[Sree73]

Originally Posted by ottocycle

I read the news that Govt is going have a 60% one time penalty now to make the cash white. Let's see how many opt for the same.

That is just one side of strory. The rest 40% will be kept with government for 4 years. The individual cannot use it for full 4 years and at the end of it, he will get back the principal. No interest for the 40% remaining amount in 4 years.

[Sawyer]

Originally Posted by joslicx

NITI Ayog member Bibek Debroy's take on de-monetization

Its a very good article. The author is a top economist and policy guy. It is a good read.

I read it; and here is the thing about economists - for every Debroy, there is an Amartya Sen or a Raghuram Rajan.

On the entire subject, the first lesson from my distant past in Eco 101, where the first Economics taught was Micro Economics, was : "Economics is based on the assumption that Man is a rational being". Little did I understand then what a corner stone of economic theory this is; take that away and all theories flounder. And when you move to Macro Economics, things become even more tenuous.

Macro Economic outcomes are somewhat like weather systems; very difficult to forecast except for the very near future or in very general terms. There is also a large element of chaos theory at work, where significant outcomes take place caused by very small initial conditions that cannot be measured or distinguished precisely enough to correctly predict the outcomes. And this, in the case, of weather systems, with little intervention of human irrationality in the forecast period - the weather is MORE predictable.

It is therefore no surprise to me to see the headless chicken responses of GOI to what has been let loose by it, in its infinite wisdom. But of course, to the faithful, this is an admirable "flexibility in response"; we have learnt all the military jargon, that is the only takeaway from the ethos of the Armed forces that is convenient to armchair patriots. Civic sense/discipline, as in observance of traffic rules and courtesies? Forget it, I see no change in the last two weeks, regardless of what kind of sticker the car may carry. Rant over.

Back to economics; the aforesaid is why usually it is better to go with a wise economist than a brilliant one. The wise ones know they there is a lot they don't know, and almost always only recommend "a tweak, see the response, tweak again" iterative approach like evolution. The brilliant ones draw clever demand supply curves on the back of table napkins and recommend big bang revolutions from ivory towers that are well insulated from any bad consequences.

Politicians choose the ones that suit their objectives.

The other interesting thing to note is that every analyst is saying, short term pain, long term gain. Every one is being careful enough to not define precisely the duration of these terms. The one thing all agree on is what Keynes, the well known macro economist, famously said: "In the long term, we are all dead".

On the other hand, the Indian Titanic, even with ice bergs reported in its path, does exactly what the white bearded Captain Edward Smith did on the last evening the Titanic ever witnessed: Ring full steam ahead, I want the Atlantic crossing speed record, damn all icebergs, I am the Captain of an unsinkable ship.

Every cautious passenger would do well to know where the exits are, and where the lifeboats are located. Just in case.

This thread has become a torus, and this will be my last post here. For just that reason do I hear ?!

[AbhiJ]

Originally Posted by gmhossain

If 8 crores Jan Dhan accounts have received Rs 50000 each then the total deposit would be = 400000 crore = 4 lakh crores AND NOT 21000 crores!

That figure is rising everyday.

The speed at which the figures are rising, come 30.12.2016, the final figure might be close to the 4 lac crore you stated.

That said I think the Government is just using this as scare tactics, to deter the Jan Dhan account holder to take part in the money laundering for fat cats. I am not sure that what the tax man can do legally, I am pretty sure they will not prosecute or question 8 crore account holders!

[sgiitk]

Originally Posted by AbhiJ

That figure is rising everyday.

The speed at which the figures are rising, come 30.12.2016, the final figure might be close to the 4 lac crore you stated.

That said I think the Government is just using this as scare tactics, to deter the Jan Dhan account holder to take part in the money laundering for fat cats. I am not sure that what the tax man can do legally, I am pretty sure they will not prosecute or question 8 crore account holders!

There is an element of scare tactics here, to deter the use of JanDhan. What I fail to understand that if there are more than 25 crore JanDhan accounts in a population of 125 crores, and the average family size is five, then how come 80% of the people have no access to a bank account. JanDhan is supposed to be one per family.

But remember any accounts without KYC (as JanDhan are) is limited to under 50,000. This has not changed. So as I can see it the Govt will try and catch the original source by quizzing the actual account holder. The depositor will say, I have never seen this chap earlier. This will be fun to watch.

[msdivy]

Originally Posted by carwatcher

Some are even complaining that the loss to the economy due to relief in Toll-tax is huge.

NHAI collects around 1000 crores per month. Estimated fake currency in circulation is 400 crores. NHAI collected 400 crores in 11 days ! Loss from nontoll collection is more than the fake currency in circulation.

Originally Posted by ottocycle

I read the news that Govt is going have a 60% one time penalty now to make the cash white. Let's see how many opt for the same.

One more amnesty scheme? The earlier one was 45%, now with 65%? If people don't give their old note cash, won't it go in Govt book as black money? This amount would be revenue to Govt, which they can use for public welfare. Or is Govt giving up on black money recovery via demonetization effort?

Originally Posted by Sree73

That is just one side of strory. The rest 40% will be kept with government for 4 years. The individual cannot use it for full 4 years and at the end of it, he will get back the principal. No interest for the 40% remaining amount in 4 years.

Why would anyone go for this?

Originally Posted by sgiitk

What I fail to understand that if there are more than 25 crore JanDhan accounts in a population of 125 crores, and the average family size is five, then how come 80% of the people have no access to a bank account. JanDhan is supposed to be one per family.

JanDhan is zero-balance & has other attractive features. So those already with bank accounts, have chosen to get one Jan Dhan account for themselves.

[sgiitk]

Originally Posted by msdivy

JanDhan is zero-balance & has other attractive features. So those already with bank accounts, have chosen to get one Jan Dhan account for themselves.

5x 25 crores is 125 crores, which is the population of India. So the drop outs from JanDhan must be far below the 80% claimed. More like 20% at best.

[nkghai]

With all the money deposited, banks are flush with cash and first step is to reduce the fd rates. Just got this on whats app that SBI has reduced the fd rates to 4.25 %

SBI DOMESTIC TERM DEPOSITS 24-11-2016.pdf

Hope the Lending rates also come down proportionately.

[msdivy]

Originally Posted by nkghai

With all the money deposited, banks are flush with cash and first step is to reduce the fd rates. Just got this on whats app that SBI has reduced the fd rates to 4.25 %

Attachment 1579122

Hope the Lending rates also come down proportionately.

The money SBI has in its vault is forced deposits from its customers. After Dec 30, what if the customers withdraw their money? They may have to revise the rates again.

[sdp1975]

I was watching an interview by Arundhati Roy , chief of SBI , a few days ago. She said that although deposits had increased , withdrawals had also increased post demonetization. She was expecting around 10-15% of the deposits to stay in the banking system, which would have some effect on interest rates.

It's unlikely the banks will bring down loan rates in the same proportion as deposit rates. They will use it to improve their balance sheets, just like the govt. is using low oil prices to improve theirs instead of passing the benefit to the end users.

[aaggoswami]

There is a clear bifurcation on views and now, at this point of time, I think that this demonetization is not a an activity to bring out a radical change in India. My views might seem a bit out of the world.
Pathetic, ridiculous execution. So many changes now and then indicate the government had no foresight on likely outcomes or they ignored anything and everything.

1) Why no crackdown on corruption in government ?

2) Is there any guarantee or likelihood that black money, in any form, wont be piled up again ?

3) What about those who accumulated the black money, invested in Real Estate and gold, and now are living happily ? How to tackle that in retrospect ? If tax can be demanded retrospectively, why not nab those who have safely made huge assets in one form or other ?

These questions might seem a bit odd, but to be honest, without these, there is no point on just imposing a ban and then not delivering in crunching times which are direct consequences of ban.

Came across this : http://www.outlookindia.com/magazine...s-shock/298161

Quote from above link :

However, none of the political parties is willing to subject itself to the requirement of transparency *under the RTI Act. Both the Congress and the BJP have wantonly violated the Foreign Contributions Regulation Act (FCRA), but are unwilling to face prosecution under that Act, despite a court directive to that effect. The NDA government has gone one step backwards and retrospectively amended the FCRA to permit political parties to accept donations from foreign companies, knowing well that such a step will compromise the national interest.

Dont know how true it is. But surely there is some logic in the article.

Since last 3 days, almost all ATM's I visit are out of money. Anytime, be it morning, afternoon, evening or even night @ 1 AM. And where ATM works, its a long queue. Banks are also not having cash, running short. Any government has a propensity to take honest tax payers for granted. Honestly, honesty hurts in India.

This demonetization move is as good as "De-regulated" fuel prices where we are paying way too much tax and prices are just opposite of de-regulated.
Example of Titanic cited by another member here a few posts prior to this is quite apt for the nation. Standing in those ATM queues, I am more irritated by people whose logical ability have frozen and have suddenly become way too much loyal to India and disciples of Leader. My WhatsApp is flooded with messages claiming Ram Rajya being created ( understandably honesty = Vanvas ) by a Leader.

FDI rate cut was a shock. I am sure they wont increase it again. This govt. seems to have an eagle eye on taxing PF again (which was later withdrawn after this year's budget), and sometime during the opposition on move to tax PF again, some VIP mentioned that India's tax rate is lower than international standards. So their target is clear : increase tax to international level and bring down FD/saving's interest rates to international level. They are ignoring social security net and other factors, both tangible and non-tangible ones.

Lets brace for higher inconvenience and higher taxes too.

[sgiitk]

@sdp1975; naturally some of the deposited money will be drawn out. A lot of it is legitimate, so people are restoring their liquidity. However, one can take it that the output will be far smaller, say a maximum of about 30-40% of the input. Why are interest rates dropping? The banks are flush with money so will naturally pay lower interests on deposits. Borrowing rates will also follow suite, with rate cuts.

[Nissan1180]

I spoke to a friend who has an uncle who is a very important BJP MP. Thus, what he says may be biased.
He said that the demonetization scheme would achieve the following:
1. Kill black money in real estate.
2. Prevent terror financing schemes in our neighboring countries.
3. Help banks get recapitalized.
4. Infuse fear into the minds of people who make transactions in cash.

I think the aims are great.
I think the execution is (as has been typical of this Government) more style than substance.

My friend still goes out every night and spends 2 hours in front of the ATM in Kolkata.
My mom still has to spend a hour in Ahmedabad everyday to withdraw cash that she rarely gets. She's a teacher-no chance of earning black money.
My dad has to waste his time after office in an ATM queue.
I'm spared of these ordeals because I'm outside the country. The person I spoke of in the beginning is in the US so he's spared of it too-maybe that's why he thinks it is a great decision by the government.
The person who helps mom do the housework has stopped travelling by bus- she cycles 10 km everyday because she has no cash (because her employers-middle class people like us- have no cash to give her and pay her in Rs. 2000 notes which she cannot get change for while buying a Rs. 10 ticket on a bus) . Unfortunately, buses, kirana stores and stalls selling firewood used by the poor for cooking don't use Paytm yet. .

This implementation was the worst example of how bad our leaders are. 100 + crore people bore the brunt for the wealth amassed by perhaps a few hundred thousand people.
Meanwhile, a friend's dad bought a flat recently and the builder wanted 20% of the amount in black-he was willing to accept only new notes which added to his misery.
The people who're bad will be bad and the government won't stop them-because they sponsor rallies.
The people who're good will be fooled into believing that they have contributed to the country's benefit. Some might believe the lie some (like me) won't.

If you're really serious about black money, make political parties come under the RTI. Make real estate transactions 100% white. Make your own MLA's believe in white money.

[concorde24]

Originally Posted by Nissan1180

My friend still goes out every night and spends 2 hours in front of the ATM in Kolkata.
My mom still has to spend a hour in Ahmedabad everyday to withdraw cash that she rarely gets. She's a teacher-no chance of earning black money.
My dad has to waste his time after office in an ATM queue.
.

Suggestion: Instead of searching for an ATM, ask your parents/friends to visit branch. Crowd has definitely reduced after stopping the cash exchange and you can withdraw upto Rs.24,000 per week. If you are lucky you can choose lower denominations and you don't need to queue up infront of ATM again. My bank has given me Denominations of 10 (x200=Rs.2000) and 20 (x200=Rs.4000) and rest in Rs. 2000 notes. I have not used the 2000 note till now but 10, 20 notes are very useful for sabzi/travel.

[swiftnfurious]

Originally Posted by Nissan1180

...My mom still has to spend a hour in Ahmedabad everyday to withdraw cash that she rarely gets. She's a teacher-no chance of earning black money.
My dad has to waste his time after office in an ATM queue...

Am quite surprised at this statement. Please see below on getting cash from the branch. Since both your parents are well educated, this seems absurd. Also, please suggest them to start going the online way. We, here in Mumbai are big time users of online grocery stores and they delivery very good stuff 99% of the times.

There is no point in struggling in the queue and then giving out all the cash and going to the queue again. Time to think of alternatives to save time & paper cash. Am sure your maid / servant will have bank accounts too, please start transacting cash to their accounts (that's what we do). Your parents may also order the groceries for them (along with your parents' order to save on shipping costs) so that they don't have to deal with spending cash on a daily basis; such things will save a lot of time for all involved in the chain.

Originally Posted by concorde24

Suggestion: Instead of searching for an ATM, ask your parents/friends to visit branch. Crowd has definitely reduced after stopping the cash exchange and you can withdraw upto Rs.24,000 per week...

+1.

[swiftnfurious]

Keeping this as a separate post!

I'd love to see this go Live! Just hope that the activity trickles quickly to other states too and will be implemented in less than 6 months and it's quite doable unless the corrupt minded gives vague reasons not to implement this (which am sure will come up sooner than later.

Goa is likely to become the first state in India to go cashless from December 31, as people will be able to buy perishables such as fish, meat, vegetables or anything else at the press of a button on their mobile.

Source: http://www.indiatimes.com/news/india...ts-266248.html