Demonetisation and its Aftermath

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The amnesty offer does have positives as some people would believe they would lose 90% of their money and would so just not deposit/declare it. This way atleast some people will still deposit money. These things aside this demonetisation has already taken a huge toll on the economy. Almost every person I have encountered in my daily life has been affected (the so called common man, grocer, vendors, auto/cab drivers)
 
^^ That amnesty offer doesn't make any sense actually. Lets say that some hoarder has 10 crore of unaccounted money.

Before the amnesty option was given, he could.

1. Choose not to deposit any money at all in which case the fresh currency printed for the equivalent amount would become govt funds.
2. Chose to deposit the money and/or get caught and lose the money in addition to running the risk of a 10 year imprisonment.
3. Chose to covert it to new currency in the black market by paying 20~30% commission in which case he would get back 7~8 crore, the broker get 2~3 crore and govt gets nothing

The most desirable option for govt would be option 1 and if they can keep option 3 infeasible for the most part, they can gain a lot and that makes the tax payers money used for printing the fresh currency somewhat worthwhile. For the hoarder, option 3 is the only viable option.

Now with this amnesty deal.

1. Chose to declare the cash and pay 50% tax in which case he would get back 5 crore and govt gets 5 crore but also incurs the additional cost of dealing with the old currency.
2. Chose to not declare it, potentially get caught and pay 85% tax in which case he gets 1.5 crore, govt gets 8.5 crore and he may also run risk of imprisonment.
3. Chose to covert it to new currency in the black market by paying 20~30% commission in which case he would get back 7~8 crore, the broker get 2~3 crore and govt gets nothing.

The hoarder will still see option 3 as the most desirable one, but govt stands to lose which ever option he chooses compared to option 1 without the amnesty deal.

The govt has absolutely no reason to make hoarders deposit their old currency. Regardless of whether they deposit or not, the govt has to print new currency and its actually beneficial if the black money is not deposited at all. They just need to make illegal exchange of currencies very very difficult.

Even if there is a penalty for the deposit, there is still a cost associated with dealing with the old currency (sorting, logistics, destruction etc). 10 crore of cash in Rs 1000 denominations would weigh about 170 Kg. Imagine the cost of dealing with such huge stashes of currency.

So basically, this amnesty deal makes the tax payers money spent on this whole deal and the troubles that people are facing utterly meaningless. It is essentially benefiting the hoarders at the expense of tax payers.
 
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@rdst_1 - I didn't mean to say you didn't know that.

I do see this as a way for the government to get as much cash as it can instead of people burying it or setting it to fire to cover their tracks.

People with black money will definitely feel the sting considering out of 10 you get only 2.5 and 4-5 years later get another 2.5 without any interest.
 
nimod said:
I neither sensed a sarcasm nor a question there.

I felt you were presenting your view.
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I thought and correct me if I am wrong that if someone doesn't turn in the money then it doesn't exist even though it was once printed. Now if there is a record that X amount in 500 old notes was printed by the RBI till date but Y amount is available with the RBI or have been surrendered till date then X-Y (let's call it Z) amount is missing and can be considered to be black money that the government can't retrieve, may be some via raids unless they have been destroyed already. Can the government then reprint the Z amount and distribute?

I am only guessing and it feels to simplistic to be true but is this what you meant when you said - "all such lost pieces will be govt's profit, not a loss."
 
prabs said:
How?

Note: Please understand I am asking out of curiosity and not being sarcastic.
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Every rupee represents RBI liability of that amount. When its burnt, the liability is gone. Say you have to give @avi 1crore and you gave a post dated cheque. If he burns the cheque, you automatically saved/earned that money. Its simplified but basically similar concept.
 
BJP Youth Leader Who Was Ready To Stand In The Queue For 'The Progress Of The Country', Held With Rs 20.5 L New Currency

This is the ground reality. People who never had to stand in line and changed their black money at night then go on facebook, twitter or whatsapp and diss at the plight of people who have no choice, but to stand in queues for days to get their own money without success. In fact, in many cases, these are the kind of people who are claiming to be in full support of this bad implementation.

A colleague was telling me today that many people at my own work place who exchanged their unaccounted cash by paying commissions have voted in favor of demonetization on the NaMo app and also writing comments in WhatsApp and social media about the lack of "patriotism" among the people because they were complaining about having to stand in lines and not getting cash.
 
Lord Nemesis said:
BJP Youth Leader Who Was Ready To Stand In The Queue For 'The Progress Of The Country', Held With Rs 20.5 L New Currency

This is the ground reality. People who never had to stand in line and changed their black money at night then go on facebook, twitter or whatsapp and diss at the plight of people who have no choice, but to stand in queues for days to get their own money without success. In fact, in many cases, these are the kind of people who are claiming to be in full support of this bad implementation.
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Bengaluru Government Engineers Had 5.7 Crores In New Notes, Taxmen Investigate How

Bengaluru-based government engineers Jayachandra and TN Chikkarayappa earned not more than Rs. 10 lakh a year. Raids by taxmen on Thursday revealed the jaw-dropping extras they had acquired over time - a Lamborghini, Volvo, MV Agusta, Ducati 749, multiple luxury apartments, gold and Rs. 5.7 crore in brand new 2000-rupee notes.

Money seized from the officials and two contractors in Bengaluru is the biggest haul of new cash since Rs. 500 and 1,000 notes were banned on November 8, a move to choke tax evaders. Around Rs. 90 lakh in old notes and 16 kg of gold and jewellery worth five crores were also found. Stacks of new notes on a bed made an unusual sight amid a severe shortage in banks.

Jayachandra is the chief project officer of the State highway development body and Chikkarayappa is the Managing Director of a civic body in charge of the harnessing the waters of river Cauvery.

The officials have admitted to around Rs. 152 crores in unaccounted wealth. Sources in the Income Tax department believe the final tally could be far more.

The engineers were suspended today, on a day the government warned that those trying to convert their illegal, untaxed money would be punished and coordinated action is underway.
"Trails are being pursued by agencies. The result is already visible. It will be more visible in the coming days," said Economic Affairs Secretary Shaktikanta Das.
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Sources in the Income tax department said investigations are focused on how the Bengaluru officials managed so many new notes at a time they are in short supply and are being rationed by banks and ATMs as there isn't enough compared to the demand.

At least one bank official's involvement is suspected, said sources. The manager of a cooperative bank is suspected to have helped the officials with new notes for a commission. Karnataka is governed by the Congress.
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Rumors aside, These folks are known associates of Karnataka CM and allegedly they exchanged currency from an Co-operative bank.
 
^^ Is the demonetisation responsible for smoking out such tax evaders, or could the raids have been conducted even otherwise? Genuinely asking, not criticizing.
 
kidrow said:
^^ Is the demonetisation responsible for smoking out such tax evaders, or could the raids have been conducted even otherwise? Genuinely asking, not criticizing.
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Well that's true. Otherwise it wouldn't have been possible.

The way i look it as a win for honest tax payers in coming future.
 
Recently a former MLA from Karnataka residing in Bellary by name Gaali Janardhan Reddy held a marriage function for his daughter.

He is rumored to have spent Rs.500 crores or more just for her marriage.

The above said former MLA was in prison until recently for unaccountable assets by a trial court where the CBI has investigated.

He is now out on bail.
 
The move by Modi ji regarding de-monetisation was welcomed by every one.

Another rumored move which might happen from March,2017 is regarding land or immovable assets owned by any individual.
Even this is a much welcomed move by Modi ji.
According to this every individual who owns any amount of property needs to register or enroll such properties in Electronic Property Passbook(EPPB).
For such registration or enrollment, every induvidual will be given 1 year or so duration.

If any individual who does not register within the stipulated time can do so by paying extra charge and that too for another 6 months.

After which every property not registered or enrolled deems to become the property of the Govt of India.

But the rumored move regarding accountability for gold assets for any individual needs so many clarifications.

How can gold ornaments given as gifts, inherited from mother, grand mother to daughters or others can anyone get proper receipts.

For all such above purposes, Central Govt already issued orders for re-enrollment of former or retired IT personnel for a period of 2 years on temporary basis.

This move I like the most.
The wordly truth is that even empires or regimes fell when they turned against Women.

Modi ji needs to clarify what amounts to accountable gold assets and what does not.
 
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swatkats said:
The way i look it as a win for honest tax payers in coming future.
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That's just wishful thinking. I think I would come close to believing that when at least 99% + politicians of BJP, congress and other political parties get thrown in jail since they all hold black money.
What I see is a small fraction of black money which is cash form just changing hands at expense of tax payers money and hardships.

Regardless of intentions, when a govt seeks to apply rules selectively to penalize certain wrongdoers while protecting other wrongdoers and ignoring how many bystanders gets crushed in the process it is nothing more than a perversion of basic principles of justice. The worst part of it is that even the people that they do want to penalize are getting off easy and its only the bystanders facing the worst of it. Yesterday, I stood in a queue at bank for 4 hours from 9.30 AM to 1.30 PM to get money that I saved after paying 30% tax while apparently, some people at my own work place with unaccounted money exchanged that for new currency pretty easily and paying no where close to the 30% tax that I paid.

Secondly, taking away all the cash from the people and forcing them to completely rely on system that is their control is not in the least a good thing from the perspective of civil liberties. Just wait till heavy restrictions are imposed on digital banking as well which is probably coming soon. The people with credit and debit cards don't see a problem now because they can still spend as much as they want through those channels. What if the govt next rations your digital spending as well? Then regardless of what you earn, you will be only able to use your earnings only as the govt dictates. Taking the money hostage is one very good way to get dictatorial control over the population.

The only thing presently stopping the govt from altogether abolishing democracy is the parallel judicial system which still has significant power afforded by the people and the govt has been making focused attempts to get the judicial system under their complete control and the stupid people of this country are actually supporting that too. History is repeatedly testimony to the fact that every dictatorship that ever came into existence was created not because the dictator is some sort of super human with immense power, but because of thoughtless people who afforded them such power.
 
I am still not getting this.. MODI statement of Cashless Economy..

When maximum number of people depositing and withdrawing their money...
they are considering banks as a Source to convert their black into white and then again making a pyramid of Cash at Home lockers..

With these practices, how it can be cashless economy ?
 
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