Currency Demonetisation and Future course of Indian Economy

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Mukhi
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mukhi » 03 Dec 2018 01:55

It seems the Debate on DeMo has gone to For Vs Against. The fact is, there will always be people for it and against it.

Let’s look at it a little differently. In a simple term, Does Benefit of doing DeMo outweigh shortcomings?
Option 1. What is Positive of DeMo.
Option 2. What is Negative of DeMo.
Option 3. What if DeMo was not done.

For Option 1.
1. Economy Formalized.
2. More People turning towards Electronic Transection.
3. Fake Bills came under check.
4. Tax Paying Citizen number increased substantially.
5. Banks Recapitalized for free.
6. Though not proven directly, there is a substantial correlation between stone throwing crowd in JK and Naxal Attacks going down drastically.
7. BJP gaining a key State of UP in assembly. This would result in net gain in GDP if situation improve under BJP.
8. Economy impact was “Temporary” and NOT long term as preached by opposition.
9. Real estate Properties selling at a cheaper price then before DeMo

For Option 2.
1. Normal Public had to suffer discomfort of various degree.
2. GDP growth rate dipped Temporarily.
3. Cash church for a limited time.
4. No one of importance really got caught with “Black Money”
5. Small Merchants who conduct business in mostly cash suffered.

Option 3.
1. We still would have parallel economy.
2. Parallel Economy = Less Taxes collected = Less for Investment in Infra etc. so on and on; Domino Effect
3. If the growth was to not dip temporarily, the RBI would be up and arm, raising interest rates to control inflation.
4. More landing crunch, thus resulting slowdown.
5. No effective way to check fake currency.

Therefore, looking at above, I feel, it was worth doing DeMo.

Neshant
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Neshant » 28 Dec 2018 03:18


Neshant
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Neshant » 28 Dec 2018 03:35

Mukhi wrote:Let’s look at it a little differently. In a simple term, Does Benefit of doing DeMo outweigh shortcomings?
Option 1. What is Positive of DeMo.
Option 2. What is Negative of DeMo.
Option 3. What if DeMo was not done.


Big misconception is that govt taking away people's earnings is a good thing.

Or that govt spends the money it takes from the earnings of people in a manner more beneficial to the economy than the person can spend it himself.

Politicians using tens of thousands of crores to write off farmers loans to get themselves elected certainly does not sound like it is in the best economic interest of the nation. The earnings of the many simply gifted away.

As a general rule, money a person earned through honest means should remain in his hands and not be stolen by inflation, confiscation or in the name of numerous other fancy and nonsensical economic theories.

Govt should be funded via a consumption tax (like the GST).

Mukhi
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mukhi » 28 Dec 2018 06:36

Poof
Deleted as unnecessary political rant. Discussions will be only with data

prasannasimha
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Re: Currency Demonetisation and Future course of Indian Economy

Postby prasannasimha » 28 Dec 2018 09:24

Mukhi stop any political rants. If you have real data show it. Persisting will result in bans

ArjunPandit
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Re: Currency Demonetisation and Future course of Indian Economy

Postby ArjunPandit » 03 Jan 2019 00:33

Neshant wrote:Big misconception is that govt taking away people's earnings is necessarily a good thing.



Neshant wrote:Govt should be funded via a consumption tax (like the GST).


This is the most important part, and very rightly so.
To support your first point, that's almost always the case that from a short/medium term financial perspective govt operations are inefficient, in many cases they dont aim as well. Simply because employment is also one concern.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby disha » 03 Jan 2019 05:07

Why rNDTV was complaining against demonetization.

One of that is the alleged involvement of NDTV. Income Tax officer Sanjay Kumar Srivastava, who has been exposing financial irregularities by NDTV, had made a sensational claim that P Chidambaram had parked his bribe money in the controversial media house.


Do read the rest at:

https://www.opindia.com/2018/11/aircel-maxis-with-cbi-getting-sanction-to-prosecute-p-chidambaram-a-relook-at-ndtv-link-and-the-it-officers-letter-to-cbi/

With CBI getting sanction to prosecute former union minister P Chidambaram in the Aircel-Maxis case, the investigation into the case has entered its final phase. P Chidambaram and his son Karti are accused of receiving a bribe in exchange for illegal approval to the Aircel-Maxis deal granted by the then finance minister.

With the case finally gaining momentum, it is time to revisit some other aspects of the case. One of that is the alleged involvement of NDTV. Income Tax officer Sanjay Kumar Srivastava, who has been exposing financial irregularities by NDTV, had made a sensational claim that P Chidambaram had parked his bribe money in the controversial media house.

In an 88 page letter written to the CBI chief in April this year, Srivastava had said that “NDTV Ltd. needs to be investigated over parking of bribe of US $40 million by Maxis and its owner T. Ananda Krishnan (accused in the Aircel-Maxis case) on behalf of P Chidambaram and Karti P. Chidambaram for obtaining FIPB approval in Rs.3500 crores. Aircel-Maxis deal fraudulently claiming the proposal for Rs.180 crores only when gross value of the proposal was to be considered and which has been hushed up by certain IRS officers in lieu of bribe paid by NDTV Ltd.”

...

Srivastava has noted that CBI is investigating multiple cases of bribes paid by NDTV to Income Tax officers and embezzlement of ₹1,46,82,836 from government account by NDTV. According to him, these cases and the case of bribe received by Karti Chidambaram are interrelated and interconnected. Because P Chidambaram was the final authority involved to grant necessary approvals and he is the common thread in all criminal conspiracies and bribe transactions, says the letter.


Mukhi
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mukhi » 06 Jan 2019 12:45

prasannasimha wrote:Mukhi stop any political rants. If you have real data show it. Persisting will result in bans


Please check your email as I disagree with your judgement.
Moderator note
You may disagree with whatever. This is not a place for a political discussion. If you persist you will be banned. Consider this as a final warning.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby pralay » 06 Jan 2019 13:48

Mukhi wrote:It seems the Debate on DeMo has gone to For Vs Against. The fact is, there will always be people for it and against it.

Let’s look at it a little differently. In a simple term, Does Benefit of doing DeMo outweigh shortcomings?
Option 1. What is Positive of DeMo.
Option 2. What is Negative of DeMo.
Option 3. What if DeMo was not done.

For Option 1.
1. Economy Formalized.
2. More People turning towards Electronic Transection.
3. Fake Bills came under check.
4. Tax Paying Citizen number increased substantially.
5. Banks Recapitalized for free.
6. Though not proven directly, there is a substantial correlation between stone throwing crowd in JK and Naxal Attacks going down drastically.
7. BJP gaining a key State of UP in assembly. This would result in net gain in GDP if situation improve under BJP.
8. Economy impact was “Temporary” and NOT long term as preached by opposition.
9. Real estate Properties selling at a cheaper price then before DeMo

For Option 2.
1. Normal Public had to suffer discomfort of various degree.
2. GDP growth rate dipped Temporarily.
3. Cash church for a limited time.
4. No one of importance really got caught with “Black Money”
5. Small Merchants who conduct business in mostly cash suffered.

Option 3.
1. We still would have parallel economy.
2. Parallel Economy = Less Taxes collected = Less for Investment in Infra etc. so on and on; Domino Effect
3. If the growth was to not dip temporarily, the RBI would be up and arm, raising interest rates to control inflation.
4. More landing crunch, thus resulting slowdown.
5. No effective way to check fake currency.

Therefore, looking at above, I feel, it was worth doing DeMo.

Add to Option 2 that:
6. People having black-money do not stash it in homes in form of cash, so they largely escaped as apparent from point 4 so DeMo was ineffective or insufficient to rein on them.
7. The high-value currency notes(500,1000etc), which helped the black transactions still exist, govt. rather introduced even higher value notes(rs.2000), this makes the economic cleansing temporary, and so the parallel economy still exist.
8. People using digital transaction had to pay commissions to foreign companies for digital transactions as the desi options were very very limited.

prasannasimha
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Re: Currency Demonetisation and Future course of Indian Economy

Postby prasannasimha » 07 Jan 2019 07:35

I have deleted your political statements and kept your nonpolirical one. I repeat any poltical statements will lead to abans on this thread. Simple as that. BRF has specifically removed poltical discussions after some issues. Doing it will be at your own peril. If you want to do a political discussion please go to another spin off list. Not here. Tgere will be no more discussions wrt this.

hanumadu
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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 10 Feb 2019 06:30

https://timesofindia.indiatimes.com/city/chennai/tamil-nadu-taxmen-dig-up-graveyard-unearth-gold-diamond-cash/articleshow/67894063.cms

Documents, money, gold and diamonds worth 400 crores illegal income found in a grave yard. These kind of people might be waiting desperately for 2019 elections. Two more terms for Namo needed to permanently squash all such hopes and set them straight.

hanumadu
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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 30 Aug 2019 04:09

http://timesofindia.indiatimes.com/articleshow/70900848.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
MUMBAI: The Rs 2,000 note, which was much-reviled during demonetisation due to difficulties in exchanging it, is seeing a sharp drop in print orders by the RBI. The number of outstanding notes has shrunk by 7.2 crore to 329 crore in FY19.
According to bankers, the RBI is shifting focus away from the Rs 2,000 note as the denomination was printed in large numbers to cope with the
replacement of demonetised notes.


How do outstanding notes shrink by such a large number. Its more than 2% of the outstanding Rs 2000 bills. Are they damaged bills that are being taken out of circulation but not being printed in enough numbers or not at all to replace them or is the govt actively removing them from circulation.

Wonder if all 2000 Rs bills that enter a bank are never returned back to circulation and the only bills left will be black money. People will notice such a step and will replace their 2000 Rs hoard with 500 Rs hoard but it will be a little more difficult on account of the 4x numbers and 4x space required.

Vips
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Vips » 30 Aug 2019 17:53

ISI agents copy hi-tech features in latest Rs 2000 fake notes.

As Special Cell of Delhi Police unravel the Pakistani links in the smuggling of high-quality Fake Indian Currency Notes (FICN), the ongoing investigation has upset the Indian security establishment. The key concern is the startling fact that Pakistan-based crime syndicates have copied the most exclusive security features of Rs 2,000 Indian currency notes, a feat not possible without the connivance of the state machinery.

For the first time, the FICN seized by Special Cell proves that 'Optical Variable Ink' used by India in printing Rs 2000 notes has also been used by the Pakistan operatives. "Its a very high quality special ink, which gives a colour shift effect. On the front side of Rs 2000 note, the colour of thread changes from green to blue when the note is tilted," told an official of the Special Cell to IANS.

Sources said that hi-tech Optical Variable Ink is used in the new series of fake notes, reportedly being printed at Pakistan security press in Malir Halt, Karachi. Sources said during investigation it was revealed that notes are being printed under the supervision of senior officials of Pakistan's spy agency, the Inter services Intelligence (ISI). One of the prominent distributors of ISI is India's most wanted fugitive Dawood Ibrahim's infamous Dcompany, which also operates from Karachi.

The investigation reveals that another prominent security feature copied for the first time by ISI operatives is the raised bleed lines printed on the extreme left and right side of the note. These raised lines are identification marks, meant for the visually impaired people.

six months back, the FICN seized in India did not have such hi-tech security features. "They have now even copied the exploding series numbers printed on the right hand bottom of the notes. For instance, in newly seized Rs 2000 notes, bearing series '7FK' the series is printed in exploded formation. Hitherto, these features were absent on FICN, enabling anyone to detect them with naked eyes," said the official.

After demonetisation in 2016, the circulation of FICNs from Pakistan remained almost shut for a long period. However, in the first week of June this year, a huge consignment of FICN amounting to Rs 7.67 crore was seized by Nepal police at Tribhuwan Airport in Kathmandu. The seizure alarmed the agencies in New Delhi as for the first time, the consignment arriving from Karachi via Qatar carried high quality FICN.

"The latest seizure of notes made by Special Cell has a more upgraded version of FICN. It seems that Optical Variable Ink, is being smuggled through the connivance of the state-run printing press in Pakistan from a multi-national company which supplies this ink only to federal governments. It is a serious security breach," said an official of the Directorate of Revenue Intelligence.

On August 24, a Special Cell team led by DCP Pramod Kumar Singh Kushwaha trapped a D-company agent Aslam Ansari from Nehru place in Delhi and recovered FICN worth over Rs 5.50 lakh. In the first glimpse, police sleuths could not verify the authenticity of the Rs 2000 notes as they carried almost all the security marks including thread, water marks and other features. Later the currency experts confirmed that notes seized by the Special Cell were high quality FICN.

Earlier Company in Germany supplying the paper for currency notes had compromised India's interests and supplied the same paper to Pakistan and now that India has taken steps to print notes on indigenous paper the ink suppliers have gone rogue.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mort Walker » 31 Aug 2019 17:12

^^^Time to make the ink in India.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby jpremnath » 31 Aug 2019 17:22

It was a grave mistake to keep printing more of the 2000 note after the demonetisation exercise. It is undermining the original goal of eliminating black money. It should only have been 100 and 500. By keeping the 2000 note in circulation, RBI is assuring horders that it is safe to accumulate the black money again. Not to mention making things easy for pakis like the above news. They get twice the outcome by half the efforts. Wonderful.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby ArjunPandit » 02 Sep 2019 23:25

VIPS ji, the site also has an article showing previous PMO asking to print duplicate currency notes...

Picklu
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Picklu » 04 Sep 2019 04:43

There is no way to practically make the economy fake currency proof. We can introduce a set of 10 hi tech feature, the state machinery support behind the fake currency racket will copy them. We can make another set of 10 and they will be copied again. In the mean time, at the usage level it is not practically possible to check each and every high value currency note for all these high tech features. Such checks are time and effort consuming and not in the realm of human capability of a bank operative given the amount of workload he has. This is the reason why almost all the notes, good as well as fake, got returned to RBI; the overworked bank workers simply could not keep up checking and noting down each fake note with the person depositing it.

The only long term solution for this is to keep the highest denomination of the note as small as Rs 100 or max 200. Essentially to make the effort to introduce significant amount of fake note prohibitively risky, logistic intensive and costly.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Dileep » 04 Sep 2019 08:29

We should have phased out 2000 and 500 and not create 200. I honestly believed that it was the intention after Demo, but apparently BJP as a political party also need to win votes, buy seats and consequently the capability to handle 'suitcases'.

Why we do not have holograms (except the security thread) on our notes? Why do we still use phoren inks and paper?, and even use phoren contractors to print notes? Why we do not develop technologies like fluorescence fingerprinting?

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Re: Currency Demonetisation and Future course of Indian Economy

Postby tandav » 19 Nov 2019 00:29

GST implementation as of date forces provider of service to pay GST with no practical mandatory enforceable liability of receiver of service to pay the vendor. This has lead to a situation where a provider of services is forced to 1) not only provide services (such as payment of salary, ESIC, EPF, PT, travel, testing etc), but 2) also forced to pay GST (typically 18%) and since all the invoicing is on accrual basis technically invoice should be done when service is provided. Most MSMEs are reluctant to raise GST invoices since nearly 18% of invoice value is to be paid towards GST (+ liability for income tax). This GST payment sucks aways liquidity from the company. Therefore most MSME Companies do not raise invoices until after the money is released by client. Many larger companies are forcing their vendors to pay the GST before accepting an invoice. After the GST is paid the client company can sit pretty, take input credit and delay payment to the vendor for petty reasons for 6-8 months with no penalty on them. In many cases companies are borrowing money from Bank to pay GST. it appears that in such a regime it is better to sit back and relax rather than work and lose more of your hard earned money and assets.

hanumadu
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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 07 Feb 2020 01:33

Tamil Actor Vijay's financier raided and 65 crore recovered. Recently, I am seeing fewer and fewer 2000 Re notes. It's mostly 500. I guess all 2000 Re have been hoarded already. Now this guy has even hoarded 100 Re bills. Seriously?

Image

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mort Walker » 08 Feb 2020 10:48

Dileep wrote:We should have phased out 2000 and 500 and not create 200. I honestly believed that it was the intention after Demo, but apparently BJP as a political party also need to win votes, buy seats and consequently the capability to handle 'suitcases'.

Why we do not have holograms (except the security thread) on our notes? Why do we still use phoren inks and paper?, and even use phoren contractors to print notes? Why we do not develop technologies like fluorescence fingerprinting?


Agree. Nothing more than Rs. 100 note. All notes should be the same size, this was one of the big problems with demo when ATM machine note holders had to be changed. There should be another figure besides MKG on the note faces.

Suraj
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 09 Feb 2020 00:15

Dileep wrote:We should have phased out 2000 and 500 and not create 200. I honestly believed that it was the intention after Demo, but apparently BJP as a political party also need to win votes, buy seats and consequently the capability to handle 'suitcases'.

Why we do not have holograms (except the security thread) on our notes? Why do we still use phoren inks and paper?, and even use phoren contractors to print notes? Why we do not develop technologies like fluorescence fingerprinting?

I see Rs.2000 notes as a honey trap for a future demo step. It has all the hallmarks of a 'supersize your meal for just 25c' around it. Those who hoard cash would love the 75% savings in storage space between 500 and 2000, far more so than the 50% between 500 and 1000 earlier. At an opportune time, I expect all Rs.2000 notes to be invalidated. The impact on the mango person will be minimal since it's the cream on top, with the overwhelming majority of the notes being held in hoarded form.

hanumadu
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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 09 Feb 2020 12:20

New 2000 bills are not being printed, IIRC. If they are being hoarded, they should become rarer and rarer to see in every day use.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby kvraghav » 09 Feb 2020 12:52

It is difficult to get 2000 RS note anywhere now. The 2000 RS note is the most fragile one and degrades fast. I think we have to keep it in refrigerator to preserve it.

Suraj
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Suraj » 09 Feb 2020 23:50

Nothing wrong with that. It sounds like a good thing to design something that demands turnover, given that the whole purpose of the Rs.2000 notes - IMHO - is to corner away the hoarders even as the mango man progressively transitions more and more to cashless and electronic transactions.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Manish_P » 10 Feb 2020 10:07

Speaking of Rs 2000 notes...

Mumbai police caught flyer with 'Pakistan-made' Rs 2000 Indian notes of Rs 24 lakh denomination

A man who arrived on a flight from Dubai on Sunday morning was arrested for carrying fake Rs 2,000 notes with a face value of almost Rs 24 lakh.

The passenger, Javed Shaikh (36), a Kalwa resident, had been to Dubai and Bangkok in the past and may have brought in many such consignments.

The notes were of high quality, incorporating seven of nine security features.

“An average person will not be able to identify the fake notes. They look genuine. Shaikh walked away at the airport’s security check. He was caught at the bus stop outside the international terminal,” said joint commissioner of police (crime) Santosh Rastogi, who did not rule out a terror link. He said Shaikh could be caught because of a CIA tip-off ( :shock: ). “The counterfeit currency was stuffed in one of his bags. It took us over an hour to locate it,”


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Re: Currency Demonetisation and Future course of Indian Economy

Postby Manish_P » 12 Feb 2020 11:09

Banks Are Stopping Rs 2000 Note Circulation In ATMs, Branches: Is Rs 2000 Note Being Scraped?

As per the reports coming in, A top public sector bank in the country reportedly issued instructions to its senior officials to restrict the circulation of currency notes of Rs 2,000 denomination

Recently, the officials have been asked not to create panic among customers and told them to receive Rs 2,000 notes from the bank customers.

As per the report, after issuing the directive to restrict the circulation of Rs 2,000 notes, senior officials of the public sector bank (PSB) reportedly called branch managers to confirm that it was being executed immediately.

The branch officials were asked to provide only the denominations of Rs 500, Rs 200 and Rs 100 in ATMs and to meet the possible inconvenience arising out the situation, the supply of Rs 100 notes will be increased through currency chests, said the report citing an email of the PSB.

During fiscal 2017, about 3,542.991 million notes of Rs 2,000 denomination were printed.

In the next financial year, the number saw a dip as the central bank printed only 111.507 million notes of the same denomination.


According to a top finance ministry official, the printing of Rs 2,000 banknote had been reduced to the “minimum” by the RBI in January 2019.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby hanumadu » 26 Feb 2020 13:39

According to Twitter and a business standard link, 2000 re bills are being pulled from circulation and atms are being recalibrated to issue 500 bills from the erstwhile 2000 bill slot. 2000 is still legal tender. So demonstration no demonstration this time. I guess there will be a rush for 500 bills to replace the stacks of 2000s by the hoarders. At the very least we should be seeing 2000 bills back in circulation.
Last edited by hanumadu on 27 Feb 2020 06:59, edited 1 time in total.

pankajs
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Re: Currency Demonetisation and Future course of Indian Economy

Postby pankajs » 26 Feb 2020 19:17

Expected but with a lot of delay.

Public but especially merchants will stop accepting the Rs 2000 notes and most of them will get back into the banks as deposit. Demonetization with an unstated cutoff date.


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