[srishiva]

Where the current exercise is failing is the people's resistance to change and people who hold black money using all the tricks to make sure they dont lose any of theirs.

I need to pay my plumber 2 lakhs for the work he will do and needless to say it needs to be cash. What is the solution ? Shouldn't we had found solution for such issues before doing something like this ?

This exercise is bringing out all the other problems that are inherent in our system. I am not sure how the current issue can be solved without actually solving other issues.

I am afraid they will find some way (and thats a hard thing in itself) to solve the current crisis without actually solving anything over time.

[anToNIcHeN]

https://mises.org/system/tdf/What%20...&type=document

Should read this!. Lengthy read though!.

[sgiitk]

@srishiva; What you are saying is that the 'Black' Economy is too entrenched. I see how you pay him 2L in cash with no liquidity. Are you aware that any payment in excess of 20k (or is it 50k) has been illegal for ages. So you knowingly entered into a black market transaction, and maybe the money you had to pay him is now worthless.

You can always deposit the 2L (or whatever) into your account and pay him in two to three weeks in cash (white to black) when liquidity returns. Of course you can give him a cheque much earlier.

[SDP]

Originally Posted by SDP

Person B has 1000Rs of invalid currency. He has possibly "helped" 10 such poor souls. So he is sitting on 10,000Rs in old notes.

What does he do with all this cash in old (now invalid) notes? Find a bigger money laundering Person C, who would charge 40% and give him 6000 in new currency?

Originally Posted by drmohitg

...
Well that is something I am also unable to figure out that how is person B managing to convert the money. Some say its by using farmers, villagers, bank accounts of multiple people and so on. I am not sure and no one will talk of course and tell what they do. But the deal is happening openly at rates varying from as low as 15% to as high as 45%. Most of the times, there is a whole chain already formed where each person is adding a fixed % as his commission and passing on the money. But yes I am clueless as to what the last person is doing with this cash.
....

Continuing with your same example (and my extension to it). Let's assume that Person B has given actual 600 Rs in new currency notes to Person A (and not a IOU note). These 600Rs are from his own pocket. So, after 10 customers, he has 6000Rs less in his fresh-notes kitty. I the person C he needs to find offers him 60% for his 10000Rs of old notes, he is just breaking even. So logically Person C would have to offer lesser commission %age for this to work ... let's say 20% instead of 40%. So as one goes up the money laundering ladder, the commission %age would keep on reducing. BUT the actual white-conversion (where all the real effort/influence would be spent) only happens at top tier. So effort/risk is high at top-tier and the compensation for the effort is low (in terms of %age). Doesn't make sense. We are missing something big.

Originally Posted by srishiva

...
I need to pay my plumber 2 lakhs for the work he will do and needless to say it needs to be cash. What is the solution ? Shouldn't we had found solution for such issues before doing something like this ?
....

I seriously hope that's an hypothetical example.

[sukhoi30]

Originally Posted by pratyush6

No one said, this would be easy, but a certain section trying to convert as much money to white (while exchanging) has made it cumbersome for everyone. A couple of my banker friends noticed this on the first two days itself, when the same people kept coming to exchange.

Absolutely! As soon as the indelible ink concept was introduced, the queues in front of banks reduced considerably. So, all this brouhaha was created by a few who were exchanging notes for others for a commission.
In my past post also I have mentioned how media has selectively reported. Many media houses have also attributed some unfortunate deaths to the demonetization scheme.

Read this analysis or rather investigation ...

http://www.opindia.com/2016/11/how-d...tunate-deaths/

My personal opinion, in India, an exercise of such mammoth proportion has been rather well handled by the general public. People have been patiently waiting in the queue to get their hands on to new valid currency. No one is rioting or large scale fighting against each other. A few skirmishes do occur as people tend to lose patience when queues are long and the objective is not achieved. But still, the entire exercise has been remarkably peaceful.

[mayankk]

Originally Posted by sukhoi30

Absolutely! As soon as the indelible ink concept was introduced, the queues in front of banks reduced considerably. So, all this brouhaha was created by a few who were exchanging notes for others for a commission.

How did you get to that conclusion? That is just not implied in any manner. Could it be, just hypothetically speaking here, that the inked people saw no point in going back again, for their own money? I mean, that would be a logical next step. But hey...

[carwatcher]

The solution to this problem was explicitly given by the Govt. that kindly help him open his bank account and transfer whatever amount you like.

If someone says that a person earning 2 Lakhs from single contract continuously needs to be outside the banking system then I would say that we seriously need to change our attitude in the same way and in such quick time we change it when we land in foreign country.

Originally Posted by srishiva

I need to pay my plumber 2 lakhs for the work he will do and needless to say it needs to be cash. What is the solution ? Shouldn't we had found solution for such issues before doing something like this ?

But what are the realistic chances that even the second scheme would be successful.

I also have thought about it and came to a conclusion that rather than such scheme the money donated by hoarders in temples, etc is better and Govt. should also put One Donation collection center in each city where anyone can 'throw' whatever money he likes without any questions asked even with face covered but with some security so that no one throws garbage, liquid, etc which may spoil the notes, so that rather than burning, throwing, etc. something meaningful can be done. Even if Govt. collects few crores, it will be worth.

Originally Posted by drmohitg

Keeping emotions side, which option is better for the country?

[sushantr5]

Originally Posted by carwatcher

I also have thought about it and came to a conclusion that rather than such scheme the money donated by hoarders in temples, etc is better and Govt. should also put One Donation collection center in each city where anyone can 'throw' whatever money he likes without any questions asked even with face covered but with some security so that no one throws garbage, liquid, etc which may spoil the notes, so that rather than burning, throwing, etc. something meaningful can be done. Even if Govt. collects few crores, it will be worth.

Well the demonetized currency if not exchanged, lets say somebody destroys it by burning or throwing into water. It automatically goes into Government coffers. RBI will print deficit money and simply give to Govt. in next three years. So Donation collection center is not required.

[JayPrashanth]

This demonetisation exercise is turning into a farce. The right hand doesn't seem to know what the left's doing. There are bribes being given in crisp 2K notes. One minister even said that it was the RBI's move, nearly absolving the government of its responsibilities. Funny that most of us are praising it. If anything, it's causing a loss in productivity everywhere, and the poor are getting hit the hardest as their coping mechanisms to massive change is the least.

The latest word: It could take up to 6 months before normalcy is restored. I'm not surprised considering that the RBI presses were initially asked to prepare for currency withdrawal on the midnight of 31st December 2016. The decision was advanced by 50 days for god knows what. Now, we're in a situation where the RBI press is unable to service demand, and the powers that be are running like headless chicken, invoking nationalism and all kinds of rubbish. What a crying shame that we have a spineless opposition. A classic case of getting caught between a rock and a hard place.

Cheers,

Jay

[TD_GHY]

Originally Posted by JayPrashanth

I'm not surprised considering that the RBI presses were initially asked to prepare for currency withdrawal on the midnight of 31st December 2016. The decision was advanced by 50 days for god knows what. Now, we're in a situation where the RBI press is unable to service demand

Jay

Could you please provide the source for the above information. Thanks.

[sukhoi30]

Originally Posted by mayankk

How did you get to that conclusion? That is just not implied in any manner. Could it be, just hypothetically speaking here, that the inked people saw no point in going back again, for their own money? I mean, that would be a logical next step. But hey...

That's how...
Did use of indelible ink reduce queues at banks? Yes, say TOI readers

[prasadee]

Originally Posted by carwatcher

The solution to this problem was explicitly given by the Govt. that kindly help him open his bank account and transfer whatever amount you like.

There are millions of poor migrant workers especially in our cities (like Mumbai and Bangalore) without solid proof of address. My parents in Bengaluru have been using the services of two such people. If you look at states like Assam and Meghalaya, they have ~5% of their population with Aadhar cards. Although they are part of the union, they are in stark contrast with rest of India with ~90% of population that have these cards.
https://en.wikipedia.org/wiki/Aadhaar

Speaking from a really small sample set of these 2 migrant workers, it has been impossible for them to get a Bank account, or a ration card for 3 years now.

People in our cities (ones in AC IT offices) will never see an issue in going cashless. They are the ones prolifically posting messages trivializing people affected by this drive. They trivialize, take sides, and start calling the people standing in the lines names. Not all of them are maids and servants trying to convert black money for their maaliks, or for a commission.

Originally Posted by sgiitk

@srishiva; What you are saying is that the 'Black' Economy is too entrenched. I see how you pay him 2L in cash with no liquidity. Are you aware that any payment in excess of 20k (or is it 50k) has been illegal for ages. So you knowingly entered into a black market transaction, and maybe the money you had to pay him is now worthless.

Wow, I did not know this figure. I shudder to think that all the big cash transactions I made as a tourist - were illegal black transactions.

[carwatcher]

Sorry for being rude but you are simply stretching the argument while shifting the goalpost in the process.

You started with the plumber earning 2 Lacs and now discussing about migrant labourers. Even if we assume for a moment that both are same, so as per you we have millions of poor migrant labourers who do work in excess of two lacs per contract then we are certainly not poor economy and must quickly move towards banking. For the sake of argument even the IT folks are migrant workers, isn't it?

Also think about it, if the so called poor migrant worker remains without access to banking, who has more chances of getting exploited him or his employer who make him sign on whatever amount he likes as paid in cash and claim that expense in his IT return and pay lower taxes to the Govt. To give you a small example from my own. I employ many migrant labourers depending on situation. At the same time I make sure I pay almost each of them via NEFT, reason, they won't spend on drinking, gambling, etc and they also feel very happy when they inform their family members to check whether the online payment has reached them or not. This I am doing since last few years.

Do you think that the Govt is so dumb as to make the payment to the lowest strata of the people who work under MNERGA scheme as labourers directly in their bank accounts ? It was done so as to stop their exploitation in the hands of their contractors.

I can clearly see from your posts that you are ignorant about tax-laws TDS etc but am sorry to say that ignorance was never allowed as excuse in the eyes of law. Also I am sincerely requesting to go through the requirements for opening a Jan Dhan account, you won't only be surprised but shocked that even without any document, such account can be opened at the discretion of the bank manager. My security guard who is from Nepal got his account opened with his photograph, employment letter from me and his ID proof from Nepal, that's it.

One thing I also have noticed that our country has almost 100 Crore mobile users, if they know how to use mobile, I am sure they will also learn how to use basic banking services (I am not referring to Net banking or Mobile banking).

One more parallel we can see that when the high end or the big foreign cars were launched in India there were skepticism that what's the use when we don't have roads but everything improved in quick time though there is massive scope for improvement.

When Nano was about to be launched, the lobbies in media started crying that soon there will be massive traffic jam and pollution because of one single factor Nano and all rest of the cars are kind of pious non-polluting divine chariots.

The biggest benefit from this whole exercise (even if it flops) which the Liberals always care for is that the IMAGE of Indian economy will improve in the eyes for foreign investors.

Originally Posted by prasadee

There are millions of poor migrant workers especially in our cities (like Mumbai and Bangalore) without solid proof of address.

[prasadee]

Originally Posted by carwatcher

Sorry for being rude but you are simply stretching the argument while shifting the goalpost in the process.

You started with the plumber earning 2 Lacs and now discussing about migrant labourers.

I am not sure what the plumber talk is about. I have not read all the posts on this thread, and I cant see the co-relation. I talked to my retired parents about a migrant worker who washes their car once a month. He had dropped by to wash the car/ask for some money in the last couple days. My parents were feeling bad for him, and I felt the same. I certainly dont know his annual income or the tax code that applies to him.

BTW, my retired parents (both graduates), do not use any mobile payments or app based payments. They may do so now, and I would be very happy about that progression.

[carwatcher]

Wasn't aware / realised that, Thanks.

Originally Posted by sushantr5

Well the demonetized currency if not exchanged, lets say somebody destroys it by burning or throwing into water. It automatically goes into Government coffers. RBI will print deficit money and simply give to Govt. in next three years. So Donation collection center is not required.

I think I goofed up by replying to you thinking about that the plumber post is made by you. Dangers of replying from the App, apologies.

At the same time, tell the migrant workers to meet some PSU bank manager after few days, he should help them out.

Originally Posted by prasadee

I am not sure what the plumber talk is about. I have not read all the posts on this thread, and I cant see the co-relation. I talked to my retired parents about a migrant worker who washes their car once a month. He had dropped by to wash the car/ask for some money in the last couple days. My parents were feeling bad for him, and I felt the same. I certainly dont know his annual income or the tax code that applies to him.