Team-BHP - Government scraps Rs 500 and Rs 1000 notes!

Finally some genuine relief to the poor and honest who have been growing extremely cynical of the system and almost accepted that law can't touch the "corrupt rich". The beauty of this decision is that it affects everyone across the board and that too proportional to the amount of cash they are hoarding irrespective of 'clout and influence'. Most of the anti-corruption measures so far were catching small-time bureaucrats and business people. People are happy to deal with the inconvenience because this is the first time a common man is feeling a sense of justice.

I think introducing new large bills is a dumb idea and makes people suspect the cash economy will resume again.

Next move should be to make property and gold transactions to be fully digital and transparent before cash hoarding picks up again. And since real-estate is a state subject, it is a great opportunity for some regional leadership to earn massive goodwill of people.

Of course, it is another challenge to catch the really sophisticated people who cheat the system from within but that will be an on-going cat and mouse chase. First order of the business is to get everybody into the system by tightening cash, RE and gold.

Quote:

Originally Posted by Gannu_1 (Post 4089931)

Looks like the plan is working. :p

Business Insider

I was saddened to hear this. If this was legal tender, then that amount is lost from circulation and it will be some time before RBI gets this back into the economy.

Other alternatives:
1) Donate anonymously to a temple or other religious centers, who use it for public good (like providing food).

2) Select a poor school, leave a bag of note bundles. Every kid gets 1 bundle (100 notes). It is a great incentive for the parents to open a bank account in child's name and deposit these notes. For tax purpose, parents can claim as gift or donation for child's education (not sure of the IT rules).

- any other, please add -

Yesterday, I picked up medicines worth Rs 1,600/- for my mother and filled up Rs 1,500/- worth of petrol in my Hyundai Creta. No problems in passing old 500-rupee notes at either place.

Today morning at 10:30 AM, I visited my SBI branch to deposit the older notes we had at home. The queue already present there stretched to outside the branch premises, across the road and into a building complex on the opposite side of the branch!

Moments like these make us feel really thankful for having good contacts, friends and relatives in the banks. Deposited our older notes in my account and came out with 20 notes of the new Rs 500 (the maximum withdrawal allowed in a day is Rs 10,000) within 15 minutes and drove back home.

I was told that the all-new Rs 2,000 notes will arrive by helicopter in the afternoon today. As such, I can pick them up tomorrow.

^^^While many are questioning the re introduction of 500 and inducting the new 2000 denomination, given the rupee no longer goes as far as it used to, it will be difficult to make do with Rs 100 as the highest denomination. However what it does is it 'resets' the paper currencies in circulation by weeding out the fakes which undermine our economy and national security and dealing a body blow to those who have been hoarding unaccounted money. It also sends out a strong message to these crooks that if it happened once it can happen again. So while even the series can be counterfeited and hoarded, the vicious cycle has been disrupted.

Many are arguing that most of tax evading crooks hoard not cash but gold, real estate etc. While that may be true in many individual cases and to a certain extent, many 'institutions' who accept 'donations' without receipts are bound to have paper currencies lying around. In addition to debating what is finally netted by this exercise, the psychological message of this move cannot be ignored.

While inconvenience is greatest for those who live in the fringes of the economy and are not liquid enough to tide over even a couple of days when the economy is disrupted, the ones who are better off don't help things by panicking and queuing up at ATMs and petrol pumps just so they can rid themselves off the old notes. The message was clear, there would be ample time to deposit/exchange the old currency for the next couple of months. We are literate and aware enough to complain about corruption but grimace at the slightest inconvenience.

Agreed that many farmers hold cash and do not have bank accounts; this is a good opportunity for them to become a part of the banking system by depositing the cash which in any case is exempt from tax since its agricultural income. Small traders in villages, even if they under/dont report their income, are unlikely to have huge cash hordes which will invite IT scrutiny. The bigger evaders, who apart from cheating the economy, are also responsible in exploiting farmers and stunting the improvement of the farm supply chain should feel nervous and rightly so. This move is precisely to strike fear into the heart of crooks like these.

There are few things about this move which is now crystal clear

1. This was done to cripple the FICN (Fake Indian Currency note) economy in Pakistan, it costs approximately 39 rupees per 1000 Rupee note and is sold for around 350-400 across illegal channels, ISI earns around 500 crores through this channel and is directly used to fund terror in India (source Major Gaurav Arya's Facebook Page).

2. Elections in Punjab and Uttar Pradesh require huge money stacks to be conducted and each voter is paid over 1500 RS to vote in their favor. For this reason money was stacked for over 6 months now and those huge stock piles are now, worth in their value as paper, this was the single largest blow

3. This move affects black money hoarders and Hawala channels, their entire stock pile is rendered useless overnight.

4. Reduce curruption

Now the my take on the above points:

1. Pakistan does this on a very large scale and it does that through the full support of the state machinery, so I personally feel it might take them months if not days to counterfeit the new currency of high denomination, Hence continuing their endeavors of funding terror.

2. Elections in Punjab and UP have been fought like this for decades now, so people expect them to pay, maybe once they come into power(though the likelihood of that happening is critically nil) however I don't feel the elections would be completely fair as this massive move would have been expected to do.

3. Black Money hoarders definitely have most of it converted into other means and liquid cash is not the major chunk of their hoard, I know many money lenders who have foreseen such a move and were not lending money to anyone for a while now. Most of their investments are sitting safe in bank lockers as gold and other assets, until government starts cracking down the lockers I feel the government has not even succeeded catching the tail of the huge elephant in the room. Hawala channels would definitely find better ways so government needs to be very proactive in their approach to ensure these low lifes don't pickup the pieces and start form where they left.

4. This is a very ambitious move to eliminate corruption, corrupt people are smart they would now ask for things like gold maybe watches, I remember in the year 2000 principals of eminent schools asking parents to get them cars in return of getting their children admitted in schools, the trend would continue.

Now how did the common man get effected, I will site a few examples.

One of my team member is getting engaged this weekend, he had given 2 gold rings to be made for his engagement, which he cannot pay with the cash he has now, I understand he can deposit the money into his account and swipe his card at the jewelers, but there are other expenses like hiring taxis and paying caterers which he wont be able to do with a cheque if they decline it.

Another team members mother is battling cancer, they sold some gold in the tune of 3 lacs and kept the cash ready towards medicines and treatment cost, which they have to put in the bank. This was an inconvenience which was totally uncalled for.

My father passed away on the 2nd and I couldn't even imagine conducting his last rites in the present situation, at least I feel he was lucky that people performing his last rites were happy that they got paid in cash instead of cheque or IOU. I was also able to settle his entire hospital bills in cash which would have been a great challenge now(private hospitals are no longer accepting cash)

People who are praising the government for its historic move don't understand how unprepared the government itself was.

pramod

Quote:

Originally Posted by RavenAvi (Post 4090116)

This is also a form of corruption - using your contacts to get services on priority, by bypassing the norms. You just increased the time people standing in queues would have to spend standing there.

Quote:

Originally Posted by kmadhok (Post 4090163)

Redesigned Rs 1000 notes t be released in a few months.

http://www.ndtv.com/india-news/rs-1-...rnment-1623668

With this announcement, it clears the intention of GOI for demonetization. This exercise's sole purpose was to put an end to fake currency and its source. Those talking about check on black money was kind of a side effect from this exercise and not the sole intention of it.

I rightly welcome this move, especially the abrupt disruption of currency unlike advance notice given to all for incoming new currency. I think 1000 denomination seems to be an after thought after certain surveys and suggestions from various strata of society in last 2 days. In my opinion, end to 1000 and 2000 would force people to deal more in cashless. Few months down the line everyone will be back to square one dealing in cash transactions.

How many more years is it going to take by traders(retailers and wholesalers both, even local restaurants) to move towards cashless transactions? If I see changes on ground level especially among these people, then only we can say this has really bought an expected change.

Just my 2 cents.