[Sebring]

Even Im hoping the same, but very unlikely as they dont want the notes to return as that money can be used elsewhere. Also I hear 99% of the notes are back, wonder how!

Originally Posted by Visran

I hope RBI gives us another chance to deposit these old notes without much hassle, just today found old notes worth 20K which i had stacked up for emergency needs

[sgiitk]

@Sebring; Already we have been clever /smart to put in far more money than anticipated. Agree, thus all talk of again opening a window for depositing cash is highly improbable. So assume that the game is over.

[jraj]

Alright let's take a course correction here.

The aim of demonetization was to bring down real estate prices down so that it becomes affordable.

So, can we stop discussion "Cashless" and now start discussing on real estate course correction.

Man,forget changing goal posts, this one is like changing the playing field itself.

[deerhunter]

Originally Posted by avira_tk

The broadest indicator of economic performance is actual growth in sales of houses and automobiles

Originally Posted by binand

I don't know where this is coming from - care to share some references for this? It might be true for California but could hardly be the case in India.

Originally Posted by binand

Even in India? I would like to see some reference from which you are quoting this.

avira_tk is partly right. Even Government of India considers auto sales and real estate prices among the five broad indicators of macroeconomic performance.

we are interested in a macro-assessment and hence focus on five broad indicators:
• Agricultural (rabi) sowing;
• Indirect tax revenue, as a broad gauge of production and sales;
• Auto sales, as a measure of discretionary consumer spending and two-wheelers, as the best indicator of both rural and less affluent demand;
• Real credit growth; and
• Real estate prices

Link

[deerhunter]

Finally, the govt has clarified several aspects of demonetisation. All details are from the Economic Survey, released today. Link

Why demonetisation?

The aim of the action was fourfold:
- to curb corruption;
- counterfeiting;
- the use of high denomination notes for terrorist activities; and
- especially the accumulation of “black money”

Going cashless is not a stated aim of demonetisation.

Impact of demonetisation on the above aims:

a. Corruption (underlying illicit activities)
- Could decline, if incentives for compliance improve.

b. Unaccounted income/black money (underlying activity may or may not be illicit)
- Stock of black money fell, as some holders came into the tax net.(in the short term)
- Formalization should reduce the flow of unaccounted income.(likely in the long term)

Counterfeiting and terrorist activities - No mention of the impact of demonetisation on these. Likely no long term impact.

Impact on GDP:

Given the uncertainty, we provide a range: a ¼ percentage point to ½ percentage point reduction in real GDP growth relative to the baseline of estimate of about 7 percent.

i.e 6.5%, compared to the earlier estimate of 7.1%. Real GDP growth for the year 2015-16 was 7.6%

Finally, this:

A cautionary word is in order. India’s demonetisation is unprecedented, representing a structural break from the past. This means that forecasting its impact is hazardous. History’s verdict, when it arrives through the “foggy ruins of time,” could surprise today’s prognostications.

So, the government accepts that the demonetisation was a gamble. If all this likely long term impacts fail, the only things left are 0.6% loss in GDP growth and more than 100 dead people.

Originally Posted by poloman

Q3 results are pouring in. Most analysts are now saying that the effect of demonetization on the economy is negligible and the results are above average.

The ministry of finance doesnt think so. GDP growth has definitely reduced compared to earlier estimate.

[longhorn]

The aim of the action was fourfold:
- to curb corruption;
- counterfeiting;
- the use of high denomination notes for terrorist activities; and
- especially the accumulation of “black money”

Impact Assessment

- to curb corruption :- My foot. Is the govt trying to say that the sarkari babus won't accept the new currency as bribe ?

- counterfeiting; :- Impact for 6 months at best. The Pakis should be able to decipher it by then.

- the use of high denomination notes for terrorist activities; :- maximum impact is probably here. Naxals and Maoists most likely to be affected. Impact on terrorists across the border would be temporary.

- and especially the accumulation of “black money” :- this is where the govt failed BIG time. Almost all the black money held in currency form by hoarders have been exchanged through banks (either over or under the table). Only the NRI's and people holed up in some God foresaken place have actually lost their hard earned money.

[GrammarNazi]

IMPO A large part of the 1% GDP fall due to demonisation seems to have shown maximum impact on small businessmen, especially those who are into manufacturing.

In almost all tier II cities, there still is a cash crunch due to non availability of lower denomination. Even in metro cities most ATMs are dispensing in denominations of 2000, and it really isn't easy to get change for that 2k currency note.

Originally Posted by jraj

...The aim of demonetization was to bring down real estate prices down so that it becomes affordable...

Why this sudden willingness by Govt, to indirectly interfere (to such a great extent) with a free market? That too where the govt used to earn heavily through stamp duty and registration charges. The govt seems to be 'improving' on it's excuses!

What right thinking leadership deliberately conspires to specifically cause a fall of the real estate value in its own metropolitan cities !? Why would a government do such a harmful thing to its own people ? Many other very very important things are overtly expensive (like private schooling), I've never seen government bothering about them.

Real estate is not even an essential commodity to the extent that food, clothing, schooling, social security, Medicare etc are, to poor people. It's a brilliant catalyst for creating employment though.

At upscale localities / Tier I cities where real estate prices are high, people employ highly skilled workers to build spaces, the equipment used is often more advanced and compact, thereby providing employment for those involved in manufacturing such equipment.

At non-upscale localities / Tier II cities with mid-level prices, it can be something as simple as employment of semi-skilled workers like carpenter's, electricians, plumbers, gardners etc.

So, EoD this'll also hit the highly skilled type of construction allied services and labour, very hard.

In cities like Bangalore, software company employees spend clean white money buying flats, and they're among the main guys responsible for large scale development of the mid-level priced real estate.

In August 2016, my 2nd cousin bought a flat in Brigade Metropolis. He's a PhD who returned 3 years back from the US to join Qualcomm's branch here in Bangalore. Property prices for such organised markets are seen to grow only at a steady average rate (unless there's an unexpected exponential change/development in the surrounding areas), and then for the govt to deliberately cause a slash of say even 15% (many people say it's double that) in real estate prices, is like killing the asset growth for 2-3 straight years. Artificially crashing real estate prices for such individuals is an unfair punishment to such people.

To imagine that such people are going to pay EMIs for investments that aren't gonna yield profits half as much as budgeted, it makes real estate investment a non attractive prospect for an already struggling market.

[sachinpk]

Originally Posted by GrammarNazi

Why this sudden willingness by Govt, to indirectly interfere (to such a great extent) with a free market? That too where the govt used to earn heavily through stamp duty and registration charges.

Note the bolded part. There is a catch here. The stamp duty/registration charges are all taxes which goes to the respective state government. Where as Income tax goes to the central government. A state government was happy (actually penny wise, pound foolish) to allow all sorts of shady money to get into real estate market as they got some good income through this. In states like Kerala, every body knew that the land prices are deliberately kept low in official records so that the stamp duty and registration charges are kept low. State government was happy, because at least they got some money to run the state affairs. The rest came from lottery & liquor sales.

The Central Govt. as the apex government has much more bigger and important role to play, and ideally they should get some good revenue through taxation. Our state governments are too myopic so they lost the wood for the trees.

What right thinking leadership deliberately conspires to specifically cause a fall of the real estate value in its own metropolitan cities !?

The real estate value was a big time bubble, which had to break some time or later. Because the entire sector had very inflated prices, mainly due to the unaccounted black money in that sector. And please note, for Central government this real estate sector is not what brings in any credible revenue. This market is essentially for the corrupt & greedy of every state.

So, EoD this'll also hit the highly skilled type of construction allied services and labour, very hard.

I do understand that part. Infact my daughter's care taker; she is now going back to her home town in rural AP. Her hubby was into "real estate brokering". A very small time player, dealing with land sales. He has taken a hit, as there is no one putting in any money to real estate. Nobody has so much liquid (unaccounted) cash. We are losing a very reliable care taker, but thinking from other angle I would have to accept the fact that the hubby was dealing in a business with lots of unaccounted money. In Kerala, train loads of Bengali (most likely illegal Bangladeshis) have now gone back as there is no work for them. To be frank, I don't have any sympathies for the illegal immigrant crowd.

In cities like Bangalore, software company employees spend clean white money buying flats, and they're among the main guys responsible for large scale development of the mid-level priced real estate.

Software chaps put in "clean white money" (basically loans), but that does not mean that the realtor/builder etc. is using that money purely for building the software chappie's flat? "Rolling" is their catch word. They may use your loan disbursement amount, not to build YOUR flat, but to buy some other land some where to build their next "venture". Till recently there was no law in India, which kind of forced these builder gangs to put the amounts they recieve on building stuff for people who gave them that money.

To imagine that such people are going to pay EMIs for investments that aren't gonna yield profits half as much as budgeted, it makes real estate investment a non attractive prospect for an already struggling market.

Dont take this as a personal taunt, but looks like you have taken a big hit after investing on the "real estate" front. Think about it; you needed a home to enjoy your life. Some where down the line, it became an "investment opportunity" with the expectation set that every one will get "real rich, real soon". It is that bubble which has got busted. I know a chap who bought around 2 acres of land hoping he could sell them in smaller chunks. Now he has decided to switch over to farming (in that land).

[Juggy]

A [business] chain is as strong as the weakest link in it.

Some may find this piece inflammatory, others revelatory, but anyone in business can attest to some of the difficulties this CEO faced. https://scroll.in/article/826796/a-c...tional-company

[sachinpk]

Originally Posted by Juggy

Some may find this piece inflammatory, others revelatory, but anyone in business can attest to some of the difficulties this CEO faced.

From what I could understand, the CEO of this company even though dealt with their vendors/service providers on a "cash less" basis, did depend upon other industries which worked on "only cash" mode (example beef trade, scrap metal trade etc.). Very similar to the CEO of a local Darshini hotel in Bangalore, who took a hit because most of its patrons only dealt with cash.

Any industry dealing only in cash, or dealing with any other industry dealing only in cash has taken a hit, there is no point in denying that. But would the beef traders and scrap metal traders now switch to e-payment, or still whine and demand to operate on a "cash mode" needs to be seen now.

[Durango Dude]

"Investment" in real estate is a "myth"; unless you have some ancestral property. Indian real estate prices are highly inflated for what they provide and there's too much supply and a flat demand and rental income is seeing a downward spiral. What the realtor promises is almost never delivered especially in the suburbs, regards rental income and appreciation. People have been holding onto properties based on 'notional' value, just like you hold on to jewelry! Just try to sell the property and you'll see how the brokers play around bring down the prices on one pretense or other. Following demonetization this has taken a severe hit along with other natural calamities that further bring to the fore the poor infrastructure surrounding your property.

[sgiitk]

Originally Posted by longhorn

Impact Assessment

1. - to curb corruption :- My foot. Is the govt trying to say that the sarkari babus won't accept the new currency as bribe ?

2. counterfeiting; :- Impact for 6 months at best. The Pakis should be able to decipher it by then.

3. - the use of high denomination notes for terrorist activities; :- maximum impact is probably here. Naxals and Maoists most likely to be affected. Impact on terrorists across the border would be temporary.

4. - and especially the accumulation of “black money” :- this is where the govt failed BIG time. Almost all the black money held in currency form by hoarders have been exchanged through banks (either over or under the table). Only the NRI's and people holed up in some God foresaken place have actually lost their hard earned money.

1.Reduction of cash in circulation seems to be having some impact. It cannot drop to zero overnight.
2. Probably correct to a large degree. Pakis were able to get the same paper and ink earlier. I hope this has been curbed.
3. Linked to 2 above. Yes, Naxals and Maoists have largely gone bust.
4. Yes, and no. A lot of the hidden horde has been declared. Now it can be put to use, and also taxes paid. Forensics are just starting. I hope most of them are caught. It will be a bit tough to explain a cash deposit of say 3 lakhs, with an annual income of say 50,000.

Also, if your turnover suddenly increases from two lakhs per annum to twenty. This is why many traders in Kanpur are trying to revert to cash.

A lot will depend on the analytics. I heard that the figure of 2.5lakh was just a smokescreen. Actually, they may start probing at something like four times that.

I must say our brains only work as crooks, use of cash mules, JanDhan accounts, etc. Things may only start to clarify after 31 March when all avenues for cash deposit (old money) will be closed. Already, political parties are united in opposing the reduction of anonymous cash contributions to ₹2,000.

[GrammarNazi]

So there does exist a counter view even by the big players.

Link : Rajiv Bajaj, "Not just execution, note ban idea itself was wrong".

Ofcourse, some may have their own angle, but it must be accepted by blind followers that there do exist pretty bad sides to demonitisation too.

[binand]

Originally Posted by GrammarNazi

Rajiv Bajaj, "Not just execution, note ban idea itself was wrong".

Ofcourse, some may have their own angle, but it must be accepted by blind followers that there do exist pretty bad sides to demonitisation too.

Well, if he knew the idea itself was wrong, one wonders why he kept quiet for these past three months. Everyone else who was convinced so was quite vocal.

Anyway, I don't think anyone disputed that there are bad sides to demonetization. One of the earliest analyses I saw predicted a short term (two quarters was mentioned) drop in GDP growth rate followed by rise - and that probably holds good even now. The debate has been on two major questions: (a) did demonetization cause so much hardship to the population that no long-term benefits can ameliorate and hence it should not have been contemplated at all, and (b) did demonetization achieve its original four stated objectives?

[Sawyer]

I burst out laughing when I saw the recent public service ad that is being aired:
Remonetise India!
Two things struck me as hilarious messaging:
1. Spend to help the economy get back on the growth track
2. Don't use cash so that it is available to the less privileged.