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Old 10th November 2016, 15:30   #271
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by gsurya View Post
China also suffers from counterfeiters, but has NEVER done something drastic like this, to make 85% of value of total currency notes invalid overnight. This is banana economics.
Circumstances and issues in China were different than those in India. Comparison with other economies is not irrelevant. I would not call this Banana economics.

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This hugely damages Rupee as a trusted monetary instrument
Not at all. In fact, it cleans up the mess. And the counterfeits and hence would be trusted more. If you are taking about overseas investors, they don't deal in cash ( at least the legitimate ones) and would not be affected.
The people who are upset and ranting about this move are:
  1. Those with huge unaccounted cash, who are now up the creek without a paddle.
  2. Those who hate Modi and this government and would like to find fault with what ever they do.
  3. Those who are habitual India baiters.
  4. Those who do not see the larger picture
The PM has stressed that he would go after those who harm the economy. To this end, a series of steps have been taken since the past 2 years to systematically choke out this evil. This step being one of them. Linking cash dole outs to Aadhar accounts, to my knowledge, was the first thing proposed by the new government, but got delayed due to legal tangles.
I view the move as exceedingly bold and an important step to weed out black money (in circulation today*); and counterfeits. Yes, the political gains in view of the ensuing elections cannot be ignored too, though we may not appreciate it.
True, this alone would not make India "black money " free. It would take repeated "dandas" like this, as well as educating our young on civic values, national pride and such to finally graduate to a more ethical society. Say within a couple of decades. Illiteracy continues to the root of all evils, and unfortunately our politicians understand it all to well.

*EDIT: Yes, over the years, most of the black money has been converted to holdings in property, gold and other such assets. And yes, further action to root out these would have to be taken.

Last edited by earthian : 10th November 2016 at 15:34. Reason: added edit
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Old 10th November 2016, 15:31   #272
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

A naive question here. What will one do with hoarded gold?
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Old 10th November 2016, 15:36   #273
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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A naive question here. What will one do with hoarded gold?
Simple. Wait till the hullaboo has died down, go to your friendly, neighbourhood gold smith, and convert back to cash.
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Old 10th November 2016, 15:36   #274
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I agree our system is muddling along despite fairly clear instructions. Yesterday I went to the IIT Post Office to send a Speedpost. I could no. Why I do not know since the standard charge is₹40 (even less here since the distance is under 100km). I saw no mention anywhere that all services are suspended. Today I saw a news in the paper saying that some bosses went and shut down the Services counter in the main Post Office.

Yes, Tourists have a problem, but the number is very small (a few lacs in a population of 125 crores) , and most of them use plastic anyway. In fact their places of stay can help out by doing, say, a 400 transaction on their swipe machine, deduct the 1.5% that the bank charges ie 6/- on 400) , and then give the guest the rest of the money.

We may or may not like a dispensation but then one has to be a bit rational and reasonable.

Last edited by SDP : 10th November 2016 at 16:28. Reason: Deleted Mallya part as it was deleted from original post for being off-topic
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Old 10th November 2016, 15:36   #275
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by FrozeninTime View Post
This Government is causing inconvenience to common man. I have not seen any money being retrieved from various so called scams. It looks as if some dictator is dictating terms. It just doesnt feel like I live in democracy. This kind of uncertainty and forcing me into digital in the harp of curbing black money is nothing more than draconian. If Government regularly tries to flush out, time will come rupee will lose its value and Gold hoarding will start. This will be a catalyst for parallel economy.
Unethical practices and unjust laws contribute to inequality leading to black money. It looks as if Government finances are in taters and want to squeeze money from poor and middle class.

For all who support digital transaction do you want big corporations to know where and what you spend. With this data they are already controlling you through forced ads and what not.

What happened in Greece is a warning to all people Government if it wants will take all that money if country runs into financial crisis. Bank accounts are first affected and if God forbid if it freezes transaction or limits what will you do in emergency? The future looks bleak not for corrupt but for common man. I pay my taxes also but the way it is implemented is what I am against.
I have never seen such a depressing view of the matter in the whole net than yours. Even after breaking head I could not find out how Govt can squeeze money from poor and TAX PAYING middle class when you can freely exchange your legally made notes at par.
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Simple. Wait till the hullaboo has died down, go to your friendly, neighbourhood gold smith, and convert back to cash.
Not so easy going forward. Every high value transactions is being closely tracked. How is the friendly gold smith going to hoard that much cash?

Last edited by SDP : 10th November 2016 at 16:30. Reason: No personal attacks please. Lets keep the discussion civil. Edited quoted post as well
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Old 10th November 2016, 15:43   #276
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Moderator Note: You have been repeatedly warned NOT to submit political posts! Post deleted, please read our rules!

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Old 10th November 2016, 15:54   #277
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I'd readily admit I agree and disagree with certain bits of the initiative, and I'm not really inconvenienced if I have a liquidity crunch for a short while because of both living in an urban center and being decently tech-savvy.

What I find disconcerting and abhorrent is this entire 'if you aren't with us, you're against us' rhetoric creeping into the mainstream. There definitely are talking points and grey areas in the current initiative (and a lot of other things), but every social forum (even T-BHP to a certain extent) is replete with people trying to shout down anyone unwilling to drink the KoolAid without question, turning any debate into an Us Vs. Them battle. Whatever happened to democracy and the freedom to have an contrary opinion, and the right to discuss and deliberate?

Last edited by Chetan_Rao : 10th November 2016 at 15:56.
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Old 10th November 2016, 16:02   #278
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Just wanted to understand the move better so my question.
How does this affect the black market going forward (except current cash in hand ofcourse)? What is stopping the same people to not deal in real estate in black?

The two big advantages I see are the negation of fake currency and the negation of loads of black cash in hand. Those two points in itself are big positives for the government. That said I don't see how the government can stop transactions in black in the future with this move. Or am I missing something?
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Old 10th November 2016, 16:03   #279
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by FrozeninTime View Post
This kind of uncertainty and forcing me into digital in the harp of curbing black money is nothing more than draconian.
Well, for starters, hoarding huge amounts in hard cash, in most cases, is unaccounted money. Unaccounted money is unearned revenue for the government, which in turn relies on taxes collected from us honest people to meet the expenses. Why crib about converting into digital money? I do not see any good reason.
Generally those who are complaining bitterly about this move are the one's sitting on tons & tons of unaccounted hard cash.

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If Government regularly tries to flush out, time will come rupee will lose its value and Gold hoarding will start. This will be a catalyst for parallel economy.
Gold hoarding - you really went that far eih?



Quote:
For all who support digital transaction do you want big corporations to know where and what you spend.
My dear friend, In today's advanced world if you are even using a basic smartphone, those who want to know about you can easily know everything they want to.
Please understand,
digital money = 100% accounted (white)

This move only helps common man, if you really try to understand.

Quote:
What happened in Greece is a warning to all people Government if it wants will take all that money if country runs into financial crisis.
Greece is a different topic altogether. You should study it. There are many articles on it on the web. Just google it. Even Greece did not take away all its people's money literally, the way you have put it out.

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Originally Posted by gsurya View Post
And articles like this reveal the reality, this is really more about politics of the coming state elections than to do with economics.
BJP too is fighting the politics, no? Then it affects all parties.

Even when such a move was done, lets say, 6 months later, people could have found some political motive out of it even then.

30 Sep was the deadline to declare black money. Government waited till Diwali was over and announced demonetization. I would say the timing was alright.
I would not look for any political motive for a decision such as this, which is only good the the economy.
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Old 10th November 2016, 16:06   #280
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by sgiitk View Post
@Frozenin Time: I do not want to get into an argument - but who gave Mallya thousands of crores in loans. The PSU banks in the UPA days. I guess they took some collateral! So while it would have been better if he was detained, but then he was an Hon MP traveling on a Diplomatic Passport.

We may or may not like a dispensation but then one has to be a bit rational and reasonable.
This is amusing is giving a loan the illegal activity or the defaulting repeatedly on the loan before the bank went to court? It was obvious Mallya was allowed to leave India by the same dispensation that got him into Rajya Sabha in the first place.

The point is that common man sees the big fish repeatedly get away while they are put to the sword by hasty, ill-thought out moves like this.

Last edited by gsurya : 10th November 2016 at 16:08.
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Old 10th November 2016, 16:07   #281
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by gsurya View Post
the Govt should have prepared them first.
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Originally Posted by gsurya View Post
Its poor & middle class that is most affected, not the smartphone & creditcard class. Many construction activities using daily workers have stalled as the contractors have no money to give out in cash. These poor people literally live on a daily basis.
Your points are totally valid, but if the government gave enough time for the people to prepare, then the whole purpose would be defeated.

The sudden change in policy was necessary to ensure those at fault do not have enough time to convert their black money.

In this case the stick had to break while killing the snake I guess.
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Old 10th November 2016, 16:13   #282
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Just wanted to understand the move better so my question.
How does this affect the black market going forward (except current cash in hand ofcourse)? What is stopping the same people to not deal in real estate in black?

The two big advantages I see are the negation of fake currency and the negation of loads of black cash in hand. Those two points in itself are big positives for the government. That said I don't see how the government can stop transactions in black in the future with this move. Or am I missing something?
This is exactly the point I am making. Almost anyone I pay - whether it is my architect, lawyer, doctor, mechanic takes money in cash & doesnt give a tax receipt. All those fantastic ads of using PayTM to pay for an Auto remains in ads with little real penetration.

The Govt's first push should be to at least bring them all into doing billing transactions, let alone moving to cashless transactions.

As long as the LEGAL cash economy is as big as it is today, going after potential cash hoarding hurts the legal cash economy more - which is mostly handled by poor, SME & middle class.

Read the interview of Raghuram Rajan just a couple of years ago where he said Govt had considered doing such demonetization as an option but didnt use it because it will hurt the LEGAL cash economy more & because black "money" is not really in money form, but more in unaccountable assets like real estate, stocks, gold etc.
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Old 10th November 2016, 16:24   #283
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I don't understand why some members are trying to oppose this move. I fear either they have not understood this very well or just voicing difference only for the sake of doing it. Main argument is that common people are struggling in the absence of paper cash. They don't understand that this shortage (only for 500 and 1000 denominations) will be there only for a couple of days. Then why do they create such an illusion that common people will be without paper cash soon?
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Old 10th November 2016, 16:29   #284
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You might want to just turn on your TV & watch any channel. Everywhere there are huge queues of people, frustrated & complaining - banks out of notes, people dont have id cards, workers in one state who have all documents back home rushing back.

Travelers are most badly affected. Yesterday I was stuck for 20 hours on a train with 110 Rs of legal cash. I was one of the better off as I could take an Uber when reaching destination!

Its poor & middle class that is most affected, not the smartphone & creditcard class. Many construction activities using daily workers have stalled as the contractors have no money to give out in cash. These poor people literally live on a daily basis.
I know your politics, but don't want to talk about that here. The very people were crying they want decisive action against black money. When action is being taken the same people cry hoarse. This is the hypocrisy. There were 5 bandhs in Bangalore sponsored by state Govt in the last 3 months. People were inconvenienced for no tangible benefits. They could not even move out of their houses.

If you want to fight against black money you need to appreciate and tolerate some harsh and disruptive steps. No one is going to credit 16L in to your bank accounts. But this will suck away atleast 10% of cash economy which was black and as per some estimates this may be as high as 1% of GDP. So let markets cleanse itself and you will end up with a clean transparent tax paying system where it will be really hard to cheat.
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Old 10th November 2016, 16:34   #285
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by earthian View Post
Circumstances and issues in China were different than those in India. Comparison with other economies is not irrelevant. I would not call this Banana economics.



Not at all. In fact, it cleans up the mess. And the counterfeits and hence would be trusted more. If you are taking about overseas investors, they don't deal in cash ( at least the legitimate ones) and would not be affected.
The people who are upset and ranting about this move are:
  1. Those with huge unaccounted cash, who are now up the creek without a paddle.
  2. Those who hate Modi and this government and would like to find fault with what ever they do.
  3. Those who are habitual India baiters.
  4. Those who do not see the larger picture
The PM has stressed that he would go after those who harm the economy. To this end, a series of steps have been taken since the past 2 years to systematically choke out this evil. This step being one of them. Linking cash dole outs to Aadhar accounts, to my knowledge, was the first thing proposed by the new government, but got delayed due to legal tangles.
I view the move as exceedingly bold and an important step to weed out black money (in circulation today*); and counterfeits. Yes, the political gains in view of the ensuing elections cannot be ignored too, though we may not appreciate it.
True, this alone would not make India "black money " free. It would take repeated "dandas" like this, as well as educating our young on civic values, national pride and such to finally graduate to a more ethical society. Say within a couple of decades. Illiteracy continues to the root of all evils, and unfortunately our politicians understand it all to well.

*EDIT: Yes, over the years, most of the black money has been converted to holdings in property, gold and other such assets. And yes, further action to root out these would have to be taken.
My mom had to queue throughout the day for 2 days in order to get notes for my grandmother's medicines. She doesn't earn black money-she just happened to receive those notes from an ATM machine on the previous day.
My friend had to skip college today to convert her notes.
My grandmother's nurse had to skip work to convert all that she had. She lost a day's pay.
This is not a new step. This happened in 1978 under Morarji Desai. He banned all currency notes above Rs. 100. How long did it stop the hoarding of cash?
Let us be clear about one thing: addressing the symptom and not the cause cannot be a solution to everything. That's what is happening in the country today. People in other countries would have laughed at such a frightening measure. They are in fact.
If they were serious about black money, why not keep a deadline till the end of the financial year? People could be asked to get their notes changed after presenting their ID cards. That's not what happened. In order to shock the system, they did it overnight (I'm not going into the political reasons behind this-that's not a topic for this forum).
And what did people do with their money? They bought gold.
Every jeweler in the metro cities experienced a spurt in sales of gold bars in the last few days. I wouldn't be surprised if people hired proxies to buy their gold for them in order to make it untraceable.
I'm deeply disappointed that you take such a biased view of the situation. Perhaps it's not an inconvenience for you-perhaps you have someone who could go through the trouble of changing your currency without you being physically present. But that's not how the majority of this country's population feels. Yes, it is a bold step. Yes, it will make some of the cash appear in the bank's balance sheets. But is there any strategic thought behind what would happen when the new notes are introduced? None. Things would go back to being the same.
Not everyone who dislikes a government decision is against India-many of us contribute more value to the country than the bureaucrats and politicians running the show. Lets not be judgmental about things so quickly.
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