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Old 24th November 2016, 20:07   #1291
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by ravradha View Post
Going by present projections the money which is expected to be deposited is not more than 60% of free float.
There would be some black that cannot be deposited due to various reasons, one of them would be loss of 'reputation'. Hence these moneys not coming in is actually a fillip for the RBI (and the Government). It was earlier estimated that 25-30% would be 'lost' thus.
Why do you consider this as an issue?
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Old 24th November 2016, 20:23   #1292
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No more exchange of old 500 and 1000 rupees notes

http://m.economictimes.com/news/econ...paign=ETFBMain
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Old 24th November 2016, 20:24   #1293
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by alpha1 View Post
1. The new currency can only be released by Banks.
Okay, so the people who have hoarded money (got through illegal means) would just then walk into the bank and ask for the new currency note, in exchange of the old.
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2. The new currency can always be governed to be released against an account in the Bank.
The next excuse would be that every one in India (who deals with money) does not have a bank account. And that asking every one to open an account is a big big crime.
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3. The new currency's path can be traced and transactions accounted for if everyone keep their books clean and declared.
How do you propose for this currency's path to be traced? We are in this mess (of black money) because there were lots of people who did NOT want to see any proper accounting of their money. And those people include your friendly neighbourhood realtor, super market owners & all the way to terrorists and money counterfeiters.

I am sorry sir, but you have not thought through the scenarios which the government is facing.
1. For people who did not have an account, the government allowed them to exchange the "Cash At hand" with just an ID proof. People misused it. Then govt. said they would mark people.
2. Then the government even today is willing to accept any much money into an account, even in older notes. No body wants to utilise that.
3. Government allowed people to with draw Rs.24,000 in a week by using a "self" cheque or withdrawal slip. No people had to queue up at the ATMs.

This may not be the best of all schemes; but considering all aspects (including secrecy, and surprise) this would be only one way to do it. Any other way, the smart black money hoarders would have figured out a way to do money laundering.
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Old 24th November 2016, 20:44   #1294
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by JLS View Post
Then why this colavari di sir?
Why should we look for any other way for implementing this scheme?
Because, Sir, the words that everyone, from GOI down, is using and hearing - without any skepticism of what is said or investigation into the exact legal implication of withdrawing legal tender status of a currency note - is Banned and Scrapped - see even the title of this thread, for example.

Banned is conveying the meaning that what I and many are doing just now is illegal; scrapped is conveying the meaning that the notes are now like a total loss car, not fit to be driven on the road, even if legal.

Anyone doing what I am doing is doing this in spite of the free and liberal use of these words. Knowing that no matter what language may be used by anyone, even GOI, doing so is not illegal under any existing law on the Indian statute books. The words of GOI in a gazette are just that; words. The gazette is only the official voice of GOI, it does not automatically mean all that is in the gazette is legal. Or, relevant to this case, that all that the Gazette implies is not legal is illegal. For something to be illegal, it has to go against a law passed by Parliament, or a rule under a law, or an ordinance signed by the President of India in cases of national emergencies. On its own, the Gazette cannot make any action illegal, or imply it to be so as it has done in this case.

But by its actions and words, GOI has prevented the large scale implementation of this scheme, and understandably so. It need not have done so, with some application of mind on part of GOI, is the point I made in my post. And by doing that, saving a lot of honest citizens from a lot of pain and dislocation.

Last edited by Sawyer : 24th November 2016 at 20:51.
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Old 24th November 2016, 20:53   #1295
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
...But by its actions and words, GOI has prevented the large scale implementation of this scheme. It need not have done so, with some application of mind on part of GOI, is the point I made in my post. And by doing that, saving a lot of honest citizens from a lot of pain and dislocation.
So, can I say that by smart interpretation of GOI's directive you are not facing any difficulties - by smart interpretation I mean that 500/1000 notes in restriction less circulation till 31st Dec.

Others, who are not so smart and are deceived by government announcements -( post 8th Nov, 500/1000 notes usage is to be restricted only for public hospitals, petrol pumps, toll booths etc - ) are being in convinced.

So, is the moot point that government is deceiving people by saying notes are banned from 8th Nov, while actual ban will be implemented only from Dec 31st?
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Old 24th November 2016, 21:00   #1296
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by JLS View Post
So, is the moot point that government is deceiving people by saying notes are banned from 8th Nov, while actual ban will be implemented only from Dec 31st?
I am not going to comment on what the GOI motives are, who am I to accuse it of deception?
But again, there is no legal bar on using them even after Dec 31, IF you can find someone to accept them voluntarily. My vegetable vendor won't, for one simple reason - he can no longer deposit it in his bank. For the same reason, neither will I.
And further to my earlier argument see this notification from just now:

After midnight tonight, till December 15, you can still use old 500 rupee notes at:
Payment at toll plazas and petrol pumps.
Payment of school fees up to Rs. 2,000 per student in central government, state government, municipality and local body schools.
Payment of fees in central or state government colleges.
Payments towards pre-paid mobile top-up to a limit of Rs. 500 per top-up.
Purchases at consumer cooperative stores operated under authorisation of central or state governments with identity proof (Safal, Mother Dairy) up to Rs. 5,000 at a time.
Purchases at milk booths under central or state governments.
Payment of current and arrear dues to utilities will be limited to only water and electricity.
Payments in government hospitals for medical treatment.
Use in all pharmacies for buying medicines with doctor's prescription.
At railway ticketing counters, bus ticket counters of government or public sector undertakings and airline counters at airports for purchase of tickets.
Payments at crematoria and burial grounds.
Use at international airports for arriving and departing passengers up to Rs. 5,000.
Purchase of LPG gas cylinders.
Payments towards on-board catering during travel by rail.
Purchase of tickets for suburban and metro rail travel.
Purchase of entry tickets monument maintained by the Archaeological Survey of India.
Payments towards fees, charges, taxes or penalties, payable to central or state governments including municipal and local bodies.
Payments towards utility charges including water and electricity, but no advance payments.
Payments towards court fees.
Payments towards purchase of seeds from designated state-run outlets.

More and more adhoc relaxations of the "ban". How are people to keep track of all this, and where it is allowed and for how long?
It is a complete and unmitigated shambles.

Last edited by Sawyer : 24th November 2016 at 21:02.
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Old 24th November 2016, 21:03   #1297
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by earthian View Post
.... It was earlier estimated that 25-30% would be 'lost' ..
Why do you consider this as an issue?
The good for government- Reduction in liability and therefore increase in assets and ultimately can be converted to benefits at appropriate time...

The bad for government- for the people by the people ...and people will be penalised to the extent of 5 to 10 % of GDP for not hoarding black money. Real hoarders will recoup the looses quickly and probably continue what they were good at. The huge middle class of india will foot the bill for the bounty the government will reap and which will flow into the in-favour lobbyist.
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Old 24th November 2016, 21:04   #1298
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
I have answered this in the dim history of this very long thread, but let me take another shot at this; not perfect, but from my real experience of not being inconvenienced any way - and not because I had some one else standing in queues for me.

I live in a housing complex

[content shortened]

not to anyone else.

In summary that means: the 500/1000 papers should have been allowed to run after the monolith announcement, but allowing all provisions for swap/deposit. With the same time lines and limits. Would that have actually worked? People would have flooded the markets with cash, rather than depositing and/or exchanging?
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Old 24th November 2016, 21:08   #1299
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by JLS View Post
despite this sudden withdrawal of old currency notes, all honest income-tax paying junta is carrying on their day to day business.

Then why this colavari di sir?
That's not a correct generalization. I belong to one of the honest tax paying junta class and if I hadn't had the good fortune of finding an ATM that was dispensing 100rs notes on Nov 13th, I would have been stuck with no 100rs notes to pay for meals in the past week. No hotel or darshini will accept 2000rs notes and give change for a meal that costs 100rs or less. If the situation doesn't improve in the coming few days, then I will be forced to eat at some fancy restaurant which accepts cards. Guess this option works for me, but will it work for everyone ?

Nobody in the environment where I live and work, is accepting the banned notes now. The last person I gave the banned notes to, was a doctor on Nov 12th and he accepted it because I showed him my wallet to prove that I didn't have any other denomination notes to pay him.

A close friend's relative got married and they were able to pull it off because they did it in a small town where people know each other and dont mind giving things on credit, so the caterers, decorators, kalyan mantap owners were not too pushy about payment being made immediately. Not everyone is equally lucky with finding a good support system.

I asked around if any of my colleagues/friends are facing the same issue and the most common answer I get is that their parents or relatives gave them a little cash to get by, or somebody else stood in the ATM/bank queue for them and got them a little cash, so they aren't really feeling too much pain. But for how long this will hold out is a question nobody can answer I guess.
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Old 24th November 2016, 21:15   #1300
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by asingh1977 View Post
In summary that means: the 500/1000 papers should have been allowed to run after the monolith announcement, but allowing all provisions for swap/deposit. With the same time lines and limits. Would that have actually worked? People would have flooded the markets with cash, rather than depositing and/or exchanging?
Would a temporary deluge have been better than a temporary crunch as it stands now?

Either way the currency would've been invalid after a given date, and deposits would be tightly controlled under the notified measures. Giving out the 'perception' of immediate illegality wasn't really necessary to achieve the end goal, and yes, there's a sizable chunk of our population that takes announcements at face value, and the widespread panic of the last few days is testimony to that.

Legality is defined by law not by ad-hoc advertisements, which is pretty much what the gazetted announcement ultimately amounts to from a legal perspective. The govt. could've ensured a lot less pain for the common public by letting people freely transact with the older currency (probably with a limited set of known exceptions with high possibility of laundering) upto the notified date, and as long as people knew/understood they'll have to deposit such currency for it to retain validity in monetary terms, it would've worked out far better than it has.

Last edited by Chetan_Rao : 24th November 2016 at 21:25.
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Old 24th November 2016, 21:18   #1301
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by asingh1977 View Post
In summary that means: the 500/1000 papers should have been allowed to run after the monolith announcement, but allowing all provisions for swap/deposit. With the same time lines and limits. Would that have actually worked? People would have flooded the markets with cash, rather than depositing and/or exchanging?
It needs study to see how to do this so that black money discovery is not compromised more than a minimum necessary to give people relief from today's chaos. The GOI has people that could have done this study.

My response that is therefore of limited quality, as a basis on which this could have been done.

I would have allowed the use of these notes for everything but for a list that would include all the known type of receivers on whom black money can be offloaded, the Rs 2.5 lakh rule would apply, and also the requirement to collect PAN of all buyers that gave them the old notes.

For all other receivers of the old notes, the 2.5 lakhs limit, and need to tally deposits with their IT returns would still apply, but no need to collect PAN numbers of customers.

Just a rough sketch I did in 15 minutes thinking, remember that before taking potshots. The idea is to just explain that a better way would have been possible if there was interest in looking after the honest citizen.

Even our justice system follows the principle of innocent till proven guilty. And that in turn is based on an old belief in countries that adopt this approach: Better than 9 guilty people go free than that one innocent person is sent to jail.
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Old 24th November 2016, 22:00   #1302
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

To all the above add the following factors:
1. Black wealth held in the form of paper money is estimated to be only 6% of total black wealth
2. No visible progress has been made in getting back even one rupee of black wealth stashed abroad, that I am pretty sure is much larger than this 6%, and the obtaining of which will cause zero inconvenience to every Indian not having this wealth
3. The fact that so many people, even some from the ruling party, have said that the first step in all this HAS to be tax reform, to drastically reduce the motive for dishonesty in tax payers - to be done via BTT or any other mode
leaves one flabbergasted at the widespread support in the educated elite for this step.

I can understand the poor supporting it for a while labouring under the delusion that even if they are suffering, at least finally the rich are getting their just deserts - which is not really the case as seen from 1 and 2 above - but the educated elite? What is their excuse?

Oops, sorry Mods, please merge if appropriate.

Last edited by Sawyer : 24th November 2016 at 22:02.
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Old 24th November 2016, 22:44   #1303
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
but the educated elite? What is their excuse?
I think it's because they believe this is just one of the many reforms to follow.

I seriously hope for the same, otherwise this exercise will be one of the costliest experiment or artificial calamity (which ever you fancy) that has been carried out on the Indian public.

I understood the politicians logic, in order to unite the masses, you need a common enemy to fight with or pretend that you are fighting with one. This is so natural for us, maybe this trait was necessary for our survival, if we consider evolution.
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Old 24th November 2016, 22:52   #1304
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
To all the above add the following factors:
1. Black wealth held in the form of paper money is estimated to be only 6% of total black wealth
This 6% number was mentioned in one article, and it is taken as gospel truth by others. How did they arrive at this number? Based on income tax raids on companies and individuals.

But black money in cash is held by companies and individuals that have never been subjected to income tax raids too. Like politicians, local goons, small time real estate entrepreneurs, small to medium sized retail businesses, small time miners etc
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Old 24th November 2016, 23:24   #1305
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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This 6% number was mentioned in one article, and it is taken as gospel truth by others. How did they arrive at this number? Based on income tax raids on companies and individuals.
Yes, based on income tax raid done over years.

Government scraps Rs 500 and Rs 1000 notes!-screen-shot-20161117-12.53.58-am.png

Source: Black money, white paper 2012, Ministry of Finance
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