[Chetan_Rao]

Originally Posted by Samurai

....
As I feared, they kept increasing the cash supply and we are back to square one.

Be very interesting to know 'why' the cash supply was allowed to get back to previous levels given it flies in the face of all stated objectives, though I doubt anyone who actually knows will be forthcoming with that info. Possible realization after the shock & awe subsided that the cash economy isn't really ready or capable of transitioning to cashless en masse? Some other unaccounted variable(s)?

We stopped getting facts/stats the moment numbers started diverging from the narrative, sometime around Jan-Feb 2017.

[Sawyer]

Originally Posted by jraj

Stock markets have mind of their own,sir. Remember the mood when Sensex hit 6000 and closed above 6000 in Jan 2004 .I vividly remember the celebration and then the India shining episode which followed that.

We all know what happened in May 2004.

As patriotic an Indian as any other, I am counting on something similar to happen. I don't much care what happens to the Sensex though.

[avira_tk]

Originally Posted by vishnurp99

I see 4 direct benefits of DEMO so far.

1. Real estate has got more affordable. That's not a good thing for me since I hold some real estate but it's good for the vast majority of the population.
..
3. Interest rates and inflation have fallen. Big positive for the country but bad if you were sitting on large deposits.

The vast majority of the population don't care about real estate because they operate in the unorganised sector and that's been destroyed by this idiocy. No one can hope to acquire assets when their livelihood is at risk. Actual deals aren't happening, even with reduced prices because you finally need growth to service the loan.

Interest rates have fallen because banks flush with funds and sitting bad loans have no one to lend to, capex isn't happening, so the banks are pushing retail lending , tempting people with low rates. Big depositors won't be affected , they've got other options. Inflation is down because growth has slowed, thanks to demonetisation, if oil prices go up because of the latest developments in the kingdom, the propaganda from the government will be a lot less effective when the inevitable disaster comes about.

[Sawyer]

""We welcomed the demonetisation initially in spite of having to let workers go because we couldn't pay them in the first three months or so," said K. Velmurugan, treasurer of the Small and Tiny Industries Association in the southern state of Tamil Nadu. "But after everything, the government has still not caught any persons. So, what then was the meaning of all that suffering?"

More and more voices will join this question and other such questions as the days, weeks and months pass. Unless some other big sleight of hand move is pulled off to distract people away from the question. But in the long term, karma will extract its due price in full; it has never failed to do so.

[msdivy]

Originally Posted by Samurai

As I feared, they kept increasing the cash supply and we are back to square one.

What were the options against increasing cash supply? Equip every Indian with a smartphone with the data plan? Or give every Indian citizen a credit card, debit card? The whole situation was like jumping into a pool and then figuring out that swimming skill was required to get to shore. Flying by the seat of the pants (making quick decisions on the fly) has its advantages. But can't learn swimming by that technique.

PS: I had made my stand clear in this thread in the posts last year. Let me reiterate: I was very excited when Demo was announced. But in about few days when then they released Rs 2000 notes, I knew - these guys had blown it. They didn't have a plan. A bold and great move was reduced to a farce. The biggest joke being RBI deciding how much to spend on a wedding and revising on daily basis.

[Samurai]

Originally Posted by msdivy

Or give every Indian citizen a credit card, debit card?

Bank account with a debit card would have done the trick. For lesser transactions, there was always the ₹100 bill. According to a paper published in May by Manuela Kristin Günther from the Overseas Development Institute, 90% of Indian households have at least one bank account. Unfortunately, a lot of them are unused because people prefer cash, in order to avoid income and sales tax. I know lots of businesses/shops who never accepted digital payments even at the height of cash crunch, in fear of revealing their real income. Even corrupt officials never reduced their bribe rates and still insisted on bribe in new cash. Now they all feel vindicated.

I know many who converted huge amount of black money to white after demonetization, by paying one time tax. One of them who is a doctor, told me that he had never paid tax in his entire life until demonetization. He is 75. He is still very outraged that he had to pay that tax. None of them had no scruples that they never paid tax.

So don't blame the government entirely. Lots of non-tax paying citizens and corrupt officials did their best to defeat demonetization. Like a clap or a handshake, the success of demonetization required two hands.

[sachinpk]

Originally Posted by Samurai

As I feared, they kept increasing the cash supply and we are back to square one.

Do we know that if GoI/RBI has issued exactly the same value worth of new currency? I mean if Rs.10,000 was the value of the old Rs. 500 and Rs.1000 notes, GoI/RBI has issued exactly the same value worth of money in Rs. 2000/-? I am not sure of that. But one thing I observed is that the group of businessmen who always wanted cash, have slowly started asking for it. They do have credit card swiping machines, but they charge 2% extra. I had to buy a mobile phone holder for my car, and I saw this live. But I was one of their usual customer so they waived of the 2% extra bit when I swiped my card.

But what I could make out is that every body who wants cash, and can some how defer their expenses in cash; have started doing it. Was reading in the social media that builders etc. are still willing (and like) to accept cash, because they still have a way to distribute the cash as wages etc (and show it as part of their expense on the books etc.).

Originally Posted by avira_tk

The vast majority of the population don't care about real estate because they operate in the unorganised sector and that's been destroyed by this idiocy.

I don't know the sample size (and the area from which they are drawn) based on which you had made this claim. I could have agreed with you (partially) if you had made such a claim may be one or two months after the De.Mo. But now it has been one year. If a large chunk of India's population have been busted by this activity; then the results would be much more obvious by now. Poverty and loss of income for such a large population would have forced the people to riot, indulge in robbery, and in the worst case even to commit suicide. How many such cases got reported (especially considering that media in India is extremely hostile to the current government). Nothing of that sort happened, and in one big state level election the results were even more clearly written.

The problem you listed would happen in a society which was largely based on unaccounted money. Sir, are your samples from Kerala? Don't take me wrong. Kerala for a long time has been "putting up a good show" based on unaccounted money. Every body did every thing possible to evade tax, and it was not considered a sin at all. Just yesterday three Malayalis have been caught forging notes sitting in a village in Bangalore city suburbs. Their fake notes all have been routed to the in-famous Koduvally town, in Kozhikode (national capital for havala operations). I have seen real estate prices really taking a hit there. I know people who have been sitting on large swathe of land, because no one is coming to buy them. I have also seen business establishments like gymnasiums "taking a hair cut". Why, the gyms operated on cash mode, and 99% of their patrons also operated on cash mode. Another case I know are of textile shops. These folks could literally freak out, because it was very easy for them to cook up their account books, and they also only dealt with cash. People associated/working with these sort of establishments would naturally take a hit.

if oil prices go up because of the latest developments in the kingdom

If Kingdom starts acting too smart, India would open up a different channel. India has already started procuring oil from US. With every major economy/country now working on alternate fuel, it is also better for the Arab Shieks to think differently.

Originally Posted by msdivy

I had made my stand clear in this thread in the posts last year. Let me reiterate: I was very excited when Demo was announced.

I was excited (just like you), and do I have the same level of excitement, well no. Do I feel DeMo failed? It is still 50-50. Why? Because I feel De.Mo is just one small battle, part of a big war. You can still lose a battle, if you can win a war. No politician in India would take a risk, if he knows that his political career can be finished by a false move. Especially when it comes to politicians who have seen witch hunts happening on them for 20+ years. Losing is not an option for these folks. De.Mo happened and it has moved on. GST happened after that, which again ruffled a lots of feathers. GST system is now getting fine tuned. Next would be the scrutiny of land holdings of people, effective usage of the RERA and the Benami Property Act (2015). Aadhaar; the court cases against & for it would also be a big indicator on what is to come.

[pgsagar]

Last year when they announced demonetisation, I wondered how many black-moneyed would die of heart attacks or commit suicide next day. But, it turned out, not a single such incident was reported. Are we to assume there is no black money in this country? Then why were they so relaxed? And, on the contrary, it was some poor people who lost their lives in bank queues. And, when they took out 1,000 rupee note and brought in 2,000 note, I lost whatever little faith I had in demonetisation.

[pramodkumar]

People who still feel that Demonetisation was the best thing that happened to India should watch this video, If you still feel no jobs were lost and no one got affected you should definitely watch this.

https://www.youtube.com/watch?v=AxdmLwutQ_s

Pramod

[srishiva]

I know lot of businessmen who were really worried the next day of demonetization. But as it happens in this country, there is a way out of everything. I think that is what killed any good outcome. The govt kept discovering these ways after it had been in practice for some time and it was a wasted opportunity. Does the govt realize this ? Yes, but how can you accept it ?

I pay everyone using my debit cards or cheque for small to big amounts. It has brought in some change at least in Cities.

[Sawyer]

There is a larger problem that just demonetisation. This action is one of many that are emblems of how the Government is treating its citizens these days. GST, Bullet trains, Aadhar linkage for existing bank accounts, the social media trolling - and here I agree that every party may be guilty, though some a lot more than others - are just a few instances that are very troubling. There are other well known ones as well that will derail this thread if discussed here like the singing of the national anthem in theatres is with the consequent bullying this encourages.

In today's India, it seems to getting more and more to the point where we are guilty unless we prove our innocence. Or patriotism.

Pointing to South American or African countries as banana republics will soon start looking inappropriate.

[Nav-i-gator]

Originally Posted by Sawyer

There is a larger problem that just demonetisation. This action is one of many that are emblems of how the Government is treating its citizens these days. GST, Bullet trains, Aadhar linkage for existing bank accounts,

In today's India, it seems to getting more and more to the point where we are guilty unless we prove our innocence. Or patriotism.

how is the bold and underlined part a problem?

On the brighter side of things, I found this article explaining the thinking behind a lot of shocking disruptions the present govt has undertaken.

https://hbr.org/2017/11/how-india-is...-first-economy

[sachinpk]

Originally Posted by Nav-i-gator

how is the bold and underlined part a problem?

Aadhaar linking is a problem for many, because their entire financial history can be summed up in minutes. Let us face it; a lot many Indians are okay with the corrupt system which is in place; provided they also can be equally corrupt and make more money. This I have seen at real close quarters; my own family members & close friends. So I don't find it difficult why other citizens of India behave like this.

Any body who may be strongly in favour of Aadhaar linkings (or even De.Mo and GST) would be the people, who are salaried, who are not into any business ventures, and also not rich through ancestral property etc. For such people, how much ever Aadhaar linking the government does, nothing can go worse than what they are facing any ways .

"Aadhaar link up to bank accounts", I can write pages about my experiences. A "poor" person (with two cars, good estate yields) worrying about the whole thing. Another government official who drew a five figure salary, but was still "poor" in the ration card records totally frustrated on how the "times are changing" etc. All were worried that their actual financial status is getting exposed (with a tax notice coming soon).

[Sawyer]

There are two issues about Aadhar, the one in principle and the other practical.

In principle, there are serious privacy issues. Fortunately, we still have an independent Supreme Court; I am looking forward to see how the Constitution Bench rules on this and related issues soon; I am in particular as impressed by the present Justice Chandrachud as I was not by his father when the latter was CJI. Also in principle, the scheme was started to ensure that subsidies reach all the needy and only the needy. And like demonetisation, the ones that have real wealth stashed off shore will not be affected. No bank outside India will give two hoots about any Indian Government diktat to link these accounts to an Indian Aadhar Card. And this linking to Indian bank accounts will just encourage more offshore banking.

The practical is enrolment issues. I know folks over 90 that are struggling to deal with this diktat. Last year, they were harassed with their savings in notes being made worthless. Now it is their hard earned and tax paid money in banks that will be frozen. Many can't go to enrolment centres if they found a working one close by, of which there are fewer and fewer.

As to the rest of what I wrote, my intention was to refer to the way these things are being done, not necessarily the things in themselves. And the misplaced sense of priorities.

[jraj]

255 pages and some passionate arguments on how this is the silver bullet to get rid of blackmoney.

My take on this futile exercise can be summed in this article - Rs 24 crores in new currency caught right away and even better RBI says they have no clue where the money came from,though it was serialized bundles seized.

Oh well, this is a country where the propaganda of chips embedded in notes flew pretty high. So yeah - demonetization was a fabulous move launched by the incumbent Govt to fight corruption and black money

http://www.thehindu.com/news/nationa...le19914483.ece