/news/india/con ... 58162.html

jamwal · Post by **jamwal** » 13 Dec 2016 21:59

madhu wrote:Any body keeping track of all the rides and cash seized?

https://docs.google.com/spreadsheets/d/ ... edit#gid=0

No one from AAP or BJP caught ?
Rahul Kanwal ‏@rahulkanwal 3h3 hours ago
For those asking not as if attempt was not made to catch BJP leaders turning black into white. But none were caught. Netas-Cash mafia expose

Expose of a few sootiyas from AAP would have made my day

kvraghav · Post by **kvraghav** » 13 Dec 2016 22:01

Stage being set to check opposition party account books and dig the rats out?

Suraj · Post by **Suraj** » 13 Dec 2016 22:01

Sachin wrote:
JohnTitor wrote:I thought GST laws were already passed.. states passed their version too (?)
GST required amendments in the Constitution, and these changes were the ones which were passed by the two houses of Parliament & by a large number of state assemblies. So now looks like it is a constitutional mandate to implement GST by end of year 2017 (?).

The constitutional amendment is passed and it has been ratified into law already. The current GST fracas are just efforts by some parties to disrupt the smooth functioning of the GST Council. Kerala in particular has been vocal because a lot of politicos are caught in the co-op bank route with their useless toilet paper that cannot be converted without those banks adhering to RBIs KYC requirements.

Sicanta · Post by **Sicanta** » 13 Dec 2016 22:23

Suddenly nearly every shop in my area is on paytm network. On enquiring further, a shopkeeper told me that they were approached by paytm representatives who set up the entire app for all of them.

Paytm certainly will be hard to displace.

Singha · Post by **Singha** » 13 Dec 2016 22:29

I had suggested to one of the paytm higher ups to deploy street level workers to onboard hesitant shop keepers with door to door work

chetak · Post by **chetak** » 13 Dec 2016 22:37

Suraj · Post by **Suraj** » 13 Dec 2016 22:49

November inflation falls to 2-year low due to demonetization

India's annual retail inflation declined in November to its lowest level in the last 24 months, official data showed on Tuesday.

According to Consumer Price Index (CPI) data released by the Central Statistics Office (CSO), the annual retail inflation eased last month to 3.63 per cent from 4.20 per cent in October and 5.41 per cent reported during the corresponding period last year.

The fall in CPI was mainly due to a drop in the annual food inflation -- to 2.11 per cent in November from 3.32 per cent in October.

The CPI data revealed that the annual retail inflation for rural India was 4.13 per cent while that for the urban centres was 3.05 per cent. The annual food inflation was 2.87 per cent in rural areas and 0.75 per cent in the urban conclaves.

The official data disclosed that prices of vegetables plunged by (-)10.29 per cent on a year-on-year (YoY) basis, whereas cost of pulses was marginally up by 0.23 per cent.

chetak · Post by **chetak** » 13 Dec 2016 22:54

Demonetisation: Corrupt Deal Disrupted Printing of Rs 500 Notes

NOTE BAN Demonetisation: Corrupt Deal Disrupted Printing of Rs 500 Notes

Chandan Nandy

December 6, 2016,

The very slow printing of the new Rs 500 note at the Bank Note Press (BNP) in Dewas, Madhya Pradesh, could be attributed to an old, but expensive machine supplied by a Swiss-British joint venture company that was allowed to violate significant tender norms, according to confidential documents in possession of The Quint.

The documents, which reveal in great detail the improprieties involved in selecting the company, the Lausanne-based KBA-Giori, which collaborated with the UK-based Thomas De La Rue to form De La Rue Giori, show that a four-set “finishing machine” procured for Rs 400 crore “did not meet tender specifications” and yet was purchased after suspected kickbacks were paid to top Indian government functionaries in 2009.

The machine, which was installed in 2010-11, continues to be operated at the Dewas BNP and is said to have slowed the printing/production of the new Rs 500 notes which are in extreme short supply.

Security Printing and Minting Corporation of India Ltd (SPMCIL), which is under the Finance Ministry, struck a deal with KBA-Giori in 2009, when Pranab Mukherjee was the finance minister, for the supply of the finishing machine whose production speed for churning out currency notes was far below tender specifications.

The alleged beneficiary of the scam was the then SPMCIL Chairman and Managing Director M S Rana who was close to the personal secretary of a top UPA cabinet minister. A chargesheeted official, Rana was removed as SPMCIL chief in July this year, following a series of enquiries into several cases of alleged corruption and misuse of office.

There are two other cases of irregularities against Rana, investigated by the CBI, which are related to the procurement of the KBA-Giori-supplied machine and the use of an Arabian security thread in the production of Rs 10 notes. While the CBI held Rana guilty, he was let off with warnings by present Finance Minister Arun Jaitley.

SPMCIL’s Requirements Not Met

While SPMCIL’s requirement was for a machine unit that would “function automatically with a minimum production speed of 470 bundles per hour or 2.68 million pieces per shift from 36 UP notes/sheets”, KBA-Giori supplied a machine that churned out only 378 bundles an hour, according to a 22 June, 2015 document of the Currency and Coinage division of the Finance Ministry.

The document reveals that KBA-Giori made “contradictory statements” in its offer, saying the company “is pleased to be able to offer SPMCIL our ‘state-of-the-art’ Super Series of printing presses and auxiliaries using today’s latest technology which fully complies with the tender document and is compatible with the existing equipment” at Dewas BNP.

Low Output Speed

But the results were startling. Once the machines were installed and production of Rs 100, Rs 50 and Rs 20 notes began, it was found that “the output/speed calculated based on the formula are below required minimum output of 470 bundles per hour or 2.68 million pieces per shift…The firm was not meeting the technical requirement…Thus the firm, by giving misleading and inconsistent statement in response to production speed and output of the finishing machine, created false impression of meeting the specification.”

Despite these shortcomings, an SPMCIL technical evaluation team’s report said “nothing adverse regarding fulfilment of production speed by the finishing machine by M/s KBA has been mentioned.” Even more surprisingly, the “unit level material management committee or the tender evaluation committee “recommended the offer of M/s KBA for finishing machine as technically suitable.”

A Finance Ministry vigilance department document says that “It is clear that the contradictions given by M/s KBA were overlooked by the unit level committee…The unit level committee has erred in evaluation of technical offer of M/s KBA by not taking cognisance of the formula.” The document adds: “It was the responsibility of the UNIT LEVEL COMMITTEE to evaluate the offer for any inconsistency and contradiction. But, the committee has not given due diligence to the responsibility entrusted to them.”

While “communications” were sent to KBA-Giori regarding deficiency of not meeting the stipulated production rate, the Swiss firm “counter-replied” although “the matter pertaining to contract management part is still under process.”

Non-Functional Machines

Even more damning was the Currency and Coinage department’s finding that while KBA-Giori supplied the automatic feeder machine, it was “not functional” at the Dewas BNP. The machine functions automatically right from the point where sequentially number-printed sheet piles are kept where from 100 sheets with sequential numbering are fed automatically into the machine up to wrap shrink pack system and delivery.

Eliminating A Japanese Competitor

Documents supplied to the Central Vigilance Commission further reveal that KBA-Giori was “shown undue favours” at the cost of a Japanese company, Komori Corporation. While it was specifically stated in the tender documents the offers of only those bidders would be opened whose techno-commercial bids were evaluated and accepted in all respects,” changes were subsequently made to the tender conditions and “change in specification was communicated as technical clarification to M/s KBA-Giori by BNP, Dewas.

This resulted in elimination of one of the prospective bidders, Komori Corporation, from competing in all five items constituting one line and thereby favouring M/s KBA-Giori in the procurement process.”

Besides, Finance Ministry investigations found that:

i) The tender conditions were not formulated properly as there were ambiguities;
ii) The price bid of M/s Komori Corporation was opened intentionally against the provisions of the tender conditions to justify the rates offered by M/s KBA-Giori; and
iii) No justification was available on record for opening the price bid of M/s Komori Corporation knowing fully well that this company could never be L1.

SPMCIL Officials’ Involvement

Five SPMCIL officials, including Rana, are alleged to have bent rules to favour KBA-Giori, so much so that they allegedly “refused to carry out further negotiations with M/s KBA-Giori despite recommendations by the then Finance Ministry Joint Secretary/Financial Adviser M Deenadayalam.

In complaints against the SPMCIL officials it is alleged that an SPMCIL vigilance officer’s report “confirms criminal conspiracy” to eliminate Komori Corporation and favour KBA-Giori instead

ShauryaT · Post by **ShauryaT** » 13 Dec 2016 22:57

The money deposited so far - 12.44 lakh crores - is about 80 per cent of the 15.44 trillion rupees that were circulating in 500 and 1,000 rupee notes when PM Modi announced the ban. - RBI

rsingh · Post by **rsingh** » 13 Dec 2016 23:06

ragupta wrote:Congress, SP, BSP, NCP, JD(U) leaders laundering black money, reveals TV sting
http://zeenews.india.com/news/india/con ... 58162.html

No other media outlet is reporting this news. It tells only one thing.

SaiK · Post by **SaiK** » 13 Dec 2016 23:24

ShauryaT wrote:The money deposited so far - 12.44 lakh crores - is about 80 per cent of the 15.44 trillion rupees that were circulating in 500 and 1,000 rupee notes when PM Modi announced the ban. - RBI

So 3 more trillions to net. BTW, do you have a link to the 15.44 trillion data? thx

uddu · Post by **uddu** » 13 Dec 2016 23:24

ShauryaT wrote:The money deposited so far - 12.44 lakh crores - is about 80 per cent of the 15.44 trillion rupees that were circulating in 500 and 1,000 rupee notes when PM Modi announced the ban. - RBI

Most of them seems to have already made the deposit of old notes. Most probably more than 95 percent. So 2 more weeks is for the corrupt to come up with their 3 trillion of black money.

uddu · Post by **uddu** » 13 Dec 2016 23:28

This also proves one more thing. An ordinary citizen who have amount will not wait till the last moment. Also poor who may have few 500 or 1000 must have deposited/exchanged it in the first few days, because this amount is very valuable to him and he need it to run his house. So it's the rich who don't value pocket money much and the corrupt ones who has to come up and deposit the amount. If this is correct, then indeed it's Rupee's 3 trillion worth of black money out there.

SaiK · Post by **SaiK** » 13 Dec 2016 23:28

chetak wrote:Demonetisation: Corrupt Deal Disrupted Printing of Rs 500 Notes

In complaints against the SPMCIL officials it is alleged that an SPMCIL vigilance officer’s report “confirms criminal conspiracy” to eliminate Komori Corporation and favour KBA-Giori instead

This rot is sooooooo deeeeeep! jee it is like one of those zombie movie, and the zombies here are the kala walas.

suryag · Post by **suryag** » 13 Dec 2016 23:34

Going by the run rate dec7(11.55 lake crore) to today dec13(12.44 lake crore) almost all of the money will come back

Manish_Sharma · Post by **Manish_Sharma** » 13 Dec 2016 23:35

SaiK wrote:
ShauryaT wrote:The money deposited so far - 12.44 lakh crores - is about 80 per cent of the 15.44 trillion rupees that were circulating in 500 and 1,000 rupee notes when PM Modi announced the ban. - RBI
So 3 more trillions to net. BTW, do you have a link to the 15.44 trillion data? thx

There has been double counting, the actual deposit may be much lower:
http://www.firstpost.com/politics/demon ... 34788.html

Suraj · Post by **Suraj** » 13 Dec 2016 23:37

uddu wrote:This also proves one more thing. An ordinary citizen who have amount will not wait till the last moment. Also poor who may have few 500 or 1000 must have deposited/exchanged it in the first few days, because this amount is very valuable to him and he need it to run his house. So it's the rich who don't value pocket money much and the corrupt ones who has to come up and deposit the amount. If this is correct, then indeed it's Rupee's 3 trillion worth of black money out there.

Exactly. As each day progresses, the fraction of the holdouts increasingly biases towards the corrupt who cannot/will not deposit their money because they're still trying to find loopholes / are considering the tradeoff of discovery vs total loss and rebuilding / some other hope .

The overwhelming majority of the mango people have already done their work. They're just suffering because the abovementioned fatkats are trying to hoard small cash out of circulation and thereby making things worse for everyone.