Currency Demonetisation and Future course of Indian Economy

[cdbatra]

If these guys had known before hand they would have all produced movies and recycled 100cr/movie. Another route is to basically catch hold of small time restaurants and show inflated sales and convert the colour but this is going to help only 8-10cr brackets, the ones with 100s/1000s of crores will find it difficult. The temple scheme is ingenious, deposit all money in hundi of non endowment temples and take control of the management and then award fake works to your fake companies and do away with 30-40% tax. this move was a lightning strike, if not anything the economy size will increase with banks having more liquidity at their disposal

I seriously doubt ppl having stash greater than 10 cr will have that in cash... Most of these guys have already converted to gold , real estate and other instruments.

[Chandragupta]

Anyone with less than 1 cr can easily convert to white, too many loopholes and I suspect the government has intentionally left them untouched to let this money come into system and tax it. But anyone with more than that will find it tough. You will be surprised how many people have tens of crores in cash.

[Gus]

The "I was just following traffic" is not an excuse for speeding. People who got away before the police set up speed traps are lucky, but people really should have been driving on the legal speed to begin with. Sure some traffic jam will happen because of enforcement, but at the end of this - it will be for the better.

[Chandragupta]

No, it is also about police deliberately blocking off roads and collecting hafta. Now that someone (NaMo) has given the danda to the police, they want traffic to suddenly start flowing smoothly and also pay fines for not going down the correct road, when the police itself had blocked iy earlier just to line their pockets.

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

[Gus]

I seriously doubt ppl having stash greater than 10 cr will have that in cash... Most of these guys have already converted to gold , real estate and other instruments.

A few thousand crores are spent each election in TN by both the biggies. And despite being out of power for 5 years, they still spend equally in next election. By my guesstimate, theres 10k plus crs liquid cash in notes.

Cash is king. Land , gold etc are limited in scope and still backed up and transacted with cash.

[Bart S]

I ask the foll. 10 questions:



10.Will govt. contracts be given fairly and kickbacks stopped?

Good question. A lot of people on this forum are interested in that question as well. Especially since it would help rescue indigenous projects like the Arjun MBT from the clutches of Russian arms dealers and their assorted shills.

Perhaps a lot of those corrupt transactions were in the form of black money and those involved would now be indirectly or directly affected?

[MohdKav]

One gripe that I have with the GoI is that they are not pulling up the IT-dept, Excise & Sales Tax guys. These are the biggest bunch of bas**rds to walk the country. So many small businessmen, traders will lose their money. And most of the people here are celebrating this saying 'good the buggers lost their money..serves them right' but it is because of these ******** that these people were forced to hide their income.

Go to any trading hub in Delhi or a metal hub and shout "Excise!" in the middle of a street and watch how many of the business owners there piss their pants. This is a f-ing mafia that extorts money from businesses. There is a reason why businesses hide their income so that their income is less than the excise threshold. So many cases I know where IT dept raided and walked off with crores in bribes. Same with Sales Tax & Excise. Will the GoI investigate every bugger in these departments?

Everyone supports this decision but Modi government better go after these agencies with a vengeance, otherwise the biggest mafia will be left untouched. Not just burn their stash but these guys should go to prison for what they have done to the Indian SME sector. Economic terrorism is the right term. The f-ers are terrorists.

But every bussiness owner is a black marketeer, they made honest official corrupt and were forced to take bribes , or so goes the tune here. Indian goverment babus and judiciary has behaved like mafia to its citizens.

[Suraj]

How exactly are the jewellers planning to exit this loop. Won't the currency note chicken come home to roost eventually ?

That's the question I'd ask every person who claims some fatkat managed to get rid of all his loot.

The reality is that they have not. They just found another sucker to deal with. Ultimately someone will have to deposit it in the bank for it to have any actual value. At that time, questions will be asked. A lot of these claimed 'managed to get away with it' will just become 'lost that money forever because it was orphaned cash that GoI happily walked away with'. Of course in the process, the fatcat didn't get caught, but only reduced to a very thin cat. I can live with that. I'm happier seeing all the cash back in GoI's control. That has far better long term benefits.

[Gus]

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

Are the 500, 1000 notes that they hoard have some special exemption?

No, right. Then what's your cribbing about. That everything has to be perfect or nothing should happen ?

[pankajs]

Where will the babus hide if there is no hiding place left?
If the transactions are digitized and transparent to GOI whom will the babus terrorize?

[Bart S]

No, it is also about police deliberately blocking off roads and collecting hafta. Now that someone (NaMo) has given the danda to the police, they want traffic to suddenly start flowing smoothly and also pay fines for not going down the correct road, when the police itself had blocked iy earlier just to line their pockets.

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

Anti-BM measures are going to make it harder for that corruption to happen in the future. Do you want to stop all that just because it happened in the past?

Such arguments are simply a "so what if my fly is open, your shirt is torn" torn type of deflection. People did something illegal, now they got caught, so suck it up.

[MohdKav]

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

Are the 500, 1000 notes that they hoard have some special exemption?

No, right. Then what's your cribbing about. That everything has to be perfect or nothing should happen ?

Its gone, guess who they are going to come with vengeance to get their wealth back ? The victims of their mafiadom still remains,
So until they are caught and doing business made easy ( lower regulations), these people will come back for their collection.

Building regulations for example - some rules can be interpreted in multiple ways, its been made to be confusing on purpose. These were these people make money by exhorting from builders, small time or big time. That hasnt changed. They will still ask for money, heck I was asked a bribe yesterday in GOLD, I am sure as cash comes back into circulation properly, they will take money again.

[Patni]

Dear Fellow Members,

I would like to compile a bullet points of positives of this monumental step by Modi in:
a) short term (immediate to March 31,2017)
b) Mid term ( IN FV 2017-18)
c) Long term ( in next 2 to 3 years)

I request all to please respond with a-1).. b-1) c-1) etc. and maybe in few days we can have a nice compilation that can be proof read and used as a sticky on thread. We can also attempt short term pain part but IMHO, downside is very small and very temporary.

My list to start is,

a-1: Total inhalation of all paki printed FICN which by an estimate is about 70 crore per month at least.
a-2: Complete starvation of huge daily Black money hawala operation across our boarder and also within.
a-3: Huge push towards cashless transaction for anything over 10000/- both for businesses and consumers.
a-4: Huge jump in cheap bank deposits in all the banks which overnight got all the worries of recapitalisation etc for Basel-III compliance completely addressed.
a-5: Huge positive for NaMo as he delivered on fight against corrupt elites most effectively and in most "dharmic" and across the board way.

b-1: More ppl. including females from poor and lower middle class strata will start saving in savings account and will lead to more informed and better access and utilisation of more sophisticated financial products and services.
b-2: My estimate is at least 20% to 30% jump in tax payer base for FY16-17. ( I am not counting ppl who will file returns with nill tax liability but those who will deposit more then 2 lakh cash in next 50 days and will have to declare income more then 2.5Lakh for FY16-17 and hence will pay at least 10% tax)
b-3: Cash only retailers and traders / SME etc will not be generating Black money as much as Pre 9/11! as GST will roll out too and it can only get better for India.

c-1: least 2 % boost in GDP growth at minimum with such huge blow to black money economy.
c-2: It will become almost impossible for corrupt elites/babus/politicians/underworld to maintain high spending corrupt lifestyle as they do today without paying any tax or being easily spotted.

[Gus]

So everything has to be end to end comprehensive or nothing should be done.

All I deduct is some personal heartache of the kind that I outlined above - "why me, I was just following traffic"

[MohdKav]

Where will the babus hide if there is no hiding place left?
If the transactions are digitized and transparent to GOI whom will the babus terrorize?

What happens after Cash is easily availabe in the market , 6 - 8 months from now ?
You under estimate the babu's ?
The bigger fish's have small companies in Free Zones outside India, all it takes is Rs. 4 - 7 lacs per year. Money is paid outside India into those account. They bring back the money through investments into companies in India owned by their wives.

[Gagan]

The way politicial parties are going to do it is
1. Real estate
2. Conversion to gold
3. False jan dhan accounts with the collusion of bank employees. Entire bank branches will be colluded, with bank officers opening duplicate accounts and doing transactions on the go.
4. This I am not sure of, but they will use the IDs of people who deposited money and show that they paid more money than they actually did, and will give out payouts in new currency.

There will still be losses, but the bank employees will be under intense political pressure for sure.

[putnanja]

I feel the government might impose some sort of cash limit on withdrawls so people don't withdraw lakhs at a time. If transaction happens through cheques/money transfers etc, it will leave a trail. After Dec 30th, I am looking forward to more restrictions on cash withdrawl and usage.

[Chandragupta]

No, it is also about police deliberately blocking off roads and collecting hafta. Now that someone (NaMo) has given the danda to the police, they want traffic to suddenly start flowing smoothly and also pay fines for not going down the correct road, when the police itself had blocked iy earlier just to line their pockets.

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

Anti-BM measures are going to make it harder for that corruption to happen in the future. Do you want to stop all that just because it happened in the past?

Such arguments are simply a "so what if my fly is open, your shirt is torn" torn type of deflection. People did something illegal, now they got caught, so suck it up.

Did I anywhere say that I want this to stop?

Its okay to collect fines now but what about the police and the hafta they have collected in RE, gold and cash?

Are the 500, 1000 notes that they hoard have some special exemption?

No, right. Then what's your cribbing about. That everything has to be perfect or nothing should happen ?

Do you have comprehension issues? Their BM is gone but I want a stricter scrutiny into their benami properties and gold assets in lockers.

Do you and Bart have a problem with this?

[yensoy]

I would like to compile a bullet points of positives of this monumental step by Modi in:
a) short term (immediate to March 31,2017)
b) Mid term ( IN FV 2017-18)
c) Long term ( in next 2 to 3 years)

Deflationary winds leading to lower interest rates. That in itself is a big win, allowing for more capital investment and spending. Of course there will be people who whine about why they should continue to get 9% on their savings at zero risk (and maybe some kind of adjustment should be made to keep this vocal bunch shut) but when a driver for instance can purchase a car at 6% financing, suddenly he can have his own "means of production" rather than being a day wage earner.

[pankajs]

Where will the babus hide if there is no hiding place left?
If the transactions are digitized and transparent to GOI whom will the babus terrorize?

What happens after Cash is easily availabe in the market , 6 - 8 months from now ?
You under estimate the babu's ?
The bigger fish's have small companies in Free Zones outside India, all it takes is Rs. 4 - 7 lacs per year. Money is paid outside India into those account. They bring back the money through investments into companies in India owned by their wives.

Why is GOI doing treaty re-negotiations with its counterparts across he world?
Once the system in transparent to GOI any unaccounted inflows/outlfows can be tracked to their source with help of these tax treaties?

It will just take a bit of time, perhaps up to 5 year but it will deliver in the end. That is for the big fish who have access to outside markets. The insiders (lower and medium ticket size guys) will start feeling the squeeze much earlier.

Once this phase is over gold and RE are going to be tackled. GOI knows that most of the black money inside India is in these assets. They have just cut the pipeline (currency) that carries the flow. Now the Gold/RE assets are trapped Inside with no opportunity to be liquidated quickly and flee the country.

[Gus]

What exactly are you adding to our understanding of this particular step and it's impact ?

How is saying "they should scrutinize benami and gold" without giving any actual useful steps help ?

[yensoy]

I feel the government might impose some sort of cash limit on withdrawls so people don't withdraw lakhs at a time. If transaction happens through cheques/money transfers etc, it will leave a trail. After Dec 30th, I am looking forward to more restrictions on cash withdrawl and usage.

The government has already done that. They just won't print enough cash, and they will force whatever sectors of business they can to deal with cashless - e.g. airline tickets, jewellery etc. It will lead to hardship for those unwilling or unable to adjust, but without a strong push we cannot move towards cashless. You want to pay with card, please swipe here. You want to pay with cash, please stand in line, keep your aadhar card ready and fill out this long form in triplicate.

[MohdKav]

What happens after Cash is easily availabe in the market , 6 - 8 months from now ?
You under estimate the babu's ?
The bigger fish's have small companies in Free Zones outside India, all it takes is Rs. 4 - 7 lacs per year. Money is paid outside India into those account. They bring back the money through investments into companies in India owned by their wives.

Why is GOI doing treaty re-negotiations with its counterparts across he world?
Once the system in transparent to GOI any unaccounted inflows/outlfows can be tracked to their source with help of these tax treaties?

It will just take a bit of time, perhaps up to 5 year but it will deliver in the end. That is for the big fish who have access to outside markets. The insiders (lower and medium ticket size guys) will start feeling the squeeze much earlier.

One this phase is over gold and RE are going to be tackled. GOI knows that most of the black money inside India is in these assets. They have just cut the pipeline (currency) that carries the flow. Now the Gold/RE assets are trapped Inside India with not opportunity to be liquidated quickly and fee the country.

Treaty negotiations will have no impact on them. All of these are registered as proper companies in those countries, lets take Dubai for example, the whole economy is run on money laundering. Babu's are not going to stop taking money. Nothing is going to get done now. You dont need a big fish to have access to outside markets, for as little as Rs. 4 lacs , you can have a desk , chair and 20 square feet in dubai free zone

[MohdKav]

Babu's can only be stopped, if regulations and confusions are taken away from the system. They should be held accountable. Is it possible in the short term ?

[Sachin]

SHQ works in a PSU bank, and this is what she observed yesterday.
1. In her part of the woods there are still people who hoards wads of currency notes . I hear many people say that this is kind of "old fashioned". But that is not the case. People do have small safes and strong rooms in their homes and stock pile cash there. Pretty much every transaction they do, is by cash.
2. The area has seen a boom in "real estate", and there are lots of semi-literate folks who have got truck loads of money, buy being partners in "real estate project". Poor folks, are not very happy in kind of parking the funds in multiple places. Most of them remain as cash (and fancy cars etc.).
3. The local rich fellows is now sending many of their minions with old notes for Rs.2000 or Rs.4000. Each fellow comes up with some unique ID proof, converts the money he has. He then goes to another bank with another set of old notes and use the same ID there as well. In very few cases, same person tried to make multiple attempts at the same branch, using same ID.
4. In her branch, they are collecting the xerox of the IDs along with the forms, and doing the currency conversion. None of this was fed into their core banking system (computerised) at least as of yesterday. Today I read in the papers that RBI has made this mandatory now. So looks like there are people making real desperate attempts to clear away their unaccounted wealth.

In KL, even the state Fin.Min is not happy that the co-operative bank business being actively monitored by the RBI. Stories of the strong state of KL, fully self reliant on its co-op banking system and flourishing, is doing the rounds. From what I could figure out, Co.Op banking system in KL, is fully hawala compliant and is tailor made to suit that business. The usual excuse of poor people use it is just that; an excuse. Deposits are started with Rs.49,999 to bye pass the PAN card requirement, and no one asks for any KYC kind of proofs. It is just free for all. Don't know if it is the same story in other states as well.

[pankajs]

Treaty negotiations will have no impact on them. All of these are registered as proper companies in those countries, lets take Dubai for example, the whole economy is run on money laundering. Babu's are not going to stop taking money. Nothing is going to get done now. You dont need a big fish to have access to outside markets, for as little as Rs. 4 lacs , you can have a desk , chair and 20 square feet in dubai free zone

Saar ji GOI is going to ask for source of fund/income even for Dubai based *dummy* companies in *free zone*. Juts because you are a Registered companies in Free zone does not mean that they don't have to show accounts or have no reporting requirements. After all it could be drug money meant for terror financing when terror financing is such a big concern worldwide. It is just a matter of time.

[Suraj]

The way politicial parties are going to do it is
1. Real estate
2. Conversion to gold

Neither of these are going to help. There's a repeated mistake in thinking that once cash is exchanged with something else, they're free and clear. That's not true. The cash has NO value. It has had no value for 2 days now. It will have value when someone deposits it in the bank and proves it was earned legally. In other words, RE means RE guy has to now prove that the money is white or pay tax+penalty+jail term . Gold means gold merchant has to do the same.

None of this is a fix - it just means some sucker was found, and hopefully they won't rat out the origin of the cash to save their asses. This is what's been repeatedly pointed out as the weakness of all these approaches - they ALL depend on you finding sufficient willing sucker / martyrs to pass the buck onto and save your behind. I don't mean literally you here, of course, just a figure of speech.

3. False jan dhan accounts with the collusion of bank employees. Entire bank branches will be colluded, with bank officers opening duplicate accounts and doing transactions on the go.
4. This I am not sure of, but they will use the IDs of people who deposited money and show that they paid more money than they actually did, and will give out payouts in new currency.

There will still be losses, but the bank employees will be under intense political pressure for sure.

The argument that banks are the weak point is true. It will require constant oversight to see that they're not overwhelmed / screwing up / gone rogue when dealing with deposits of the equivalent of hundreds of billions of dollars within a short timeframe. The larger goal is still to see that all that money is taken out of BMers hands, but its also necessary that they be identified and caught.

For those talking of the BM just being swapped with new cash, sorry, GoI is not doing anything of the sort. Current stated plans to print the new currency note are FAR FAR less than the actual volume of notes floating in the black market. GoI is using this moment to move everything else to cashless route. The bank accounts and debit cards are in place for most people (PMJDY). The payment processing system is also in place. They have no intention of printing anything more than a fraction of a percent of the cash that's being sucked back into the banks. Enough to maintain official M2 velocity, but no more - definitely not anywhere near enough floating cash to run a parallel economy.

[cdbatra]

Heard from grapewine:- Doctors and lawyers are scrambling to get their hands on solitaires which are available on old notes but at steep premium..

[MohdKav]

Treaty negotiations will have no impact on them. All of these are registered as proper companies in those countries, lets take Dubai for example, the whole economy is run on money laundering. Babu's are not going to stop taking money. Nothing is going to get done now. You dont need a big fish to have access to outside markets, for as little as Rs. 4 lacs , you can have a desk , chair and 20 square feet in dubai free zone

Saar ji GOI is going to ask for source of fund/income even for Dubai based *dummy* companies in *free zone*. Juts because you are a Registered companies in Free zone does not mean that they don't have to show accounts or have no reporting requirements. After all it could be drug money meant for terror financing when terror financing is such a big concern worldwide. It is just a matter of time.

Source of a foreign company owned by an Indian as far has not been asked till now. What I told you is happening as we speak. NRI's arent taxed nor are their source questioned.

[rahulm]

With nothing much to do, I went to my rural ICICI bank just to recce.

Orderly queues.

Bank manager is leading from the front at the teller desk to clear the queue. Spent some time with him

He has yet to see a 500 note. The branch has no supply of 100's but is freely exchanging 2000 notes which he said are plentiful. So much for the theory that 2000 note supply will be controlled/throttled. H

Manager said he has not seen anybody come in with wads or sacks of cash. People are exchanging trivial amounts.

ATM's need a hardware (cassette) change for the new 500 and 1000 note. Existing cassettes are not compatible.

500 note will be the same size as 2000 note. Withdrew 3000 just for the heck of it. Asked for and got 1 x 2000 note. The 2000 note is the same height but wider than USD, shorter but wider than demonetised 500 and 1000 note.

Personally, I am underwhelmed by the 2000 note. I know,it's subjective etc but the note does not have a quality feel about it.

I had 1. X 1000 and 1 x 500 old notes which I did not exchange. Will keep,them as souvenirs.

All staff are putting in late hours.

[Bart S]

500 note will be the same size as 2000 note. Withdrew 3000 just formth heck of it. Asked for and got 1 x 2000 note. The 2000 note is the same height but wider than USD, shorter but wiser than demonetised 500 and 1000 note.

Personally, I am under whelmed by the 2000 note. I know,it's subjective etc but the note does not have a quality feel about it.

Is it a polymer note?

[Bhurishravas]

Indian goverment babus and judiciary has behaved like mafia to its citizens.

If you go by the books, 99.9% of the times there will be no issue.
A section of the population wants to cut the edges. Then they are raided. They got off with bribes earlier.
They are complaining about babus being mafia now.

Coal India Ltd. is notorious for delaying money to retiring officers.
My dad was textbook honest. He retired and got all his money in less than a month.

Honesty is still a very strong currency. If you are in the wrong dont go around pointing fingers at others.

[Rishi Verma]

Babu's can only be stopped, if regulations and confusions are taken away from the system. They should be held accountable. Is it possible in the short term ?

Mister, babu's corruption is NOT the topic of this thread. Other posters are being generous with your trolling that doesn't mean you continue. And you have done the same in other threads too.

[ShauryaT]

I am just trying to understand how the Government intends to handle some negative's created by this event which is largely very positive

I am one of those, who doest not treat black money in India as criminal money for the most part. The challenge has always been the same. How do you channel this huge wealth in private hands to productive use. The issue is not about taxation on this money directly. The bureaucrats have never understood this imperative. This is the reason the VDS scheme failed. This is the underlying reason why even this huge move with a big stick at the end will not succeed to the degree it can, if supplemented by some other moves. Private money will find a way to remain in private hands. The money will not be turned over to the government. Enough suckers and compromised people and methods will be found. In a sense this move is against the people, who are a product of decades of a certain type of economy in India.

What the government has to do is to figure a way to incentivize this money for productive use and not just for benefit of the government or banks et al. How about a scheme to channel this money without penalty unto 1 Crore per person - provided employment is created. How about channeling this money for R&D investment?. We rue about lack of private investment and then come with more hair brained schemes to increase govt coffers. Until and unless, the war against corruption takes effect in a manner that aam aadmi has to no longer worry about the harassment that ensues due to state power, this issue of lack of trust of people on the govt will remain.

The need of the hour is to trust the people and incentivize and just come with a big stick, to channel this money needed to create jobs and productive use. Completely support the first move, but now follow up, do not just say - we gave you a chance to declare your black money and now pay up. That is myopic bureaucratic thinking that will largely fail to accomplish its goal - a transformation of the Indian economy.

[rahulm]

It's not a polymer note. It's paper.i have long being calling for conversion of all INR currency to polymer and I think GOI has missed a great opportunity here.

I feel the existing 20 note is of better quality.

[panduranghari]

My main takleef is that the IT Department has played a huge role in the creation and spread of black money over the years. And now that very same group of people are in charge of investigating the incoming deposits?

With connivance of political class. Specifically Indira Congress and its multiple reiterations. They have lost power of people in 2014. Now they lost their funds. 2019 will be all about performance or lack there of.

[SaraLax]

I seriously doubt ppl having stash greater than 10 cr will have that in cash... Most of these guys have already converted to gold , real estate and other instruments.

Let's game this scenario and most of it is common sense. The government must have understood the expected consequences of this demonetisation process. After demonetisation - the Black_Money_Holder (BMH) is trying convert his BM stash into gold or diamond or platinum or silver or similar long-term valued & movable, easily concealable valuable material (could even be costly watches or caviar or quality wine or drugs and etc stuff). Black_Marketeer_Seller (BMS) of goods is willing to sell at higher prices but the goods he can sell are far limited in quantity compared to the amount of Black Money sloshing around in the country.

Let's say a BMH overnight buys Gold illegally (i.e shows no PAN & takes no receipts in transaction too) from a BMS at Actual Cost Price + 6000 INR per sovereign or so. Now this is transfer of BM currency from one hand to another. In this transaction - some Gold equivalent Black money has got transformed at this BMH's side to undisclosed gold material but that additional 6000 INR is still BM at minimum (if not the entire amount given by BMH to Black Marketeer when the actual gold has itself been smuggled into the country). Now the BMS has to worry about how to convert this BM currency (atleast 6K INR per sovereign of gold) into non-currency form or make it white -- maybe the BMS will buy something else from some other BMS or he has a Bank Manager willing to be his accomplice to do the Black-2-White washing of money. But the path of washing black-2-white in the bank is potentially detectable in the medium to long term. So the better but slightly difficult route is to transfer the BM to some other 3rd BMS by buying something or enjoying a certain service. Thus the BM is getting transferred and also getting hidden into more concealable forms such that the amount of BM that could be returned back to government is coming down. But the amount of BM in the country is far more than what can be transformed into some other valuable but undisclosed item. Also - as we count down towards the last day of acceptance of old currency notes by the Banks/Post Offices/RBI- BMS's themselves will fear more as the law/tax authorities will close more of these routes available for white-washing or black-wealth-transformation and add further check points into such underground transaction pipelines.

Well - gold/platinum/valuable stones are not available in huge quantities in our country and they need to be mostly imported or smuggled from abroad. If the Central Government, state Governments, law & tax authorities up their game, gain additional intelligence from helpful people on the ground & function in a more vigilant mode - they can foil to some good extent the anticipated enhanced level of smuggling of valuable materials into the country by Smugglers+BMS combine and also the elevated levels of transformation of BM currency into Black Market valuable items between BMHs & BMSs. This needs to happen until end of this year.

If the law enforcement & tax department and government officers work with discipline - then a comparitively large amount of black money currency floating in the economy should get extinguished, inflation would fall, cashless transactions would increase and the government's efforts would have succeeded. We should expect to hear more stories of desperation by BMHs, BMSs, Bank & NBFC executives and etc.

Here is one editorial in Hindu Business Line newspaper indicating - as to what amount of money flowing in back to government might possibly indicate that the demonetization effort has been a success & that it has attacked the black money problem.

As for the mop-up of old ₹500 and ₹1,000 notes, any sum less than ₹10 lakh crore flowing back into the banks would suggest that the hoarders have somehow got away. The amount is calculated on the assumption that black money, according to 2007 World Bank estimates, is 24 per cent of the GDP, or ₹34 lakh crore in 2015-16, of which the cash component is estimated at 40 per cent or ₹14 lakh crore. We may assume that 30 per cent of this money will not return to the system, fearing investigation by income-tax authorities, which would leave us with ₹10 lakh crore. It is also worth noting that black money cannot be unearthed merely through this step, as those at the apex of the pyramid have devised smarter ways of squirrelling their wealth away. In order to prevent a shift in concealment from cash to property, laws need to be tightened as well.

[Chandragupta]

Indian goverment babus and judiciary has behaved like mafia to its citizens.

If you go by the books, 99.9% of the times there will be no issue.
A section of the population wants to cut the edges. Then they are raided. They got off with bribes earlier.
They are complaining about babus being mafia now.

Coal India Ltd. is notorious for delaying money to retiring officers.
My dad was textbook honest. He retired and got all his money in less than a month.

Honesty is still a very strong currency. If you are in the wrong dont go around pointing fingers at others.

This is delusional stuff. Yes ban BM, tax everyone - which is the way it should be, but saying that if you go by the book, there will be no issue is absolutely bullshit.

I started a company last year and the Sales Tax folks would not give approve my filing, ran pillar to post nothing happened. In the end had to grease their palms or suffer losses. You can do everything by the book and the babus will sit tight on your file and not move an inch unless you oblige them.

Do you know what it takes to get an industrial electrical connection in Noida? Water connection? NOC from Fire department?

This is a great decision which shall hopefully end such corruption but to say that business owners are reaponsible for all this BM is absolutey horse dung.

[MohdKav]

Babu's can only be stopped, if regulations and confusions are taken away from the system. They should be held accountable. Is it possible in the short term ?

Mister, babu's corruption is NOT the topic of this thread. Other posters are being generous with your trolling that doesn't mean you continue. And you have done the same in other threads too.

If you dont understand how black money is made, and how it will be made in the near future. Please dont respond.
Black money burned. Awesome. But if you think there ends the matter. You are a fool.

[Suraj]

The money will not be turned over to the government.

They are not turning over money. That paper they hold in their hand is no longer legal tender and has no value at all anymore. All it has, is authenticity. Using that authenticity they can get it replaced partially with new cash, but...

Enough suckers and compromised people and methods will be found. In a sense this move is against the people, who are a product of decades of a certain type of economy in India.

Doesn't matter if suckers are found. Like I said, all that Rs.500/Rs.1000 is NOT money anymore. It's basically a certificate of authenticity that says it's worth Rs.500 or Rs.1000, if government is convince it's not a disproportionate asset.

Further, there won't be anywhere near the same volume of cash printed, to replace what's out there. Not even a percent of what's out there . There's no longer any scope to 'take the new cash and do what was being done before', not on anywhere near that scale.