Government scraps Rs 500 and Rs 1000 notes!

[kvish]

Superb move. Timing is a masterstroke. Feels great for Taxpayers at last Am sure this will have ramifications in auto industry as well. So one can expect better deals ahead. So people can hold on to their purchases for the next weeks.

[anjan_c2007]

Here is a link for substantiating the news:

http://www.rediff.com/news/report/rs...d/20161108.htm

[sachinayak]

Absolutely fantastic decision, but have a feeling - there will be some sort of rollback, extension. Nevertheless an incredibly brave decision.

Will have a massive impact on real estate sector and commodities.

[condor]

Specimen notes - as on Rediff:

[carwatcher]

Title should be 'Govt scraps...' as I strongly feel there are many people who don't like him and will object to give credit to him and this thread may 'unnecessary' digress from the real topic.

I fully support this really Brave and Historic move and also sure that Raghuram Rajan would be having some big hand in this.

I also want some serious control over coins as there are many people are there who have installed factories minting fake coins.

I am all for it as I have absolutely 'ZERO' 500 & 1000 Rupee notes and it really makes my blood boil seeing the loads of cash being recovered from Govt. servants.

[CrAzY dRiVeR]

Next two days would be chaos. More than a few days actually. Money controls everything else and the PM has hit it where it hurts, really really hurts.

But if the nation can survive that stage, it would be really good. I've never been truly impressed with the current government, but this is one of the biggest and boldest move ever.

Hope they succeed.

[TorqueyTechie]

Pardon me for my ignorance, but how does scrapping these would help? Most importantly can somebody help me understand why this is being done?

[Chetan_Rao]

There's no mention of public transport among the exceptions, or did I miss it? Buses, autos and cabs are major 'cash transaction' areas even in this era of mobile wallets and plastic money.

The poor folk would be the worst hit by a liquidity crunch, even if temporary.

[Holyghost]

Originally Posted by TorqueyTechie

Pardon me for my ignorance, but how does scrapping these would help? Most importantly can somebody help me understand why this is being done?

Mainly 2 reasons.
1. Most counterfeit notes are 500 and 1000 denomination.
2. Black money. There are a lot of people who have tons of cash stored as notes.

[AltoLXI]

Originally Posted by TorqueyTechie

Pardon me for my ignorance, but how does scrapping these would help? Most importantly can somebody help me understand why this is being done?

The entire parallel economy of black money running into lakhs of crores is dependent on higher denomination currencies. Corrupt officials, politicians, real estate industry etc all deal in 500 and 1000 rupees currency notes.

[CrAzY dRiVeR]

Originally Posted by Holyghost

2. Black money. There are a lot of people who have tons of cash stored as notes.

Originally Posted by AltoLXI

Corrupt officials, politicians, real estate industry etc all deal in 500 and 1000 rupees currency notes.

All of which needs to come into circulation before December 31st and get exchanged at a bank or post office, or they would be just worthless pieces of paper.

[AltoLXI]

I also feel the investments in real estate will take a hit now. What do you all feel?

[condor]

Originally Posted by Chetan_Rao

There's no mention of public transport among the exceptions, or did I miss it? Buses, autos and cabs are major 'cash transaction' areas even in this era of mobile wallets and plastic money.

Public transport - buses / trains / air travel are included in the 3 day exemption. For city transport, small currencies have been used to a considerable extent. So till we get stock of the 100's, it can be difficult for those who use esp auto's and to some extent - buses.

Places like Bangalore - many use monthly pass for buses. Hence these guys will also be un-affected.

[hemanth.anand]

This is one of the Boldest moves ever in Indian economy.
Chaos for the next 50days but wonderful move in the long term.

[aargee]

Originally Posted by TorqueyTechie

Pardon me for my ignorance, but how does scrapping these would help?

Don't know why this is being done (apart from answering black economy); but trying to think from positive side...lot of unaccounted money can be several places except bank, mutual funds, NSE, BSE or anything that falls under the control of Govt or RBI.

This means, it can be under my bed, inside a cave, well, false ceilings or anywhere in form of any denomination available in India right from Rs 5, 10, 20, 50, 100, 500 or 1000.

If the said black economy in this country is said to be in so high value, storing 1 crore amount in currencies then one will need 100000 Rs 100 denomination. But a bundle of any currency is available in form 100s, so one will need 1000 bundles of Rs 100 denomination for Rs 1 Cr while for a Rs 1000 denomination will only need 100 bundles. Now decide which is easy to store, 100 bundles or 1000 bundles?