[earthian]

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.

Absolutely. Same experience here. And guess what? All salaries paid through bank accounts in December. And no one complained or was unhappy. On the contrary, one of the help commented that he would be able to increase his savings. My wife asked him to open a recurring deposit with auto deduction.

On a more sobering note, a banker was recounting the horrifying time they had during the currency 'exchange' period. He said that 'operators' would bring large hordes of people in tempos to stand in line and exchange old currency. He said that the deal the fat, black cats gave was "Give a new 2000 note and take old currency 2500". This cycle was repeating itself and they were forced to complain to their head offices which led to the inking of the finger, which led to angry outbursts since a 'good' thing was being plugged.

The Government initiated a good move. They tried reasonably to plug some obvious holes. When they saw any holes which had not been envisaged, they rushed to plug it. I don't find any fault with either the intentions or the resolve of the Government to try and eradicate black money. If at all, they should have roped in some of the same 'operators' to throw up various means of bypassing the system, since the straight thinkers can only envisage some obvious ones.

I don't for a moment think that we have seen the last of the Government moves to eradicate or at least stem the black. More to follow and i am waiting, rubbing my hands with anticipation and glee.

[poloman]

Originally Posted by mayankk

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?

I think you misunderstood my post. I have hardly seen any salaried tax paying guy with out any other income hoarding cash. But middle class is not only the salaried class. There are only around 2Cr tax paying individuals in this country. So where should we account the rest? Do we need to understand their income is less than 2.5L or all are farmers. The harsh reality is that these are the real tax evaders in this country. They may not be filthy rich and will come in the middle class bracket. But they do the entire transactions in cash and under report their income.
This landlord guy is not paying tax since he was not willing to part with his PAN number for HRA exemption and was open about the reason.
That said I am not for a fully cash less society. The physical component will be always there. Transactions less than 100 or even 500 should continue to happen in cash and they should keep 500rs note as the highest denomination. That will be the right approach.

[msdivy]

Originally Posted by vishnurp99

I think we should add a poll to this thread to find out what the team-bhp members actually feel. The choices could be -

1. Severely pained by Demonetization and there will be a net loss
2. Moderately inconvenienced but think there will a net gain at the end of it.
3. Slightly inconvenienced but think that there will be a net gain.
4. No inconvenience at all and think that there will be a net gain.

Right now, it may be the vocal few whose voice is being heard.

We need 5th: No inconvenience at all and there will be a net loss. Effort spent on demonetization is far more than any gain from it. There will be a direct loss to Govt. I am not counting the indirect losses and losses from unintended consequences.

I must have spent 30 minutes total of my life time depositing old notes & getting new currency. You can say I am not affected at all. This whole demonetization effort of Govt is futile. Most pain & least gain. We are back to square one, just that old notes have replaced new notes. The game was on. Some folks had tamed the rules. What Govt did was paused the game and recounted the points. Sure some folks lost some points, which is negligible to them. The game will continue again. No rules changed. People who had gamed it, will continue as before.

Demonetization is a bold move. I appreciate the Govt for even attempting it. But they were not prepared and rushed into it. As a result of demonetization,
1) Counterfeiters have deposited their fake notes via non-banking and got new notes. It will take years before banks can scan the notes and identify the fakes.
2) Black money hoarders have converted their loot in old notes into new notes.

Originally Posted by sachinayak

Government expected people (in general) to be honest, but corruption is deep ingrained into our system (and not just government).

Government is people & people is Government. Who is this Government expecting people to be honest? BTW, if people were honest before, there wasn't need for any effort from Government . Why did the Government suddenly expect the people to be honest after Nov 8th?

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.

Will the 50-day effort affect this person? PAN of the landlord is mandatory for rent more than 8K before Nov 8th and so is now. What changed?

Originally Posted by Samurai

If this had been told upfront, most wouldn't have understood.

Does it matter whether people understand or not? And will RBI able to bring large transactions under banking system?

Originally Posted by poloman

Are you OK with a trader with 25L turnover absolutely zilch tax where as a salaried individual with same income pay 30% tax?

There can be 2 sources of black money:
(1) Tax not paid on income generated legally. Eg, Traders, consultation fee of professionals.
(2) Income generated illegally. Eg: Bribes, trading banned items

Govt doesn't have a mechanism to catch case (1). At best, based on complaints, Govt can investigate case (2). I would have expected Govt to frame rules, lay foundation & build the infrastructure to account for all financial transactions. Without these, the 50-day effort will remain just an attempt.

[ecenandu]

Originally Posted by vishnurp99

I think we should add a poll to this thread to find out what the team-bhp members actually feel. The choices could be -

The poll results will be skewed and won't be a representative one. Most of us here are more likely to be the least affected by this move. Anyway, it will be an interesting poll for sure, can't see that coming, though.

[Saanil]

Guys,

As far as I read, the last day to exchange your old notes for the new ones is Dec-31 right? Don't you think this timeline is a bit aggressive given the shortage of manpower in banks for this huge task? Any sense of whether this deadline will be extended? What is the harm in extending this deadline for say 3-6 months? This should not affect the positives one expects to achieve from demonetization right? How does it matter if the deadline is Dec-31 or March 31, 2017? Sorry but I am not an expert here and just asking very basic questions.

[sudev]

One: if figures being given by RBI are to be taken then most of the old notes are already deposited.
Two: There are hardly any queues for depositing old notes, at least in Delhi NCR

Changing deadline without very cogent reason will result in weakness of system and banking

[nowwhat?]

Originally Posted by Saanil

As far as I read, the last day to exchange your old notes for the new ones is Dec-31 right?

It's actually December 30th.

[Eddy]

Originally Posted by sudev

Two: There are hardly any queues for depositing old notes, at least in Delhi NCR

Stood in a 10-15 minute queue to deposit the old notes a couple of days back. This was the HDFC branch in Cyberhub.

PS: The queue may have been shorter had we not gone immediately after the lunch hours.

[Thad E Ginathom]

Originally Posted by dark.knight

... ... ... 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.

Originally Posted by poloman

I will also keep it short and sweet. Are you saying that digital economy is bad?

Earlier in discussion, not sure where, I said that no country in the world does without cash for smallish transactions. Since then, I heard that Sweden [if I remember correctly] comes close, a resident saying that they could spend days and days without cash in their pocket.

I have no idea how Sweden achieved this, but I really doubt that it was forced on them overnight. My mother country has been living happily with plastic for decades, but there is still plenty of cash in pockets, and plenty of cash being spent. Generally, the plastic comes out of the pocket for the larger items.

I am perfectly happy with plastic transactions and perfectly happy with internet transactions (at least on my own computer). I am not so happy with "app" transactions, as the entire environment is not, in my humble opinion, proven sufficiently secure.

My life in UK (born 1950s) dates back to the days when getting cash meant cashing a cheque over the counter, and getting cash from any other branch but your own meant them making a phone call (for which the customer was charged) to the home branch. A far cry from being able to walk up to any ATM of any bank, or passing plastic over the shop counter. This situation evolved, shopping/spending habits changed gradually. It cannot be forced.

Actually, in UK, wages paid direct to bank account became common even before there was so much plastic. There were just too many attacks and robberies on staff collecting the weekly payroll. Employees might have preferred those little brown envelopes, but they could see that it was their own colleagues at risk. My own employers, 1970-something, changed after such an attack in which, thankfully, nobody was injured,

If this fully cashless economy was being pushed in UK now, and I was there, then my reaction would be: tory government, bunch of bankers, of course they want to potential to make profit on even more money passing through their hands --- and they certainly are not going to do it for free, and why should they? they are commercial entities.

So, bankers laughing all the to the, err... bank. Seems to be the end result of all this.

[poloman]

Originally Posted by msdivy

Govt doesn't have a mechanism to catch case (1)

Promoting digital economy or strict enforcement are the only two ways to increase tax compliance among these groups. If more and more customers go for digital payment they will be forced to comply just for the sake of survival.

Originally Posted by Thad E Ginathom

If this fully cashless economy was being pushed in UK now, and I was there, then my reaction would be: tory government, bunch of bankers, of course they want to potential to make profit on even more money passing through their hands --- and they certainly are not going to do it for free, and why should they? they are commercial entities.

So, bankers laughing all the to the, err... bank. Seems to be the end result of all this.

Even I am not a big fan of app based banking or forced digitization. But the problem in India compared to UK or US or Sweden will be a total disdain for paying tax and as a result very poor tax compliance. Most people have this strange attachment for hard cash or wad of notes. Simply they will queue up for cash at ATM and pay that up at places which any way accepts plastic which they used to withdraw cash from the ATM. This is a strange but inherent behavior. So unless some shock treatment is given, people will prefer status quo. So some minister rightly put "the aim should be less cash economy if not cash less..!"

[nowwhat?]

Originally Posted by Thad E Ginathom

I have no idea how Sweden achieved this, but I really doubt that it was forced on them overnight.

Sweden could be the first country to go cashless -> Sweden could be first country to go cashless as even churches are taking cards for offerings.

Since we are talking about Sweden and considering we are all motor enthusiasts here, it is interesting to note that Sweden switched overnight from driving on the left side of the road to the right and it wasn't pretty, but they stuck to it.

[earthian]

Originally Posted by Thad E Ginathom

...Generally, the plastic comes out of the pocket for the larger items...

Seems for the smaller items too...

The New Polymer 5 pound note

Originally Posted by poloman

..Most people have this strange attachment for hard cash or wad of notes...

You yourself said it earlier. It is because the average Indian does not want to pay taxes if he can help it. Secondly, the tax laws/rules, procedures and processes are complicated and the attitude of the tax authorities, at least in the common man's perception, is one of suspicion, vindictiveness and authority. Not saying that they are like that, but saying the common perception. "Lafduma kem padvu? meaning why get into trouble, is their thinking. Not unjustified though.
I was returning by an international Air India flight flying a domestic leg from New Delhi to Ahmedabad. Since i had quite a lot of photography equipment, i wanted to declare to the customs at New Delhi before boarding, so that customs at the international airport at Ahmedabad would not view the equipment as being imported into the country. Normally one fills up a form and gives it to the customs officials at the point of boarding. However, in the International Terminal of IG Airport at Delhi, the customs officials said that no form was needed. In fact, they first asked me to produce a receipt or a bill; and when i hotly challenged them to show me the rule book where in it is stipulated that i need to carry a bill for any item i carry when travelling on the domestic sector; they relented and asked me to carry on, saying that the practice of form filling of foreign made goods while travelling in the domestic sector has been done away with. Surprise! When i travelled in the same airline, again in an international flight operating on the domestic leg, i had to fill the form at Ahmedabad. Just 12 days back! Such are the rules, or lack of them and the discretion in applying them, that do not inspire confidence.

[sukhoi30]

So, the discourse has moved from "withdrawing/exchanging" cash to "becoming cashless".

Couple of things here ...

1. Some people are under the impression that Govt. is forcing you to go cashless.
-- What action of Govt. suggests so? Yes, Govt. is encouraging people to go cashless for a larger cause. That is why several announcements like discounts, waivers etc.

2. cashless transaction may not be secure or it is not reliable.
-- Well, if you are using an e-wallet system, you will be storing a limited amount say Rs. 1000 to Rs. 5000. Which is an amount you would anyway keep in your pocket, right? With cash in your pocket you encounter risk of pickpockets, thieves, mugging, loss of purse etc., don't you? So, some risk is necessary in every aspect of our life.

I see this as a problem with many people who are averse to two things : change and risk taking. Getting people out of a comfort zone is not an easy task. What I appreciate the most about this Govt.'s step is that they are attempting a change with a great risk. It could go either way, but definitely it will shape the future of this country in a better way, whether one likes it or not.
Overall the people of India have accepted this change in a positive way with the understanding that there is some amount of risk in the process.

Contrast this to the Greek crisis sometime in 2008 when the world was struggling with a financial crisis. Greek Govt. as part of a bailout plan, shutdown banks, limited withdrawal from ATMs, increased taxes (rather than increasing the tax base), introduced austerity measures etc. The result, widespread protests, rioting and lot of lives lost. Over there also long queues were seen in front of ATMs and banks. In fact, if you search some recorded footage, there were riots right in front of the banks.

So, for all the opposition posturing, none of that has happened so far here. People went about their business, managed the low cash situation, moving to a cashless system and all this without much fuss.

[sachinpk]

Originally Posted by earthian

You yourself said it earlier. It is because the average Indian does not want to pay taxes if he can help it.

Then the average Indian also should not expect any good service from the government either. He should cope up with corrupt leaders, corrupt government officials, inefficient public transport and bad roads. But I don't see that happening. Every one wants every good thing in life; but at another person's cost. Fat chance that is going to happen!

If this is the mentality of an average Indian, then no amount of freebies or incentives is going to make the person more honest or ethical. Giving more freebies is only going to make him/her more greedy and expect more freebies (without giving back any thing). And to be frank, I have not seen any nation with such people have grown/developed beyond a certain point.

[Samurai]

Today I went to 3 shops in small towns, none would accept card or paytm despite the bill at each place being closer to 1000 bucks. All gave excuses like none of their customer like to pay using card. I asked them how do you know? First give a choice, then figure out whether they will take it.

At least two of those shops make over 50K in revenue each day, all cash. It is easy to see that their real reason to stick to cash is to avoid tax. BTW, none of them gave a receipt. They gave multiple excuses for using cash, but they failed mention they don't want to pay tax.