Go Back   Team-BHP > Around the Corner > Shifting gears


Reply
 
Thread Tools Search this Thread
Old 16th November 2016, 19:16   #826
Senior - BHPian
 
Join Date: Jul 2009
Location: Pune
Posts: 2,375
Thanked: 1,047 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

I found this white paper on the site of the Ministry of Finance, GOI, on the subject of black money and how to address it:
http://finmin.nic.in/reports/whitepa...kmoney2012.pdf
It is a 100 page or so document, that deals with the subject from all angles and sets out all the many things that are recommended to be done to comprehensively deal with the subject.
I have done a first quick read to see what this paper says on the demonetisation step, but so far I haven't found a single reference to it in all the steps that are recommended in this white paper of the GOI.
Very puzzling.
Sawyer is offline   Reply With Quote
Old 16th November 2016, 19:21   #827
Distinguished - BHPian
 
Thad E Ginathom's Avatar
 
Join Date: Jun 2007
Location: Chennai
Posts: 7,698
Thanked: 6,873 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by avira_tk View Post
You don't have to be uber rich and ultra savvy to despise the poor ...
Having Rs.5 is enough to despise the person with Rs.4 --- and worship at the feet of the person with Rs.10. I don't understand either attitude, but they are so rife as to be considered "normal."

Thad E Ginathom is offline   Reply With Quote
Old 16th November 2016, 19:50   #828
Senior - BHPian
 
Join Date: Jul 2010
Location: Bangalore
Posts: 1,840
Thanked: 3,103 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post
I found this white paper on the site of the Ministry of Finance, GOI, on the subject of black money and how to address it
That document should be recommended reading for everyone who's interested in understanding the whole thing, rather than believe and/or endlessly parrot something they heard mentioned somewhere.

The section defining black money and the multitude of ways it's generated is enlightening, esp. to misinformed folks who are inclined to believe it's just cash hoarded somewhere.
Chetan_Rao is online now   Reply With Quote
Old 16th November 2016, 20:00   #829
BHPian
 
SilentEngine's Avatar
 
Join Date: Jan 2008
Location: Mangalore-Bangalore
Posts: 921
Thanked: 119 Times
Default

Quote:
Originally Posted by diyguy View Post
Is there a fee for withdrawal and an interest component that I will have to bear?

As per my understanding there is a transaction fee of 2.5% or Rs 250 whichever is higher so you will be paying 10% just to withdraw 2500. Interest component is separate.
SilentEngine is online now   Reply With Quote
Old 16th November 2016, 20:08   #830
Senior - BHPian
 
Join Date: Jul 2009
Location: Pune
Posts: 2,375
Thanked: 1,047 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Chetan_Rao View Post
That document should be recommended reading for everyone who's interested in understanding the whole thing, rather than believe and/or endlessly parrot something they heard mentioned somewhere.
I agree; and if you find any reference in it to demonetisation as an effective step to tackle black money, do let me know. I intend to read the entire document asap, and will revert when I do.
Sawyer is offline   Reply With Quote
Old 16th November 2016, 20:28   #831
Senior - BHPian
 
Join Date: Mar 2011
Location: Back to Chndgrh
Posts: 2,067
Thanked: 2,576 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Instead of Ink, can we not record fingerprint? scanners and software for these should be easily available, something like -

http://www.amazon.in/Cogent-CSD200-3.../dp/B00VYQ5I5Q
Turbanator is online now   Reply With Quote
Old 16th November 2016, 20:55   #832
BHPian
 
heavenlybull's Avatar
 
Join Date: Aug 2014
Location: Delhi
Posts: 118
Thanked: 105 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post
I agree; and if you find any reference in it to demonetisation as an effective step to tackle black money, do let me know. I intend to read the entire document asap, and will revert when I do.

I still hope that this is not just a Tughlakh kind of action after all, taken in spite of this white paper put forth by none less than the Ministry of Finance, GOI.
I had a cursory look the doc, and as expected no mention of demonetization anywhere. A section dealing briefly with 'Cash Economy' is there, though and doesn't seem very eager about dealing with cash circulation issue.

From the pdf, the closest reference to a situation we are in now "...creating a limitation on cash holdings for private use, as well as provisions for confiscation of cash held beyond such prescribed limits. However, such laws need a broader political
consensus to emerge for their acceptance in Parliament."

This demonetization surgical strike has caught everyone by surprise, personally I feel its a master stroke. Its full effect on black money will only be known in the coming months.

Last edited by heavenlybull : 16th November 2016 at 21:17.
heavenlybull is offline   Reply With Quote
Old 16th November 2016, 21:02   #833
Senior - BHPian
 
Join Date: Jul 2009
Location: Pune
Posts: 2,375
Thanked: 1,047 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post
I found this white paper on the site of the Ministry of Finance, GOI, on the subject of black money and how to address it:
http://finmin.nic.in/reports/whitepa...kmoney2012.pdf
It is a 100 page or so document, that deals with the subject from all angles and sets out all the many things that are recommended to be done to comprehensively deal with the subject.
I have done a first quick read to see what this paper says on the demonetisation step, but so far I haven't found a single reference to it in all the steps that are recommended in this white paper of the GOI.
Very puzzling.
I have read the entire paper again - a white paper on Black Money from 2012, still to be found on the Ministry of Finance website - and while it contains this paragraph:
Quote
A comprehensive analysis of the factors leading to generation of black money in India along with the various measures attempted to counter it till date makes it apparent that there is no single panacea that can rid society of this menace. At the same time, it is not impossible to curb, control, and finally prevent the generation of black money in future as well as repatriation of black money, if a comprehensive mix of well- defined strategies is pursued with patience and perseverance by the central and state governments and put into practice by all their agencies in a coordinated manner.
Unquote
BUT: There isn't a single reference in the white paper to demonetisation as a step to counter black money!
And there are more than 50 - I stopped counting once it got beyond that - other suggested measures.
Is this because the demonetisation done in 1978 was known to have failed in this purpose?
Why has no one in the media asked the awkward questions that then arise from this?
Are we just getting carried away by the surgical strike bandwagon?
PS: I have done my best to read the sometimes boring paper from end to end; if anyone turns up any reference to demonetisation as a useful measure that I may have missed, please do point this out - I still hope that this is not just a Tughlakh kind of action after all, taken in spite of this white paper put forth by none less than the Ministry of Finance, GOI.
Sawyer is offline   Reply With Quote
Old 16th November 2016, 21:09   #834
BHPian
 
Join Date: Jun 2008
Location: Chennai/ Trichy
Posts: 362
Thanked: 180 Times
Default

Quote:
Originally Posted by Turbanator View Post
Instead of Ink, can we not record fingerprint? scanners and software for these should be easily available, something like -

http://www.amazon.in/Cogent-CSD200-3.../dp/B00VYQ5I5Q
Ink is infinitely more widely available and simpler too!
sunsetorange is offline   Reply With Quote
Old 16th November 2016, 21:13   #835
Senior - BHPian
 
msdivy's Avatar
 
Join Date: Aug 2006
Location: Bangalore
Posts: 1,434
Thanked: 781 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post
Are we just getting carried away by the surgical strike bandwagon?
The term 'surgical strike' is now revised to 'carpet bombing', done on the general Indian public. I hope the Govt comes with further concrete measures and continue the blitzkrieg. Otherwise, it will be like setting the house on fire to kill the rat .
Quote:
Originally Posted by Sawyer View Post
4. Weeding out fake currency is a definite benefit, but it is too soon to say that it is the only benefit.
This benefit will last only till the counterfeiters get started on the new notes .
Quote:
Originally Posted by Turbanator View Post
Instead of Ink, can we not record fingerprint?
Given a fingerprint, it is impossible to zero on the person since there would be too many false positives.

Last edited by msdivy : 16th November 2016 at 21:17.
msdivy is offline   Reply With Quote
Old 16th November 2016, 21:26   #836
Senior - BHPian
 
Join Date: Jul 2010
Location: Bangalore
Posts: 1,840
Thanked: 3,103 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post
I agree; and if you find any reference in it to demonetisation as an effective step to tackle black money, do let me know. I intend to read the entire document asap, and will revert when I do.
I'll re-read it minutely over the weekend, but it's apparent that the authors don't believe in shock & awe tactics as an effective measure to gain any long-term benefits. Section B4 addresses the cash economy specifically and there are references to controlling cash circulation by regulatory means, but the statistical evidence is overwhelming that most black money is generated by legal means and not necessarily in the cash ecconomy, and only good long-term governance can effectively curb it.

They provide sound logic for their arguments, and debunk quite a few economic myths about black money and the parallel economy globally. Everything is debatable of course, but the document by itself is credible and provides a lot of information for common people like us.

The following comment at the end of section 1.3.3 sums it up pretty well:

Quote:
It is therefore necessary to create awareness about these aspects and encourage understanding about the lack of any universal panaceas or magic remedies for this complex socio-economic problem.
P.S. One aspect of this whole situation that most seem to be either missing or discounting is such sudden moves shake the poor man's confidence in currency, and can lead to further diversion of money into non-liquid assets. I'm not suggesting any of this will necessarily be illegal, but it would be pretty ironic if this caused a longer term liquidity crunch because the lower classes are too spooked to trust the currency in their pocket.

Last edited by Chetan_Rao : 16th November 2016 at 21:34.
Chetan_Rao is online now   Reply With Quote
Old 16th November 2016, 21:44   #837
Senior - BHPian
 
Join Date: Jul 2009
Location: Pune
Posts: 2,375
Thanked: 1,047 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by heavenlybull View Post
This demonetization surgical strike has caught everyone by surprise, personally I feel its a master stroke. Its full effect on black money will only be known in the coming months.
Surprise does not automatically turn it into a master stroke; all we know just now is that it was a surprise. Only the full effect you refer to can yield the verdict on just what kind of a surprise this is. And its full cost as well.
Here is also something that I don't think many know, although the Government ought to know, but it would not surprise me if no one knows. Out of the 1.2 billion Indians, assume that 600 million aren't dependent children, and therefore need to have either cash or bank accounts to survive. How many of the 600 million don't have bank accounts today? It is no use saying, all should have, the question today is how many of this 600 million don't have a bank account today? I will take a shot at it, and guess 100 million. How do 100 million, most of whom will be in villages across the length and breadth of the country, now manage? I agree than many of these may not have a 500 rupee note in their homes, but many will? And even those that don't see these notes will be affected when those that give them useful work are affected by the cash dislocation. How long will it take to get the cash situation all sorted out there? All the focus seems to be on ATMs and bank lines in town and cities. God only knows what is happening in the villages; what we are seeing on TV, when restricted to cities and towns, is relatively trivial.
And 100 million may be an undercount.

Quote:
Originally Posted by msdivy View Post
The term 'surgical strike' is now revised to 'carpet bombing', done on the general Indian public. I hope the Govt comes with further concrete measures and continue the blitzkrieg. Otherwise, it will be like setting the house on fire to kill the rat .
If what you are saying is correct, then it means that killing the rat will need the house to be attacked with more than just setting it on fire. How does that help those that died in the fire? Who will decide on how that equation balances?
PS @ Chetan Rao: Quoting from you:
One aspect of this whole situation that most seem to be either missing or discounting is such sudden moves shake the poor man's confidence in currency, and can lead to further diversion of money into non-liquid assets. I'm not suggesting any of this will necessarily be illegal, but it would be pretty ironic if this caused a longer term liquidity crunch because the lower classes are too spooked to trust the currency in their pocket.
Unquote
There is something called the Law of Unintended Consequences, and what you have described could well be a classic example of just one such consequence. That is probably why the white paper does not do shock and awe; it is a macho thing to do, but in a complex environment like the Indian economy, shock and awe can become a weapon of mass destruction, not to be employed lightly.

Last edited by Sawyer : 16th November 2016 at 21:53. Reason: PS
Sawyer is offline   Reply With Quote
Old 16th November 2016, 22:10   #838
Senior - BHPian
 
Join Date: Jun 2014
Location: Bangalore
Posts: 1,106
Thanked: 645 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by avira_tk
You were all for targeting car owners for out of state registration , basically because they had posher apartments than you did. You were calling them bourgeois without a care and suddenly you find that attitude suffocating.
Good try, but no luck!! I supported the drive against out of state registered vehicles precisely for the reason why I am supporting this demonitisation drive. That is there are lots of people who flout the rules, and try to make easy money. When honest people have to suffer, these smart alecs think that they can get away by acting "poor" and have fun. Where as in the case of cars, there were folks who had to roam around in KA but did not find it good to pay road tax. Now we find lots of black money hoarders who feel that they need to pay any tax dues to any one, and using hawala to mess up the economy is a good thing to have. So if you see posher apartments only means one thing to me; more taxes to be paid.

Quote:
Nothing prevents you from going to the middle east and getting enough money to buy a plot, when did paying income tax entitle anyone to a plot of land?
Do you think that I would be happy when one black money hoarder who got his funds from all dubious sourses in the middle east manages to get land and other resources, where as tax paying citizens gets shafted? Do you think that having black money, doing hawala transactions and flouting the rules of the country are all ethical behaviour?? The Gulf money had made lots of people think that KL is a place which totally disconnected from the rest of India, and should have its own business rules, work ethics etc. Time to have a recheck at the map.

Quote:
There is plenty of land available for sale in Kerala and prices are at an all time low, what's stopping you if everything is accounted.
I am aware of that as I have friends in that business. Chappies got it really badly when some new regulations were bought in, and the income sources etc. had to be revealed. And even they admit that old time way of profiteering by flouting laws is now not yielding much results. And now you have this demonitisation drive coming in. And as a bonus, the law related to benami dealings in land has also got amended. The "poor people" of KL have things to worry, indeed.

Quote:
The sellers will ask you to deposit the money in the cooperative banks though.
You have then explained why the cooperative banks in KL are now in deep mess. These banks were nothing but hawala money laundering outfits disguised as a bank. Today they went on a strike. Nothing changed. Tomorrow I hear the exchange money without account champions in Kerala may find having a small mark on their fingers.

I have not even mentioned about the security related aspects of having a black money economy. Hope you know the recent incidents in the state on that count.
sachinpk is offline   Reply With Quote
Old 16th November 2016, 22:21   #839
BHPian
 
heavenlybull's Avatar
 
Join Date: Aug 2014
Location: Delhi
Posts: 118
Thanked: 105 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by Sawyer View Post

I will take a shot at it, and guess 100 million. How do 100 million, most of whom will be in villages across the length and breadth of the country, now manage? I agree than many of these may not have a 500 rupee note in their homes, but many will?
To repeat what everyone already knows, get Rs 4500 in exchange at any bank, post office for people with no bank accounts. Or get a bank account now and then deposit.

I have relatives in remote villages in Uttrakhand and at least one family member has a bank account in the nearest town. I don't think situation is so bleak in villages anymore.
heavenlybull is offline   Reply With Quote
Old 16th November 2016, 23:28   #840
Senior - BHPian
 
Join Date: Jun 2014
Location: Bangalore
Posts: 1,106
Thanked: 645 Times
Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by heavenlybull View Post
I have relatives in remote villages in Uttrakhand and at least one family member has a bank account in the nearest town. I don't think situation is so bleak in villages anymore.
Before I catch some sleep. The "poor people with no bank accounts" is just a sob story used to paint a different picture. There could be people like that but their numbers may not be high and they also would not have so much income.

This sob story is played out by the rich black money holders , as they really have no solid explanation for the money they have today. An honest man how ever rich has nothing to worry.
sachinpk is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Government likely to award 21 highway projects for Rs. 28,000 crore & 1,500 kms S2!!! Street Experiences 1 22nd December 2015 20:05
Fake Currency Notes - How do you tell the difference? kedarwalke Shifting gears 24 11th July 2012 17:22
Know your pace notes Tom Indian Motorsport 15 14th June 2004 20:09
Journey Notes - Bangalore- Cochin in a Vtec ajmat The Indian Car Scene 13 16th April 2004 20:29


All times are GMT +5.5. The time now is 23:09.

Copyright ©2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks