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Old 4th September 2018, 16:39   #2641
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by mayankk View Post
Well how about this for "colored" nosing?
https://www.bloombergquint.com/opini...ban#gs.zKs70bY
You wanted to say brown, say brown. Blaming Raghuram Rajan for this debacle is a joke, to put it mildly.

ps: Andy Mukherjee is fantastic. And unbiased. He's written for a couple of decades now, for a wide variety of Indian and International newspapers, currently with Bloomberg.

https://www.linkedin.com/in/andymukherjee/
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Old 4th September 2018, 16:49   #2642
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Re: Government scraps Rs 500 and Rs 1000 notes!

No prizes for guessing why Raghuram Rajan was shown the door. He foresaw the impact of this dumbo idea and hence would have none of it, but the advocate who became FM had other plans. Of course he had to protect his chair, come what may ! Since the first PM of India is long gone and thus cannot be blamed for this, they had to pick some other scapegoat for demonetisation.

EDIT :- The wise words of Raghuram Rajan are more true now than ever - Ignoring talent and ensuring mediocrity isn't nationalism

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Old 4th September 2018, 17:33   #2643
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Re: Government scraps Rs 500 and Rs 1000 notes!

Leaving political affiliations aside, I hope all know that demonetization of a fiat currency is a extremely rare event - it's been done in a hyperinflation crisis (Yugoslavia, Germany, Zimbabwe), a country that breaks up, or a coming together like Euros replacing francs, DM's etc.



That such a executive decision was made without any such situation and the way it was implemented with no less than 200 changing rules over next 3 months, at a high cost to exchequer and waste of people's time, definitely leads to questions about the circumstances, the objectives, and the plan vs actual results.


These facts havent been shared, without which a judgement call cant be made. The only fact we came to know after 2 years of the event is that 99% of the old currency god replaced (RBI report). Petitions to the highest court, and motions in the parliament on the subject havent resulted in a government white paper on this.


Therefore the definitive statement on the a decision can only be
1. Either it was a hastily taken decision without a clear objective, or that implementation was not thought through.

2. indian government thinks of itself not as a public servant but as a ruler, and hence does not feel any need to clear the air with subjects.


Either way, it is a continuation of the tradition of arrogant disdainful leadership which was there as a colony, and maybe earlier too. Certainly not a modern nation-state with accountable governance.
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Old 5th September 2018, 12:39   #2644
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Re: Government scraps Rs 500 and Rs 1000 notes!

Two interesting articles related to DeMon. One with a critical stance, one that highlights one positive. Both ring true, based on personal experiences and what I saw going on around during that time.

https://www.livemint.com/Opinion/lV1...-tells-us.html

"When the euro was introduced in January 2002, there were long fixed windows to redeem existing national banknotes before their money status was revoked. At the end of the 10-year period, 99.15% of Italian lira and 98.77% of French francs had been returned. Remarkably, Indians managed to return 99.3% of the value demonetized in a 60-day period. The return rate is even more incredible when one considers that, unlike the European demonetizations, which allowed unlimited redemption, the Indian demonetization imposed per-person ceilings on exchanging old notes for new notes with the rest having to be deposited into a bank account."

"That 99.3% of the currency came back could mean one of three things. First, while there really was 10-40% black money in the economy, tax evaders and criminals never held this wealth in cash holdings; they were adept at laundering before demonetization through shell companies, tax havens abroad, and Swiss bank accounts. As they never held black money in cash, there was no problem in returning their old notes to the RBI through deposits."

This makes perfect sense. Gone are the days when a mattress stuffed with money or suitcases full of cash were the sign of a black money baron. With the availability of assets abroad, access to global law firms and financial consultants who know sophisticated ways to hide money, the super-black money-rich have long since taken these routes to hide their wealth.

So did the government not realize this? Or was the intent to uncover the black money held by the rest of us?

https://www.forbes.com/sites/nusbusi.../#362b3883dc3f

"...a dramatic spike in debit card usage by 84% in response to demonetization."

"The rise is especially strong for debit card holders who were considered to be infrequent users prior to demonetization. These users increased the number of transactions 400% after demonetization, whilst the value of their transactions jumped 150%."

"...levels of digital payment adoption, which were observed to increase from both suppliers and facilitators during the demonetization period, declines once cash makes a comeback in the economy, but still stays far above the initial levels prior to the demonetization."

This is exactly what happened with me. I have no black money whatsoever, no chance of it, since I have just one source of income and it gets taxed before it reaches my bank account. I still prefer withdrawing cash and spending it instead of cards. I think that's my choice and I should have that freedom if I want to. I don't think using cash legally earned is a bad thing. I too increased my debit card usage immediately after DeMon, but now I've gone back to mostly cash transactions. So what was the point?
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Old 5th September 2018, 14:09   #2645
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by am1m View Post
snip...
I still prefer withdrawing cash and spending it instead of cards. I think that's my choice and I should have that freedom if I want to. I don't think using cash legally earned is a bad thing. I too increased my debit card usage immediately after DeMon, but now I've gone back to mostly cash transactions. So what was the point?
Thanks for sharing article links - will go thru them.
Regarding your point on cash transactions, even if you are spending your legally earning cash, if it is in a big amount and if it is not recorded through accurate recording trail, you are allowing an opportunity for receiver to create unaccounted black money.
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Old 5th September 2018, 14:12   #2646
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Regarding your point on cash transactions, even if you are spending your legally earning cash, if it is in a big amount and if it is not recorded through accurate recording trail, you are allowing an opportunity for receiver to create unaccounted black money.

That is a very good point, I never thought of that, thank you!
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Old 5th September 2018, 15:24   #2647
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Re: Government scraps Rs 500 and Rs 1000 notes!

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cash makes a comeback in the economy, but still stays far above the initial levels prior to the demonetization."

This is exactly what happened with me. I have no black money whatsoever, no chance of it, since I have just one source of income and it gets taxed before it reaches my bank account. I still prefer withdrawing cash and spending it instead of cards. I think that's my choice and I should have that freedom if I want to. I don't think using cash legally earned is a bad thing. I too increased my debit card usage immediately after DeMon, but now I've gone back to mostly cash transactions. So what was the point?
This is what is known in the industry as a dead cat bounce. https://www.investopedia.com/terms/d/deadcatbounce.asp

Most if not all the chaiwalas and small grocers who made a show of installing credit card machines and paytm accounts have now gone right back to accepting cash, and only take paytm etc grudgingly due to service charges among other reasons.
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Old 5th September 2018, 15:37   #2648
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Re: Government scraps Rs 500 and Rs 1000 notes!

Sometimes I wonder whether the stories about currency being printed 'off the record' are true. All indications are that DeMo worked but over 97% of old currency is back, which does not sound right! If it was 100+% then life would have been easier.

Any other ideas.
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Old 5th September 2018, 16:58   #2649
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Re: Government scraps Rs 500 and Rs 1000 notes!

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All indications are that DeMo worked .
Enlighten us, what are these indications?

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Originally Posted by sgiitk View Post
but over 97% of old currency is back, which does not sound right! If it was 100+% then life would have been easier. .
I can't believe you are still stuck at 97%, its 99.3% now, that's what is being discussed for the last 4 pages. Money form Bhutan, Nepal, Zimbabwe and some agencies is not yet in, I am sure we might cross 100%.

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Any other ideas.
No more ideas, Thank you!

Pramod
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Old 6th September 2018, 05:43   #2650
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Re: Government scraps Rs 500 and Rs 1000 notes!

Most of us, very rarely understand the complete picture and look and a couple of measures and usually come to judgements pretty soon. Then there is also bias in decision making, we usually have made up our minds and then find evidence to support our decisions. And, we will only believe in the evidence which propagates our theory.

I am no different. I had the same thoughts like most in this nation after the JNU case, DeMO, GST. Even for deaths during DeMo, I was shrugging my shoulders and thinking, if I dig deep I am sure to find these are natural deaths rather than deaths due to queuing up.

But after about several months and a dozen articles, I started to give myself challenges as to find concrete evidence of a DeMo success rather than trusting Whatsapp forwards.
Of-course there were people who converted their ill begotten cash, but I wondered will I ever see a report where the executive would publish figures and say, hey, after this exercise we caught so many people.

Then came the facts:
(1) The govt hasn't produced a single whitepaper on DeMo
(2) No one knows if any one has been prosecuted
(3) The GDP did take a nose dive
(4) The MSME sector took a huge beating - they almost do everything in cash
(5) The jobless numbers skyrocketed
(6) Credit took a huge hit

I saw small traders first hand who were suffering because of DeMo, supporting the cause, as like most, they believed this will bring a cleaner economy and they were ready to do their part.

Now after so much time, we have to ask, was all of this for nothing? Is no one accountable for the lives lost or are those numbers false reporting? Nothing has changed on the ground. At most, some very small mom and pop stores accept digital currency, but was that even the objective?

I hope people expect more accountability from lawmakers, be it any party, and question and debate the decisions that affect us rather than accede to everything .
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Old 6th September 2018, 07:20   #2651
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Re: Government scraps Rs 500 and Rs 1000 notes!

A question for the seasoned economic geeks. What are the repercussions of printing money off the record? Keeping in mind that our government does not care for its people, even if there are repercussions for the common folk, I wonder if that is any factor for either the government or the cronies that they are typically in bed with. What are the checks and balances? Are we supposed to believe in our agencies given they can hardly operate without interference or autonomy?
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Old 6th September 2018, 08:02   #2652
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Re: Government scraps Rs 500 and Rs 1000 notes!

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What are the repercussions of printing money off the record? Keeping in mind that our government does not care for its people
Printing money without demand from the exchange market, leads to devaluing of the money you own. It devalues government's money, rich man's money, common man's money, etc. As you can see, people with more money are affected more. Any politician who tries to order printing more money will be told about this simple fact. Of course, one can escape this if their wealth is in foreign currency and other assets.
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Old 6th September 2018, 08:34   #2653
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by sgiitk View Post
Sometimes I wonder whether the stories about currency being printed 'off the record' are true. All indications are that DeMo worked but over 97% of old currency is back, which does not sound right! If it was 100+% then life would have been easier.

Any other ideas.
Can't say about off the record printing. But I think all the fake currency (prime objective of DeMo) got accepted as well as counted.
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Old 6th September 2018, 08:42   #2654
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Printing money without demand from the exchange market, leads to devaluing of the money you own. It devalues government's money, rich man's money, common man's money, etc. As you can see, people with more money are affected more. Any politician who tries to order printing more money will be told about this simple fact. Of course, one can escape this if their wealth is in foreign currency and other assets.
Well the economy 101 might say that but given the size of Indian economy, I wonder if there will be any effect if we print a few billion dollars extra. Rupee is getting devalued anyway and I wonder if the devalutation compared to the extra printed will be an exact zero sum game.
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Old 6th September 2018, 08:48   #2655
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Can't say about off the record printing. But I think all the fake currency (prime objective of DeMo) got accepted as well as counted.
For that to have any effect the new currency should have had state of the art anti counterfeiting measures.

Except for changing the colors to bright ones which allegedly match Modi's kurta colors



there are no new security features on the new notes. Never mind the so called GPS nano chip



None of the usual security printing features that have evolved in the past decade find application.

The last time a full security feature upgrade was applied to Indian currency notes was in 2005 and even then what was in place was at least a generation behind (source - my father is in the security printing business since the early 1980s, not currency notes of course but all kinds of other documents that require security features).

https://www.thehindu.com/news/nation...le16443665.ece

Last edited by hserus : 6th September 2018 at 08:51.
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