Currency Demonetisation and Future course of Indian Economy

[chetak]

twitter

Banning immigrants is for kids, real man ban notes.

[Dipanker]

My interpretation is based on the Rs 9.2 lakh crore being the new amount pumped into circulation as per the RBI gov. testimony to the Parliamentary Standing Committee.

Thus the total amount in circulation = New amount of 9.2 lakh crore + Leftover Old Amount

Unless of course there is an "alternate" meaning of the word "new".

[Suraj]

I suggest you quote the RBI governor verbatim rather than use sources twice removed . It's the least you can do. I provided a firsthand reference. Right now, you are simply using font effects around one word mentioned a third party.

[A_Gupta]

^^^ http://www.newsnation.in/business-news/ ... 60695.html

About as direct as the news media can give you:
# Total 9.92 lakh crore rupees of total currency including new notes of 500 & 2000 is in circulation as of 27th January

[Suraj]

Thanks A_Gupta. So 9.x lakh crore it is.

[Avtar Singh]

tea lady reaction in kolkata from 5.10
the looks from the younger daughter are priceless

https://www.youtube.com/watch?v=j2PIz6Tbhz0

[A_Gupta]

Interesting, "...January 13, 2017,the total notes in circulation to Rs 9.1 lakh crores...."
(from http://www.business-standard.com/articl ... 018_1.html and January 27, 2017, the total notes in circulation were Rs 9.92 lakh crores.

Remonetization was proceeding in these two weeks at the pace of about Rs 5,900 crores a day.

[VinodTK]

tea lady reaction in kolkata from 5.10
the looks from the younger daughter are priceless

https://www.youtube.com/watch?v=j2PIz6Tbhz0

Priceless

[venkat_r]

It's a month plus and people have already moved on, on topics to talk about. While it seemed a huge deal during the 6 weeks...It will be almost forgotten in the next few months. It is all advantage modi as he will have the money to run his schemes and only talk about the positives. The only ones who will remember the pain and carry a grudge are the ones who lost significant money.

A lot depends on perception- Not sure what makes Modi above politics, a demigod that you and other people make him out to be. I understand that the crowd here is nationalistic but somehow thinking Modi cannot do anything wrong is just lame. Also goes on to show the effect Modi has on majority of the population! Incredible.

Am a big fan of Modi too in most of the stuff that he has done, but on this the pointers are against, no matter how you slice it. If there was any data in support of the elimination of Black money, Modi would have shouted from the rooftops, now just waiting for some additional data so that it can be spun accordingly.

Just because people stopped complaining does not mean that this circus is a successs - till now even Modi, who is a master communicator could not explain why this was done, shifting from black money to terror funding to cashless economy.

I personally do not doubt his intentions, may be they are very noble and good. But that is hardly enough, or saying a lot if one has to justify this about intentions.

[venkat_r]

Not sure if this was posted, at least not in the recent pages that I went through, so here it is

AIB video on demonetization - quite funny !

https://youtu.be/YqwVOWYJSxw

[A_Gupta]

The Feb 10 RBI bulletin including payment system indicators for Oct-Dec 2016 is available now:
https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx#

[Gus]

If there was any data in support of the elimination of Black money, Modi would have shouted from the rooftops, now just waiting for some additional data so that it can be spun accordingly.

see, you have already decided 'this circus' is a failure.

The gap between previous tax base and number of high value deposits made is all clear for those who follow this. The reduction of money circulation is also clear in the last few posts from Suraj and Arun.

If the overall goals were - reducing BM, moving people into formal economy, reducing indirect tax burden on the poor and instead have a fair and progressive tax structure with an increased tax base, reducing cost of money for entrepreneurs etc..

Then the first step would be to move all money to banks and reduce money circulation to what can support formal economy and not overflow into BM etc.

On all these counts DeMO has been a success. The numbers clearly indicate that. If you are going to argue otherwise, please put forward better arguments than "modi is not shouting about it", "you all think modi can do no wrong" etc

[shiv]

Anyone post this? From Jamwal on Teetar

"Just my thoughts" - watch the tea shop lady going ballistic - has subtitles
https://www.youtube.com/watch?v=j2PIz6Tbhz0

[Suraj]

Late lateef! It's already posted one page ago

[tandav]

Private Banks and NBFCs are lining up at MSME doors to provide unsecured loans at ~20% interest.

[venkat_r]

see, you have already decided 'this circus' is a failure.

........

If the overall goals were - reducing BM, moving people into formal economy, reducing indirect tax burden on the poor and instead have a fair and progressive tax structure with an increased tax base, reducing cost of money for entrepreneurs etc..

Then the first step would be to move all money to banks and reduce money circulation to what can support formal economy and not overflow into BM etc.

On all these counts DeMO has been a success. The numbers clearly indicate that. If you are going to argue otherwise, please put forward better arguments than "modi is not shouting about it", "you all think modi can do no wrong" etc

Well at least thanks for assuming that it is a success and trying to defend it. Your definition of the measure of success is born after the fact than originally stated and if you or anyone else, it might be clear to you and might know at some level already and hence the rush to defend it.

The originally stated objective was elimination of BM and later we found out about terrorist funding, Pakistan fake currency and tax less economy. If it was anything else, please post a video or statement of the govt or Modi or the FM saying that.

Also you got it wrong to say that I have to give proof of failure, the fact that entire population has been put through this circus without much to show for it other than marginal gains at best screams something. On the other hand burden of the proof is on you or rather on GOI to show what it achieved after all this. Removing 86% of existing notes for removing 400 chores of counterfeit notes or for removing 6% of black money is something that has to be questioned. If you are able to find success in all this more power to you and may you face a 100 % demonetization next time so that you can toast for the complete cashless economy next time.

[Gus]

Oh yes..I actually want another round of DeMo to take 2000s out..

Is that all the straw men you have or you have more?

[darshan]

IMO, catching even one Bhajiawala per each major metroplex or even per state for that matter more than makes demo process a success. The DeMo process probably also allowed GoI to go through the drills of going to a major war, internal security and financial systems. There could be many other intangible benefits that may have been resulted for agencies like RAW, CBI, etc.

[venkat_r]

Oh yes..I actually want another round of DeMo to take 2000s out..

Is that all the straw men you have or you have more?

Ha ha ha ... enough said. With your yardstick of success made of flubber, anything will do.

Glad at least some are questioning the logic on this one. During Vietnam war some sayings like "destroying the village in order to save it" came out - well in the words of Modi - Samajdar ok ihsara kafi

[arshyam]

Also you got it wrong to say that I have to give proof of failure, the fact that entire population has been put through this circus without much to show for it other than marginal gains at best screams something. On the other hand burden of the proof is on you or rather on GOI to show what it achieved after all this. Removing 86% of existing notes for removing 400 chores of counterfeit notes or for removing 6% of black money is something that has to be questioned. If you are able to find success in all this more power to you and may you face a 100 % demonetization next time so that you can toast for the complete cashless economy next time.

Er, you might want to read up on Jaggi's article on Swarajya or TN Ninan's in BS (links posted in this thread). Just because money is in the banks does not mean its done and dusted.

[kittigadu]

It's a month plus and people have already moved on, on topics to talk about. While it seemed a huge deal during the 6 weeks...It will be almost forgotten in the next few months. It is all advantage modi as he will have the money to run his schemes and only talk about the positives. The only ones who will remember the pain and carry a grudge are the ones who lost significant money.

A lot depends on perception- Not sure what makes Modi above politics, a demigod that you and other people make him out to be. I understand that the crowd here is nationalistic but somehow thinking Modi cannot do anything wrong is just lame. Also goes on to show the effect Modi has on majority of the population! Incredible.

Am a big fan of Modi too in most of the stuff that he has done, but on this the pointers are against, no matter how you slice it. If there was any data in support of the elimination of Black money, Modi would have shouted from the rooftops, now just waiting for some additional data so that it can be spun accordingly.

Just because people stopped complaining does not mean that this circus is a successs - till now even Modi, who is a master communicator could not explain why this was done, shifting from black money to terror funding to cashless economy.

I personally do not doubt his intentions, may be they are very noble and good. But that is hardly enough, or saying a lot if one has to justify this about intentions.

You bring absolutely no facts, apart from random conjecture, to determine whether it is a success or not. And then you call it a "circus". Why ? How are you so sure that it has failed, when the government and the RBI are still working on it ?

[shiv]

Your definition of the measure of success is born after the fact than originally stated

What should have occurred for you to call it a success?

Removing 86% of existing notes for removing 400 chores of counterfeit notes or for removing 6% of black money is something that has to be questioned. .

If a man gave your child a bag of sweets and said one of them is a cyanide pill would you protest if someone threw the entire bag away?

All arguments can be classified as discussion but when logic is discarded in favour of useless rhetoric you are not doing yourself any favours.

[venkat_r]

You bring absolutely no facts, apart from random conjecture, to determine whether it is a success or not. And then you call it a "circus". Why ? How are you so sure that it has failed, when the government and the RBI are still working on it ?

Well though I called it a circus, I am not sure I am going to call it as a failure, nor success, not yet atleast until I hear the next steps on income, commercial, property tax policies that come up, which are the primary causes of BM. Cashless economy i not sustainable if people do not have incentives (both carrot and stick) to adopt to white or official economy, people's habits die hard and they will find a way.

I for one, and most people would not doubt Modi's intentions behind this, though there is an elections angle, removing BM is a noble cause and much needed. Not yet convinced yet if it has hit the mark, or if this was thought through and gains are worth the effort. Just taking one snapshot of BM is not going to make it go away, it will find a way back in.

[JohnTitor]

^^ While I do not necessarily agree with everything you are saying, the part about people's habits, I can.

In parts of Bangalore (more so in smaller places like Tumkur, Mysore etc)... businesses are going back to cash only. When asked why they are no longer accepting cards, the standard response is one of the following:

- Card is inconvinient (when I asked for whom, he decided to ignore me. I decided to take my custom elsewhere)
- Cash is cheaper
- Cash is now "back to normal"

Until cash becomes scarce, I fear cashless won't takeover. Cashless is fine in bigger stores but not with smaller shops and street vendors. I don't understand why the Govt isn't removing the 2k notes along with 500 & 100 notes. We shouldn't have notes with denominations > 50.

Additionally, the RBI needs to increase the number of 5/10/20/50 notes. People seem to be hoarding these (or there is generally too few)

[rahulm]

It's the lifting of cash withdrawal limits which increases cash liquidity in the economy which in turn is reduces the incentive for SME's to transact electronically.

I, am disappointed by this easing of cash withdrawal limits but am hoping the gobermint has a plan in place. Perhaps, its timing is a political sop which can be changed after the polls. The GST Will no doubt be a game changer.

I have also never understood this 'All India Permit' and 'Permit valid in Maharashtra and Gujarat' type of trucks. We are one nation and a truck should be able to travel across the country without this silly permit business.

[kittigadu]

You bring absolutely no facts, apart from random conjecture, to determine whether it is a success or not. And then you call it a "circus". Why ? How are you so sure that it has failed, when the government and the RBI are still working on it ?

Well though I called it a circus, I am not sure I am going to call it as a failure, nor success, not yet atleast until I hear the next steps on income, commercial, property tax policies that come up, which are the primary causes of BM. Cashless economy i not sustainable if people do not have incentives (both carrot and stick) to adopt to white or official economy, people's habits die hard and they will find a way.

I for one, and most people would not doubt Modi's intentions behind this, though there is an elections angle, removing BM is a noble cause and much needed. Not yet convinced yet if it has hit the mark, or if this was thought through and gains are worth the effort. Just taking one snapshot of BM is not going to make it go away, it will find a way back in.

Has the Prime Minister not said, that this is just the first step ? When you call it a "circus" you are saying that the Prime Minister is not serious, and casting aspersions on his motive. This is the first prime minister that is actually willing to take a risk and tackle this head-on. Instead of supporting him, cast aspersions, make snide remarks etc etc. Name another politician in India that is willing to take on Black Money and corruption.

[Karan M]

100'S, 50'S, 10s are still in short supply and people are still transacting more by card based on what i have seen. Most amazing shopkeeper calls out SAAAAAAARR WOT IS PIN SAAR? And person yells OUT 7-ZERO-BLA-BLA

[UlanBatori]

Engg college principal in desh recently sent out a mass email asking recipients to URGENTLY send:
PAN #, DOB, Bank acct details. Several of the esteemed recipients (engineering faculty!!!) replied, also cc-all.
By geemail, of course.

[venkat_r]

What should have occurred for you to call it a success?

.....
If a man gave your child a bag of sweets and said one of them is a cyanide pill would you protest if someone threw the entire bag away?

All arguments can be classified as discussion but when logic is discarded in favour of useless rhetoric you are not doing yourself any favours.

To call it a success, want to understand why it was done and if that was achieved. It was announced to remove BM, was that done ? Shifting the goal post and adding different spins makes me suspicious.

How did the people feel through and towards the end ? Did they feel empowered? I know this is highly subjective and everyone will come up with an argument. My opinion is that there is more uncertainty and made people somewhat sensitive to what's coming next - something that makes me question this and why I call this a circus.

Your example is plain wrong. The example should be will you burn the entire jungle to catch the tiger, or boil the ocean for your cup of tea, or level you house to kill the mice? I can give more examples but you get the idea.

People went through a lot of inconvenience through this, I want GOI to show something credible for it not just that few people caught with cash in their trunks or houses.

[Suraj]

To call it a success, want to understand why it was done and if that was achieved. It was announced to remove BM, was that done ? Shifting the goal post and adding different spins makes me suspicious.

Let's use this metric. There are two specific logical requirements:
* Why was it done ?
* What was achieved

The logical basis for success is "Why was it done ?" is KNOWN and "What was achieved" MATCHES the why.
The logical basis for failure is "Why was it done ?" is KNOWN and "What was achieved" DOES NOT MATCH.
Other pair of choices where "Why was it done ?" was not known, has no logical result, since the What was achieved cannot be established.

You have concluded that the effort was a failure. Therefore logically it follows that you know "Why was it done" . Please tell us precisely, why was it done ?

[venkat_r]

^^ While I do not necessarily agree with everything you are saying, the part about people's habits, I can.

In parts of Bangalore (more so in smaller places like Tumkur, Mysore etc)... businesses are going back to cash only. When asked why they are no longer accepting cards, the standard response is one of the following:

- Card is inconvinient (when I asked for whom, he decided to ignore me. I decided to take my custom elsewhere)
- Cash is cheaper
- Cash is now "back to normal"

Until cash becomes scarce, I fear cashless won't takeover. Cashless is fine in bigger stores but not with smaller shops and street vendors. I don't understand why the Govt isn't removing the 2k notes along with 500 & 100 notes. We shouldn't have notes with denominations > 50.

Additionally, the RBI needs to increase the number of 5/10/20/50 notes. People seem to be hoarding these (or there is generally too few)

First of all let's not kid ourselves into thinking India is going to be a cashless economy. India is a cash economy and if it becomes a 70 to 75% cashless, I would think it would be a big achievement- even in advanced countries like in the US, I have seen that there are people who want to use cash, and I am not sure people should be punished for that and they should have a choice.

I am sure there are many small to medium traders that were affected by the demonstration - because that is how they have done the business and depending on the day announcement they were left with the cash at hand. I would not call them crooks or criminals, as that was their way of living and doing business. have not heard of any mass suicides so assuming that they figured out a way, if the government or the banks did not bail them out officially.

[venkat_r]

To call it a success, want to understand why it was done and if that was achieved. It was announced to remove BM, was that done ? Shifting the goal post and adding different spins makes me suspicious.

Let's use this metric. There are two specific logical requirements:
* Why was it done ?
* What was achieved

The logical basis for success is "Why was it done ?" is KNOWN and "What was achieved" MATCHES the why.
The logical basis for failure is "Why was it done ?" is KNOWN and "What was achieved" DOES NOT MATCH.
Other pair of choices where "Why was it done ?" was not known, has no logical result, since the What was achieved cannot be established.

You have concluded that the effort was a failure. Therefore logically it follows that you know "Why was it done" . Please tell us precisely, why was it done ?

Appreciate your enthusiasm, but it has to work the other way. Tum dhande pe lagjao and tell me why. Please reverse the logic for yourself.

That is the exact reason why I called it a circus and Said that I am not yet willing to call it a failure or success yet.

[Suraj]

Appreciate your enthusiasm, but it has to work the other way. Tum dhande pe lagjao and tell me why. Please reverse the logic for yourself.

That is the exact reason why I called it a circus and Said that I am not yet willing to call it a failure or success yet.

You're either trolling and will face consequences for thread disruption, or you can make your case instead of turning arguments around. Your choice.

[hanumadu]

That is the exact reason why I called it a circus and Said that I am not yet willing to call it a failure or success yet.

What does it even mean? I don't know what your criterion for success is, but hope it is not unobtanium.

[JohnTitor]

First of all let's not kid ourselves into thinking India is going to be a cashless economy. India is a cash economy and if it becomes a 70 to 75% cashless, I would think it would be a big achievement- even in advanced countries like in the US, I have seen that there are people who want to use cash, and I am not sure people should be punished for that and they should have a choice.

I am sure there are many small to medium traders that were affected by the demonstration - because that is how they have done the business and depending on the day announcement they were left with the cash at hand. I would not call them crooks or criminals, as that was their way of living and doing business. have not heard of any mass suicides so assuming that they figured out a way, if the government or the banks did not bail them out officially.

I'm not sure if you are trolling but nowhere in my post that you quote do I say "India should become 100% cashless" (Even 80-90% is enough). As a start, all large transactions, say about 5k or 10k should be cashless. That is not too much to ask. I don't see why anyone needs to be walking around with 10s of thousands in cash to buy 2-wheelers, gold ornaments and real estate.

Second, nowhere in my post did I call anyone crooks or criminals nor have I talked about "punishing" people. While there will inevitably be tax dodgers (who are criminals per law), my post was not aimed to target individuals but rather attitudes toward cash. As far as suicides are concerned, I'm not sure what that has to do with anything. Your post seems to be unconnected to what I was trying to say.

[sudarshan]

I've heard these arguments against demonetization - "All this card stuff won't work in India. Does Modi seriously think every villager is going to magically become computer-savvy?" and then "Even the USA isn't 100% cashless, they do use cash. So how can Modi even think of making India cashless?" and of course "This prime minister and his group are elites, what do they know of the suffering of common people, they can swipe their cards anywhere so they think the common people can do the same."

First of all what is all this "won't work in India" stuff? Is India some kind of parallel universe where normal laws of physics and human relationships don't work? And you need to be computer-savvy to just swipe a card? I've seen fruit sellers in trains in India happily using cell phones. Village kids running to take computer lessons. Indians, if anything, are extremely agile and quick to adopt new paradigms. This is simply a standard canned argument for opposing any and all progress in India. If the boorish British and French peasants can adapt to the industrial revolution and start driving cars and shopping in malls, instead of clip-clopping in horse carriages and buying from the butcher down the road, why can't Indians? This is very similar to Gandhi's recommendation that India should remain a village economy for eternity and stay "swadeshi" because that is simply the Indian way. Thank God India didn't go that route after 1947.

Second of all, this idiotic notion that "cashless" means "100% cash-free." So if you can make the connection that even the super-duper USA isn't 100% cash free, why can't you (general you, not specific to anybody) understand that when Modi says "cashless India," he doesn't mean that India is going to be 100% cash-free? Cashless means exactly that - *less cash.* Are these people of the notion that Modi has started a war on all paper cash, and is going to eliminate all of it? This is basically a strawman - "you are a fool for even thinking that a country can be totally cash-free."

Thirdly, this prime minister happened to be a chai-wallah. A fact that is used against him to emphasize his lack of sophistication and his overall boorishness, whenever the point to be made is along those lines. But that fact will be conveniently forgotten when there is a need to portray him as an elite in a Re. 100,000 (or whatever) business suit who keeps going off on foreign jaunts instead of governing the country.

It is my opinion that these people who keep trotting out these same canned arguments that "India doesn't work that way" and "you don't understand how essential black money is for India, the country will collapse without it" and "how can you fools even imagine that any country, let alone backward India, can become 100% cash free????" - well, these are the people who are dangerously disconnected from reality.

[sudarshan]

Late lateef! It's already posted one page ago

Don't you know Shiv saar by now? He just wanted to post that pic of those two cute girls, which the other poster didn't do .

[shiv]

To call it a success, want to understand why it was done and if that was achieved. It was announced to remove BM, was that done ? Shifting the goal post and adding different spins makes me suspicious.

OK you don't understand, but I understand. You think it has failed. I don't think so. So we hold different viewpoints.

My opinion is that there is more uncertainty and made people somewhat sensitive to what's coming next - something that makes me question this and why I call this a circus.

I can see no uncertainty at all. Some people have been butt hurt and that is an absolute certainty.

Your example is plain wrong. The example should be will you burn the entire jungle to catch the tiger, or boil the ocean for your cup of tea, or level you house to kill the mice? I can give more examples but you get the idea.

It is pointless to argue against examples.

Some clothes were dirty. They have been washed and dried and are being worn again. That's all. There was some money in the system. Some was taken out. Some was put back in and all is well now. Everyone I know and meet are happy now.

[Dipanker]

Didn't take the Paki too long:

Fake Rs 2,000 notes from Pak reach India via Bangladesh border

IT TOOK barely two months since the demonetisation policy was announced for Pakistan-based counterfeiters to come out with fake Rs 2,000 notes, which were pushed by smugglers through the porous India-Bangladesh border, official sources told The Indian Express, citing recent seizures and arrests made by the National Investigation Agency (NIA) and Border Security Force (BSF).

[Gus]

That they will print again was a given. Question is - how good it is.