Demonetisation and its Aftermath
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paarkhi
Skilled
As the drama is unfolding day by day I feel the decision of demonetization is more political than for the welfare of public. Govt has taken the decision with half a** preparations, 13th day today...
Where is it mentioned? I see lots of old notes and coins on auction on eBay and other sites.
AFAIK The rule is ONLY against selling/auctioning currency which is currently in circulation. for obvious reasons.
My two bits on this and people might disagree with me on this:
While I am in favor of this move, I am also angry at what is happening. It seems the government and RBI doesn't really understand how panic and mob mentality works. This is was never going to be as easy as saying - "X bank in Y location deals 50 crores in cash" so sending 50 crores in the newly minted notes will work. It wouldn't because once you tell people no more cash, they are going to rush and create a mess. I just wish they hire some kind of behavioral expert before doing something like this.
While I normally don't have dim view of people but I am also angry at seeing people turning up at different banks even though they have take 4k cash quota to "try their luck" only to be found out by the cashier. There are many more turning at ATMs every day to encash 2k just for the sake of taking money, forgetting we are not doing away with money, just removing high denomination notes.
I am also angry at banks and their ineptitude. RBI told them since may to put more effort in 100 rs notes in ATM. What was stopping them from doing this for last 5 months?
So while there is a lot of blame to go around for this mess there is some merit in this move, not all, but some. For one, its never going to hurt the ultra rich black money people. The reason is they will be able to pay 5-10% commission on their money and get the new notes. Heck, some are even trying to make it white by asking service people to take the money and transfer it to them 3 months later. I have also received one such call.
It is going to hurt the "middle class" black money hoarder. The house/pg owner who takes all cash rent or the retailer who never presents a proper bill for purchase. Quite a lot of my relatives fall in the 2nd category. They have accumulated 15-30 lakhs over the years and now are scrambling to exchange notes.
That said, I am not very confident in the babus to be able to carry out an effective tax net even with these. It seems there are reports of IT dept being short handed. So are they able to collect more tax this FY or not after all this mess, remains to be seen.
While I am in favor of this move, I am also angry at what is happening. It seems the government and RBI doesn't really understand how panic and mob mentality works. This is was never going to be as easy as saying - "X bank in Y location deals 50 crores in cash" so sending 50 crores in the newly minted notes will work. It wouldn't because once you tell people no more cash, they are going to rush and create a mess. I just wish they hire some kind of behavioral expert before doing something like this.
While I normally don't have dim view of people but I am also angry at seeing people turning up at different banks even though they have take 4k cash quota to "try their luck" only to be found out by the cashier. There are many more turning at ATMs every day to encash 2k just for the sake of taking money, forgetting we are not doing away with money, just removing high denomination notes.
I am also angry at banks and their ineptitude. RBI told them since may to put more effort in 100 rs notes in ATM. What was stopping them from doing this for last 5 months?
So while there is a lot of blame to go around for this mess there is some merit in this move, not all, but some. For one, its never going to hurt the ultra rich black money people. The reason is they will be able to pay 5-10% commission on their money and get the new notes. Heck, some are even trying to make it white by asking service people to take the money and transfer it to them 3 months later. I have also received one such call.
It is going to hurt the "middle class" black money hoarder. The house/pg owner who takes all cash rent or the retailer who never presents a proper bill for purchase. Quite a lot of my relatives fall in the 2nd category. They have accumulated 15-30 lakhs over the years and now are scrambling to exchange notes.
That said, I am not very confident in the babus to be able to carry out an effective tax net even with these. It seems there are reports of IT dept being short handed. So are they able to collect more tax this FY or not after all this mess, remains to be seen.
Mr.J
Skilled
This move has very limited gain, completely disproportionate to the trouble everyone had to endure.
If govt. really wanted to tackle black money, it should have given necessary resources to IT dept, CBI, IB etc., should've pressured banks for recovery bad loans. Not made 86% of currency worthless in 3 hours.
If govt. really wanted to tackle black money, it should have given necessary resources to IT dept, CBI, IB etc., should've pressured banks for recovery bad loans. Not made 86% of currency worthless in 3 hours.
2K note seems to be a disaster. No one accepts those. I have been roaming with 2 such for the last 1 week with no luck.
The ICICI branch we have in our campus have only those 2k notes for withdraw. Damn !! I thought by now things would have been quite normal.
Hoarding 100 rupees notes !! Don't blame me, yesterday midnight I went to a HDFC ATM nearby and got 4 x 1900 rs, all in 100 notes. And now I don't feel like spending them
The ICICI branch we have in our campus have only those 2k notes for withdraw. Damn !! I thought by now things would have been quite normal.
Hoarding 100 rupees notes !! Don't blame me, yesterday midnight I went to a HDFC ATM nearby and got 4 x 1900 rs, all in 100 notes. And now I don't feel like spending them
appreciate the service of HDFC bank-branches at my place. they've erected pandals and placed chairs for the waiting people. no large queues. initially had got two 2k notes, but was told to wait for a few minutes to be given notes of 100 too, and done it was a few moments later. appreciate the patience of the people too. all-in-all calm and jovial, except if some smart boy raabutt does a 'reservation' for himself & family members in the line.
I was able to use them while on a trip here. mostly used at hotels and eateries. the reluctance in accepting it is I feel because people want to keep as much change with them as possible. situation is very slowly becoming normal but not at all places at once it seems. at a couple of places found lesser crowds/short queues than what it was when I had left.
2K note seems to be a disaster. No one accepts those. I have been roaming with 2 such for the last 1 week with no luck.
The ICICI branch we have in our campus have only those 2k notes for withdraw. Damn !! I thought by now things would have been quite normal.
Hoarding 100 rupees notes !! Don't blame me, yesterday midnight I went to a HDFC ATM nearby and got 4 x 1900 rs, all in 100 notes. And now I don't feel like spending them
I was able to use them while on a trip here. mostly used at hotels and eateries. the reluctance in accepting it is I feel because people want to keep as much change with them as possible. situation is very slowly becoming normal but not at all places at once it seems. at a couple of places found lesser crowds/short queues than what it was when I had left.
someone here had said that a CA had suggested that for people with cash above 2.5l its better to burn it then to deposit and face problems with IT. isnt it a better idea to drop it in a temples donation box or anonymously donate it to a reputed charity like say tata cancer hospital? what can they do, they cant refuse it. even banks cant refuse them depositing it, or ask them to throw it in the bin. this way at least it'll be used for some good and something positive will come out of this whole demonetisation mess
blr_p
Skilled
That's a question i would like to know the answer. How will voting be affected by this move.
What affect if any will it have on the Feb UP elections. How does one even account for it.
Have said numerous times that our democracy is fueled by black money. All parties accept it. Elections are not cheap. So business uses this to temper against unfavourable laws. That means business is dependent on govt to stay afloat. This is a more serious problem. Why does Ratan Tata have to inform Modi about who is in charge of tata.
These 2k notes are so ugly. Looks like play money. Are they really more secure. Preferred the older ones.
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blr_p
Skilled
I can't put my finger on reason or reasons for this move. The BJP is dependent on black money like any other party. If others have less to campaign then so do they. But if such a move would affect their chances they would not do it. Therefore it does not give them an advantage over others.
I keep hearing that this is only the beginning, maybe it will make more sense in time when we see the other moves. Right now none of the reasons given make much sense.
blr_p
Skilled
"Surgicial" according to a bjp spokesman is about the "precision of the incision"
This is no surgical strike, its a blunt instrument. Affects a lot of people some a great deal more than others particulalry on the lower rungs. These people will remember when voting time comes. Which way will they vote next time
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Will be good for balance books of banks. What about those NPA's now
it's not clear to be how RBI is going to account for things. Lots of questions around that.[DOUBLEPOST=1479988241][/DOUBLEPOST]
Don't know but there was more text
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Smaller point first: Tatas are one of the biggest business house in India. So their internal problems affects the market and also creates an environment of uncertainty. Govt need to know if this will cause some adverse reactions like people losing their jobs, or putting a bad image of the company / country (as TATAs have business in other nations too), etc. Nothing serious but good that Govt is keeping a tab of the happenings.
Modi after the recent ban of rs500/1000 notes said that he will push for state funding of elections so that political parties do not have to depend on black money to fight election campaigns.
Obviously like everything else this will also have its own pros and cons but that for some other day. As of now BJP will be equally hit as will be the other parties when it comes to near future elections like UP, Punjab.
But in UP thats worth the risk to take coz the other two biggies are way stronger in cash than BJP. Also it could be that BJP had an idea of the Nov 8 decision and already took some precautionary steps.
Its amusing when ever I hear somebody at work or online say that politicians will be pissing their pants over the currency ban. Do people really think that politicians who have black money worth thousands or lac's of crores would actually store them in their houses? The doctors and lawyers who keep 50 Lac or 1 Crore in their houses may have pissed their pants before they realized that they can exchange the cash for a commission. But surely, not politicians.
I remember seeing a calculation somewhere. 1 Crore in 1000 Rs notes will weigh 17 Kg. No politician is going to store more than a few 10's of crore in hard cash. Even if its over 100 crore, its like chump change before the amount of black money they deal with. In addition its easy money and these people are accustomed to throwing way 10's of crores of excess cash into garbage dumps or deposit boxes in temples. They are not affected in the least just by losing some cash. The only impact is during elections when every party gives out currency to buy votes. Its obvious that regardless of when it was planned, the info about ban got leaked to politicians. So, what is to say that BJP didn't have first hand access to the information and maybe priority access to the currency as well.
In any case, overall, I haven't seen a single bit of evidence so far that suggests this had any sort of positive impact towards reducing corruption. If any thing, the unplanned way in which it was done created a plethora of new black money enterprises and there is a rise in corruption if anything at all.
I remember seeing a calculation somewhere. 1 Crore in 1000 Rs notes will weigh 17 Kg. No politician is going to store more than a few 10's of crore in hard cash. Even if its over 100 crore, its like chump change before the amount of black money they deal with. In addition its easy money and these people are accustomed to throwing way 10's of crores of excess cash into garbage dumps or deposit boxes in temples. They are not affected in the least just by losing some cash. The only impact is during elections when every party gives out currency to buy votes. Its obvious that regardless of when it was planned, the info about ban got leaked to politicians. So, what is to say that BJP didn't have first hand access to the information and maybe priority access to the currency as well.
In any case, overall, I haven't seen a single bit of evidence so far that suggests this had any sort of positive impact towards reducing corruption. If any thing, the unplanned way in which it was done created a plethora of new black money enterprises and there is a rise in corruption if anything at all.
cellar_door
Adept
I think it would give them a HUGE advantage if they are the only party that knows this was gonna happen before hand. They start stockpiling usable money for a few weeks before this starts. Others are stuck with a lot of useless cash.
The reason I would discard it is because I dont think people in a large enough group are capable of keeping a secret like this. It would have leaked. So it seems unliklely. I wouldnt count it out though. All our political parties are rotten to the core and they would happily sacrifice the convenience (and lives) of ordinary Indians in a heartbeat if it gets them close to the seat of power. Hell they have been doing that for decades now.
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