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Old 1st September 2017, 19:23   #2491
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
Very recently I was investigating the internals of my home UPS/inverter when it broke down and I was shocked to find out that it is basically a make in China, assemble in India product and that is how most are these days. So what the West has done, we also seem to be doing by sourcing manufactured parts from China. From furniture to smart phones.
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Originally Posted by ashis89 View Post
China was and has been attractive because of cheap labor and manufacturing costs. China is also a major consumer of products. Companies, global and Indian alike, throng to avail these benefits. Countries had ignored this outflow/outsourcing of jobs as they reaped revenues from import duties and similar. Things are changing when there isn't enough job left for the people of countries.
Thats one of the important point which many people ignore while discussing demonetisation and GST. Everything is co-related with each other in the economics.

In our country, we are killing the 'Make in India' before it takes off becasue of the day by day increasing manufacturing cost of production due to higher taxation. This results into price incompetency against cheap imports from countries like China.

Let's try to understand it with statistics posted below.

Look at the decline in the manufacturing and agricultural sector, also note the ratio between imports and exports. No wonder the employment rate is affected, so is the purchasing power of a common citizen and the chain counts so on and on and on...


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Old 1st September 2017, 19:28   #2492
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

All the so-called black money has been recovered. Does that mean all that was black has turned white? Yes and No. All that lies in the bank accounts smelling odd, will be probed into. A huge task lies ahead for the IT Department. How many of the unaccounted-for-money holders will be properly identified and nailed is a question that a man in the street is eager to know. How is the government going to probe into huge deposits that poured into Jandhan accounts?
On the other hand, yes, the demonetization drive has shown many the road to IT Department, forced many to start paying the taxes. A big jump in tax collection is expected.
And I believe in this process although it is the poor man who has suffered the most, yet he is happy that the government has succeeded in chasing those who are evading taxes. The have-nots are happy that the haves have to fall in line finally.
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Old 1st September 2017, 21:07   #2493
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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The have-nots are happy that the haves have to fall in line finally.
At least they can fill their stomachs with this illusion, if not with the necessities of life.
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Old 2nd September 2017, 10:40   #2494
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

You are free to be agree or disagree, but not before listening to him:

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Old 2nd September 2017, 23:19   #2495
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I have stayed away from writing on this thread because from a discussion on demonetization it has morphed into a general and constant criticism of the present Govt and the habitual 'nothing works in India' rant. I am no economist nor do I understand the complexities of economic numbers. But as a businessman who has had the privilege (and curse) of dealing with Govt officers and ministers for years and years I can say two things with hand on heart - (1) Corruption, at least in the ministries I have to deal with, at the minister's level and the top senior two layers of the IAS has virtually halted in Delhi. Do not equate stoppage of corruption with increase in quality of work but it is, in my opinion, a big big step that I never thought I would ever see in my lifetime. (2) The IAS in Delhi are genuinely concerned about their work output, speed and a written complaint - for the first time in my working life I see these folks who consider themselves above all else being conscious of delivery - it is a first step. Visible achievement is still rather patchy but the movement and direction is true.

We are a nation with a population greater than North & South America combined. The complexity and depth of our problems cannot be solved in a hurry or by educated people ranting or by Raghuram Raju preaching from a pedestal.

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You are free to be agree or disagree, but not before listening to him:
Thank you for sharing this. He has tried to give a balanced view. Though it doesn't seem like a comprehensive one.
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In our country, we are killing the 'Make in India' before it takes off becasue of the day by day increasing manufacturing cost of production due to higher taxation. This results into price incompetency against cheap imports from countries like China.
Weakening of our ability to manufacture at the right price or quality did not start in 2014 but in 1948 & 1952 when the license Raj was introduced in two steps. So lets not blame the immediate past. Though I agree with you that real progress on 'Make in India' in removing petty hurdles has been too slow and too little. So far more hype than action. It is not the politician but the middle bureaucrat who is digging his heels for it is his power turf that will be affected.
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[*] Above proves my biggest fears of banks recapitalization using demonetization as a means. More cheap loans to big corporate without due diligence means more bad loans. ultimately we tax payer end up paying for them all.
What's wrong with recapitalizing the banks? The bad loan circus was the doing of the previous Govt.

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[*]A certain privately held telecom company have invested almost 85 k crores without generating single rupee in revenue till early 2016. We all know who it is but question is where did this 85 K crores came from suddenly. They have a target of investing 1.5 L crores as on March 2016. Said company continue to doll out freebies to users like us happily until 6 month ago.
Read their balance sheet. By the way I am no admirer of that group.
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[*]I am not digging into another big business house in Gujarat into ports et all who got a big mining contract in Australia post take over of current govt. Funny thing, the said project was mirrored in environmental concerns earlier and all suddenly went into air.
Did the project create jobs, did it add to the GDP, did it add to taxes paid to the Govt, did it help the power supply position. Those I believe are the relevant questions.
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[*]The famous fighter plane deal which was tweaked to suit a business house who is struggling to survive & is a new entrant in defense space. Despite lack of experience that company went ahead into a joint venture with this house.
No fighter deal has been signed yet to assemble/build in India. If Reliance gets into a tie up with Dassault it is no skin off any one's nose. Not sure how this all is related to de-monetization.

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So, after reading the press and reactions from most politicians, the Press and some individuals, I assume they'd have preferred NOTHING was done to increase tax compliance and reduce unaccounted wealth. No wonder the country takes two steps forward and one step back!!
Bravo. Well said R2D2. Thank you for bringing balance back to this thread.

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Corruptions remains one department, where we are number one with 69% bribery rate:Asia's Five Most Corrupt Countries: Forbes
Nothing new in this. How is it related to demonetization. This malaise has developed over 70 years. For the first time we are seeing a Govt try to seriously do something about it. Why do we expect it to be easy or smooth. There are no efficient solutions in a society as complex as ours both socially and economically. The problem with us middle class educated Indians is that we love to rant without offering a workable implementable alternative. Would you rather we go back to the previous regime? Graft is not a Govt or politician matter alone. Graft is alive and well in the private sector too. Everytime we do a property deal which is not all cheque - that is corruption too.

Coming back to the title of this thread - I think we need to wait two or three more quarters to judge the full benefit and damage of de-monetization - both have happened good and bad. Lets see if tax collections in direct taxes are higher especially from individuals in March'18 and how the informal sector gets back by then.

Last edited by V.Narayan : 2nd September 2017 at 23:31.
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Old 3rd September 2017, 08:43   #2496
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I suppose he has a right to "preach from a pedestal" considering that he WAS a qualified economist, unlike the bunch who decided that this was a good move.
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Old 3rd September 2017, 11:14   #2497
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by V.Narayan View Post
What's wrong with recapitalizing the banks? The bad loan circus was the doing of the previous Govt.
I am sorry but you are trying to justify the false actions of current govt by saying that it was fault of previous govt. For me govt is above party line. That's typical Indian way of justifying. That video few posts back came up at right time IMO

Recapitalizing the bank is not wrong but it becomes wrong when the govt of day doesn't recover those bad loans and instead forces honest citizens to pay for the capitalists and bring cash into banks. Instead they should have taken steps to recover those bad loans. Why they allowed these loans in first place. clearly political connections took front seat and due diligence was thrown out of window. Did they fixed responsibility on banks officials. I do not remember seeing any such actions in media.

I believe former RBI governor did tried to recover these bad loans and put pressure on banks for recovery. Off course he was booted out with full respect and a puppet was put in as governor.

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Originally Posted by V.Narayan View Post
Read their balance sheet. By the way I am no admirer of that group.
Did the project create jobs, did it add to the GDP, did it add to taxes paid to the Govt, did it help the power supply position. Those I believe are the relevant questions.
Yeah i did. Point is it is a product of corruption which govt should have controlled & not contributed. Still, How can a group with liabilities of 389616.00 Crores as on march 2017 can splurge 1.5 L crores on building a new business and there too survives for full 3-4 years without earning a single paise as revenue.

As for profit goes, their consolidated profit for past 5 years is 124548.00 crores. Much of these needs to be put back into parent company as well for enhancing capacity and other stuff so no way they can invest all this 124548.00 crores into telecom venture. i am assuming that they have been saving all this profit for past 5 year which is highly unlikely.

I do not believe that i can do anything just because i generated Employment & contributed to govt coffers . !!!!

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Originally Posted by V.Narayan View Post
No fighter deal has been signed yet to assemble/build in India. If Reliance gets into a tie up with Dassault it is no skin off any one's nose. Not sure how this all is related to de-monetization.
Well the deal is not only signed but the company is incorporated as well.
http://www.livemint.com/Companies/9l...I-approva.html

It would be off topic for the thread but my problem starts when govt of the day starts working for few selective groups than for the people. Do note that they have zero experience in manufacturing these fighter planes. ideally like previous cases, it should have been given to HAL or other PSU. At the end of day, deal was paid using tax payer money and benefits of deal should also go to tax payer but here it goes to a private entity.

I know they will generate some jobs et all but if it was given to HAL, than also these jobs would get generated. Additional benefit would be that profit will go to the govt and they could have used that for starting a welfare scheme.

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Old 3rd September 2017, 12:19   #2498
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

There are two issues at hand: corruption and tax compliance.

Corruption is a much harder problem to solve in our country where the elections are very expensive and low-paying government jobs are seen as the most lucrative career. You may find certain minister in certain govt. honest during certain years but overall the election funds have to be generated and the money has to come from somewhere. The "clean image" ministers help with the public opinion while funding machinery works in the background.

Tax Compliance is the real reform that is taking place. Demonetization (with arguably poor cost vs benefit), GST (with broader acceptance), Aadhaar linking, etc. are all aimed at tax compliance. Even if some of these fail, it is good to see measure of this vast scale are being taken up. I am optimistic about tax compliance in future because tax compliance doesn't directly disrupt the political system unlike corruption and hence it will be pursued with a lot of seriousness.

Of course, you have to ignore the propaganda about bringing down corruption which is a necessary evil to win elections, etc. and look harder to understand what actually is being pursued.

My comments are not about any specific govt tenure. I believe as long as elections are expensive, you can't expect corruption to go away - only the form of corruption changes.
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Old 3rd September 2017, 12:28   #2499
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I think everyone here is ignoring one very important aspect of this whole debate or rather conveniently ignoring it - our so called IT department or the "menacing tax officials".

1. Is the department equipped to even conduct a data analysis of such a large scale?

2. Are the officials themselves driven by the vision of uncovering all the black money? Are they above the temptation to ask for a bribe and let people go free.

The answer is not what everyone wants to seek or accept. But mere hoping against hope is not going to change the inevitable truth. The truth is that the department is extremely short staffed and doesn't have the infrastructure to go on this crusade against the devils, as projected by the government.
Second they are Indians too just like you and me. From the day I have gained senses, I have noticed that 99% of them accept gifts of all kinds to settle cases, only the cost of the gift varies. This can be demanded directly at the time of assessment or later worked out with the help of your CA. Thats the truth. Corruption is a give and take deed. Everyone seems to be blaming the "give" end of it but no one is giving a thought to the much uglier "take" end of it. In my view, the takers will have a field day in filling their coffers now. Infact taking this point a little further. Business houses know how to make money and hence they invest it and not keep it as paper in their houses. But these "takers" do not generate money but just get it delivered. They are much more likely to hold them in form of cash knowing very well that investing in their name may lead to a gross mismatch in their earning vs investment equation. So they would be more than willing to recover what they lost too in this demonetization exercise.

PS: My source for the department's current infrastructure is a highly ranked official from the department itself. Ofcourse we all still can believe what we want to.
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Old 3rd September 2017, 20:12   #2500
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I ----@---to.
Concur with the lackings in the state machinery. I would, though, add one more to it. That is just plain old lethargy. Lazy people. The primary reason why everything is so slow and time consuming when it hits a government department is lazy people. "I received the file just today/this week/month" is the standard put off. And nothing can accelerate this, even if we ever get a well meaning government.
I speak from 10 years of working with and for the government.
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Old 4th September 2017, 07:15   #2501
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My comments are not about any specific govt tenure. I believe as long as elections are expensive, you can't expect corruption to go away - only the form of corruption changes.
So long as we take this lying down, there is no hope for the country. Expensive elections isn't the issue - per capita ours are very cheap actually - but non transparent funding of election expenses is, but this is just one of the reasons for corruption. There is just as much corruption to supplement official income and to build wealth at our expense. What about this aspect, do we take this lying down as well?

And I agree that all parties are equally culpable on this count. As are all of us that will easily pay the cop a bribe on the roads for any irregularity in our behaviour there when driving our vehicles.

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So they would be more than willing to recover what they lost too in this demonetization exercise.
Lol - by they I assume you mean the Income Tax Department!
Unless the fertile ground for corruption to breed is removed, nothing will address the creation of black wealth. Ingenuity everywhere among givers and takers will always find a way and workarounds will always prevail - demonetise or not, do it many times or never. And every new law or regulation added to the countless ones already present just adds more opportunity for workarounds, legal as well as illegal.

What India needs is widely known - a drastic reduction in our laws, rules and regulations coupled with rigorous enforcement of the fewer remaining ones. But that is like removing water and fertilisers to the breeding grounds of corruption so it will take a revolution for that to happen.

Unlikely to happen - we don't do revolutions.

Last edited by Sawyer : 4th September 2017 at 07:21.
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Old 8th September 2017, 06:13   #2502
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It is fashionable to bash Raghuram Rajan, but his recent interview makes interesting reading for those that are able to take in a different point of view about demonetisation. In particular, his comment on Jugaad defeating the purpose of the move.

See: http://www.ndtv.com/india-news/watch...-lateststories

The question is - is this surprising or is this Jugaad to be lauded as a tribute to the ingenuity of the common man so as to not be defeated by conditions created in the country by those in power, something he has had to do to survive for as long as one can remember in India? And is its existence truly a surprise to those that think up masterly ideas like this one?

Last edited by Sawyer : 8th September 2017 at 06:14.
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Old 8th September 2017, 06:53   #2503
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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The question is - is this surprising or is this Jugaad to be lauded as a tribute to the ingenuity of the common man so as to not be defeated by conditions created in the country by those in power, something he has had to do to survive for as long as one can remember in India? And is its existence truly a surprise to those that think up masterly ideas like this one?
Well I've now started to consider this earth as a battle between two sets of people, one working for the "government" within the government (police, law, bureaucrats, army, politicians, national banks) and the others working for the government outside the government (taxpayers). This battle will never end and neither of these groups are good or evil.. just those trying to survive. We also have people outside the government influencing the government i.e ultra-rich taxpayers and vice versa. In the end everyone were just people and that's that.

There is no entity on earth that is more "jugaadu" than the government, here's some of the tactics that banks have used on us since the existence of "money" :

- Accepting gold for promissory notes
- Replacing promissory notes with cash
- Increasing value of gold as they see fit
- Fractional reserve lending, the biggest scam on earth
- Using wars to manipulate valuation of global currencies (globalization is a virus which has been promoted using positive lingo)

This even though the "Federal" Reserve Bank of America is a private entity and yet carries the name federal even though it can take and reject decisions on its own with no governmental influence.

All this doesn't mean that I'm anti-establishment (many will take this opportunity to bash this post based on some divisive tactic such as patriotism, conformism, duty as a citizen etc), I've played by the rules all the time but it doesn't mean that I don't understand what is truly going on. YES we need the government as an entity that manages the country and its laws, we need their power distribution, water distribution and overall macro-management. At the same time the government which is also a bunch of people recruited into the system, also needs the citizen's support, taxes and compliance to a certain degree where no one gets hurt.

Anything other than this to me, is fair game. The machinery has a 1000x longer list of crimes against humanity to its name than any other, its merely a little less evil than the outright system of monarchy that existed before it. Orwellian Society here we come.
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Old 8th September 2017, 07:04   #2504
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I've played by the rules all the time


Orwellian Society here we come.
Might it be that you have been lucky to be born in an economic environment that allowed you the luxury of playing by the rules all the time? And even so, ALL the time - really?? I can't make that claim, having done my share of casual bribing or breaking the traffic lights when I deemed it safe to do so. Or bought movie tickets in black, or the many other little sins that one can't live in India without committing. Or, I can't, at any rate.

As to Orwellian - you haven't seen anything yet, and beyond what even Orwell imagined. Before they - hopefully - get better, they will get a lot worse. To anyone that has read and understood history here and elsewhere, this is very clear.

Last edited by Sawyer : 8th September 2017 at 07:08.
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Old 8th September 2017, 07:19   #2505
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ALL the time - really?? I can't make that claim, having done my share of casual bribing or breaking the traffic lights when I deemed it safe to do so. Or bought movie tickets in black, or the many other little sins that one can't live in India without committing. Or, I can't, at any rate.
My interpretation varies just slightly, and yes we've had to bribe and hand out cash as well but I never considered it a violation since it was part of how the establishment operated(s), there simply was/is no way out in some cases, I had to pay advance to the driving school and a portion of it was this small kickback to the authorities and it was passed off as standard fees. Thus I feel that bribes aren't a violation since the establishment doesn't pay very well and hence they are aware that their "servants" need to look to other means for getting a salary suited to present standards of life. This includes BSNL linemen, property tax inspectors and sub-registrars.

That was my whole point, in the end its just people trying to survive in this 100% cash-enabled society. There is no better way out and this gives the perfect opportunity for those who control the cash to use it to wring our necks. If it will get worse than what Orwell imagined, then I'd say the perfect dystopia isn't far off.
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