[sukhoi30]

Originally Posted by blacksport

The fact that a fuel surcharge was there for years is no consolation if I am being coerced to use the card now. In fact a surcharge is there at all points of sale, but the merchant is made to foot the bill which he quietly adds to the price of items being purchased. In low margin items like fuel, he can't do that and hence the explicit surcharge. Cash was the only medium where there is no middleman. In all card, e-wallet transactions some money goes to the middlemen. I don't know if digital money is the future or not, but wherever it is cheaper, I am going to use cash. Damn the politicians who are helping the PayTMs and JioMoneys go after my money.

This demonetization scheme appears to be a bigger scam than one previously imagined.

I remembered your post as soon as I read this news today ...

http://timesofindia.indiatimes.com/i...w/55875898.cms

Around 4.5 crore consumers purchase fuel every day. For those using digital payments, Petrol and Diesel purchases will now attract a 0.75 per cent discount.

[nowwhat?]

Originally Posted by gmhossain

Unlike previous two occasions, RBI did not publish last week's deposit details on Monday nor today so far.

Anyway, citing their sources Bloomberg is reporting that about Rs 12.6 lakh crores have been deposited into bank accounts as of December 3, 2016 [1]. This figure apparently does not include the SBN currency that was present in more than 2 lakh ATMs, 1 lakh bank branches and the currency chests across the country on the night of November 8, 2016 [2].

At what figure is it going to stop? Any guess?

Well, it seems the above Bloomberg article may be egregiously wrong.

http://profit.ndtv.com/news/economy/...ome-topstories

"Given the total high denomination currency of Rs 15.44 lakh crore as of 8 November, the Rs 11.55 lakh crore figure may not be depicting the picture correctly," the Economic Research Department of State Bank of India said in a report.

The SBI report said that "there is possibility of double-counting of money deposited in the banks on various accounts".

"RBI has not clearly stated whether the money in the currency chest is taken into estimates, as it includes interbank deposits. Also, both the post offices and co-operative banks have accounts with Scheduled Commercial Banks and it is not clear whether there is double counting there," the report said.

Overall, there is possibility of double counting of 10-15 per cent in banks deposits, the report said.

I guess we will only know the correct picture early next year.

[Samurai]

Came across this article today, and I couldn't help laughing. Goals have changed... really?

The primary purpose of demonetization is to force all large transactions via banking system, so that RBI can regain control over money supply. This must have been the goal from day one of planning. Anyone with good understanding of Finance could have guessed it after watching this situation for few days. Took me a few days to figure out myself. I had mentioned this as the real reason on Nov 21st.

If this had been told upfront, most wouldn't have understood. How many understand how RBI controls money supply anyway. Besides, it won't be popular or sexy like saying let's catch the bad guys hoarding cash or crippling the funding for terrorism. Any other newer reasons being given are also smoke screens. The primary reason remains the same, to force all large transactions into the banking system.

[greenhorn]

Originally Posted by Samurai

Goals have changed... really?

The primary purpose of demonetization is to force all large transactions via banking system

I am a supporter in principle of demonetization, but found the aggressive timelines unusual and unneeded. But then we were sold the story that it was to prevent black money holders from laundering it, so don't complain about the queues and the headache because you are doing it for your country, and modi's life was being threatened etc.
BS has an objective analysis here
http://www.business-standard.com/art...0500135_1.html

Now the claim is cashless, which is also a good objective, but was the shock and awe really needed for that? If that was the real motive, then a phased transition as done in most other countries, would have achieved the results just as fine without inconvenience to any of us.

[dark.knight]

I've been closely observing the actions since I'm a hobby "conspiracy-theorist/realist" so to speak, these are the exact chain of events that I remember :

Day 1 - Your money will be yours, do not panic. | Please do not spread rumors, and exchange your money for new notes from day after. | You have nothing to fear. | This is to curb terror activities and fake notes.

Day 2 - Reasonably honest people have nothing to fear. | Please do not spread rumors, exchange your money for new notes tomorrow.| ATM's and Banks will be at your full service from tomorrow to ensure seamless transition.

Day 3 - There will be withdrawal limits to Rs.x per day and Rs.y per week. | People can deposit upto Rs.250,000 without any penalty. | Amounts above the acceptable amount will attract 90% tax (30% regular tax + 200% penalty).

Day 4-10 - There is shortage of notes, kindly co-operate. | This is for the good of the nation. | If you are unable to go to banks use digital payments like PayTM. | Please understand there will be sacrifices to be made till 50 days. | Rich need to be brought down to their knees.| We are printing notes as fast as we can.

Day 10-20 - Digital payments. | Virtual payments. | Cyber payments. | Electronic payments. | Mobile Banking. | Net Banking. | PayTM.

Day 20-30 - Repeat of Days 10-20, only 100x intensified on the propaganda pushing.

I'll keep it short and sweet, to avoid insults, unnecessary debates and name-calling.. I've complied all along where legally necessary but will not fall for the "PayTM" propaganda now or ever. All restrictions will be lifted hopefully by Dec end and I don't have to hear this garbage anymore. Supporters are entitled to their opinion, just dont shove them down my throat.

[poloman]

Originally Posted by dark.knight

I'll keep it short and sweet, to avoid insults, unnecessary debates and name-calling.. I've complied all along where legally necessary but will not fall for the "PayTM" propaganda now or ever. All restrictions will be lifted hopefully by Dec end and I don't have to hear this garbage anymore. Supporters are entitled to their opinion, just dont shove them down my throat.

I will also keep it short and sweet. Are you saying that digital economy is bad? Are you OK with a trader with 25L turnover absolutely zilch tax where as a salaried individual with same income pay 30% tax? If you are a salaried individual can you explain how this move has affected you, leave aside the propaganda. Atleast the Govt is showing the intention to put a leash on black money, they are not looting the country lakhs and crores in corruption deals.

As explained above I am perplexed how media is panning this with out applying mind. Why can't the govt take a multi pronged approach to clean up the system. Why they want govt to limit itself to one narrative?

[Samurai]

Originally Posted by greenhorn

Now the claim is cashless, which is also a good objective, but was the shock and awe really needed for that? If that was the real motive, then a phased transition as done in most other countries, would have achieved the results just as fine without inconvenience to any of us.

If long time was given to phase out old currency, it would have resulted in massive laundering. People would be buying all kind of tangible assets and would have caused sharp spike in inflation. Knowing the scale of black economy, that would have been dangerous.

Originally Posted by dark.knight

All restrictions will be lifted hopefully by Dec end and I don't have to hear this garbage anymore.

You mean all the old cash should replaced, without any restrictions? Then we will be back in square one within 6 months or so. The entire demonetization operation will be a complete waste.

This is what I am really afraid of. Due to political pressure, if the government increases the cash supply, the effect of demonetization will decrease. If they completely replace it, the effect will be zero.

[rm_arjuna]

Current chaotic situation is further compounded by systematic laundering by banks who dole out favours and indulge in clandestine activities .

[dark.knight]

Originally Posted by Samurai

You mean all the old cash should replaced, without any restrictions? Then we will be back in square one within 6 months or so. The entire demonetization operation will be a complete waste.

Of course not, I didn't say all the old cash should be replaced. There have been enough checks and balances to counter that in the past month, fact remains that people cannot legally deposit any more than Rs.250,000/- without expecting tax+penalty to the tune of 90% (now 50%?), and I've seen more than a fair share of big clientele, walking straight into the manager office to deposit surprisingly large-sums and to walk out with whatever little they can (which will be large amount in itself), and this is just in the 2-3 days I was at the bank for 5-10 minutes, I suppose it'll be happening all the time.

I also understand that the last day to deposit old cash is Dec 15th? So if people have in excess of Rs.250,000/- then their only choice is to take part of it home or have all of it become obsolete. Effectively the economy has been hard-reset already, a flush has been done. I'm aware of a few ways with which people have been modifying their "portfolio" so to speak but its very difficult overall since no one wants the old cash, period. All that will exist in the legal bank-balance by month end, would be accounted money.

I see no harm that people are able to take out their accounted money by month end, yes the circle will begin again but it'll take far longer than 6 months to come to the previous level of rot. I also see rent-lords scurrying for cover and finding no way out but to declare their rental gains from numerous properties.. the reset has very much become effective. I also happen to think that doing everything digital just to prevent "black" money is also bad, it can happen progressively but arm-twisting isn't the sign of the finest government. They've collected unaccounted tax- fine, they've punished offenders - fine, but how one chooses to spend his or her accounted money - via cash or card or digital is their choice to make. Thanks for asking a pertinent question to fully understand my view, as always its only my view.

[sachinayak]

Demonetization (as a concept) was a great (actually brilliant) move, albeit implemented with flawed planning and execution. Unfortunately, I am skeptical if it has really been successful or created the impact that it was initially expected to do. 2 cases that I will cite from personal know-how

1. In smaller cities (like Ratlam, Bhopal), where a lot of transaction is cash based (heck many property transactions aren't even registered), there was a massive panic when the decision was announced. The conversion rate was 35%. Now with things settling down, and people having understood (and mastered) the loopholes, the conversion rate is as low as 5-10%. A clear sign that the plan has not worked.

2. In Bangalore, know personally of someone who was offered, home delivery conversion at 35% commission.

The lower class, lower-middle class is hit. India's consumption story is hit, and the lower class, lower-middle class will be hit by that again. Not the government's fault - but we as citizens have let our government down. Government expected people (in general) to be honest, but corruption is deep ingrained into our system (and not just government).

[poloman]

Originally Posted by sachinayak

. Not the government's fault - but we as citizens have let our government down. Government expected people (in general) to be honest, but corruption is deep ingrained into our system (and not just government).

Well said. I was watching CNBC the other day, I was shocked to my bones when I heard a senior commentator saying IT department should stop terrorizing people if they want economy to recover. Now if this is the mentality of average Indian forget Modi, even God can't save our country. Atleast this step has brought out the ugly belly of black economy out. As in Chennai two crooks were exchanging 100Kg gold bars for wades of old notes.
This will affect the economy surely because the very middle class other than the salaried class itself is the biggest money hoarder. One of my friend's land lord is a govt servant in DRDO. He has 6 houses and earns 1L as rent much more than his salary. He is not paying a penny as tax on this income and demands all rent in cash even now.

[dark.knight]

Originally Posted by sachinayak

The lower class, lower-middle class is hit. India's consumption story is hit, and the lower class, lower-middle class will be hit by that again. Not the government's fault - but we as citizens have let our government down. Government expected people (in general) to be honest, but corruption is deep ingrained into our system (and not just government).

Government is letting down people since forever and still is, also. Now I don't want to get into the game of this party vs. that party, which is the oldest diversionary trick to win a debate by "passionate" folks. I'm apolitical to the core and believe that governance should basically be about several thousand sympathetic (not apathetic) people, walking the cities, towns and districts to understand core infrastructural issues, issues with governance and people problems and cracking those problems one at a time. If one problem is solved by one politician/bureaucrat/neta/IAS/IPS (all same entities with different coats on) then the country will have about a lakh lesser problems per day
than just endlessly debate in parliament trying to win ego wars against the ruling party/opposition as the country languishes in its squalor.

I'm saying this because I've been hitting the great bureaucracy center for 4-5 days now, bribing is still going on (or at least is expected) by RTO, house registration, marriage registration etc. People's limited funds are getting squeezed into oblivion and someone has to understand this.

[sgiitk]

I am hearing this story of the poor being hit often enough. What I can say is that we and our friends have at least 25 ladies/men as domestic help, and not one has asked for any cash ahead of the payday. I guess they can be classified as Urban poor. Not many of them had wads of 500 and 1000 rupee notes. So obviously they have and had enough liquidity. When talking to them, they say that their relatives in villages are also Ok, thanks to the great Indian barter system.

I expect things to normalize in the next week or two. As cash comes into the system, limits will gradually relax. Even yesterday I was surprised to see Raipur (CG) having No ATM queues, and even a 'chaiwallah' accepting digital payment.

In any case all the lakhs of crores coming into the banking system, will add to the tax kitty and the liquid kitty of the state. I expect the GST and markets to get a hefty kick in the middle term. Money once into the system, tends to stay there, and I will be surprised if more that 25-30% is withdrawn in a hurry.

[mayankk]

Originally Posted by poloman

This will affect the economy surely because the very middle class other than the salaried class itself is the biggest money hoarder. One of my friend's land lord is a govt servant in DRDO. He has 6 houses and earns 1L as rent much more than his salary. He is not paying a penny as tax on this income and demands all rent in cash even now.

What is wrong with the salaried middle class, who presumably are paying taxes, holding cash (hoarding)? Is it illegal?
Agreed that the landlord fellow may be having property beyond his means, but how do you know it is beyond his means(maybe an old rich), or that he is not paying tax?

[Samurai]

Originally Posted by sgiitk

I am hearing this story of the poor being hit often enough. What I can say is that we and our friends have at least 25 ladies/men as domestic help, and not one has asked for any cash ahead of the payday.

This is the same situation I have seen, in both the city and the village where I live. All the poor I know seem thrilled that rich people are suffering due to loss of black money. While the rich people are lamenting that poor people are suffering.

If I ignore all the hearsay, the only people suffering I have noticed are retailers who don't accept card or paytm. And they are slowly getting on board of e-transactions.

Originally Posted by sgiitk

I expect things to normalize in the next week or two. As cash comes into the system, limits will gradually relax.

If that happens, it will be really sad. The entire demonetization drive would fail. The situation should normalize by moving towards cashless transactions, and not towards square one, which is cash economy.

Originally Posted by mayankk

What is wrong with the salaried middle class, who presumably are paying taxes, holding cash (hoarding)? Is it illegal?

It is not illegal when he holds it. But when he pays somebody without any tax receipt, then it is illegal. When we pay by cash, we are often given the choice to pay ₹100 without receipt and ₹110 with receipt. How often people take the former? Very often. With cashless economy, the illegal choice goes away.