[msdivy]

Originally Posted by Sawyer

I will take that risk if I have to, beyond what I already have when I sold my old motorcycle, as have many people whose examples I have given here, who I applaud. If I do not take money from anyone in excess of what I take from other customers, there cannot be any money laundering, or action under any law relating to money laundering. Any income tax liability would be to my account; no problem with that.

I hope the 'risk' part is fully understood while accepting old notes post demonetization. It means in the worst case, Police may file a criminal charge of being a conduit for fake money & black money conversion racket.

I am appalled at the various notifications on currency limits being issued by the RBI. The numbers doing rounds are 2000, 4500, 24,000, 50,000 and latest being wedding withdrawal of 2,50,000. Our is a complex country. People here live on Rs 50 per day to Rs 50,000 per day. There are big cities, small towns. villages. People travel, migrate. Most don't have bank accounts. This one size fits all limits published by RBI isn't helping. Sorry to see premier institute like RBI grappling with the situation presented itself.

Couple of wisecracks:
Demonetisation in a booming economy is like shooting at the tyres of a racing car: Jean Drèze

Demonetisation decision by PM Modi 'worst mistake of his career': The Economist

Almost all of my transactions are via credit card and I need around Rs 500 cash per week to buy groceries, veggies and other small items. I can eliminate this if I take my car & drive 2Km to the nearest supermarket, instead of walking 150 meters to the nearest mom and pop store. How am I affected? I cannot withdraw Rs 500 I need every week, whenever I want. I see queues in the ATMs that have cash and shutter down in rest of the ATMs. Secondly, the regular card transactions are not going through. The cashier has to try a couple of times to get through. I am surprised that banks are not able to handle the marginal increase in load.

There is a nice narrative - there is someone who has stuffed cash in his home, who spends on land, gold and extravagant weddings. And this demonetization will make that person return his ill-gotten wealth, like the 80s Bollywood angry young man teaching business men their lesson. Ordinary folks are sold on this narrative and are standing in queues with a vision of better life. They will be disappointed. Sure, few would be affected, but who is suffering? None of the black money holders are, none of corrupt are - they have got on with life with new notes. Black money was like bonus to them.

Originally Posted by sukhoi30

You can clearly see that so many corporators/politicians and govt. employees own high-end cars like Audi, Volvo, Mercedes etc. Where do they get the income to buy such expensive stuff? How do they manage to build houses in prime locations? How can their children study abroad or in B-schools without even the necessary qualifications? How can they afford expensive foreign vacations?

In most cases those goods would be bought by white money in exchange for favors from businessmen. Current demonetization won't affect them.

I am all for fixing the system. But the method that being followed now is like putting put the cart, which is broken, before the horse. Would have liked hear the explanation and future plan of action. Alas, that won't be shared since it will alert the black money hoarders. Just trust the guy to deliver. Maybe I am too much influenced by corporate American culture of asking for explanations.

[carwatcher]

In the article referred to by you, there is a killer line.

"The tendency to take bribe stems from a desire to have best in life," he said. "The lure of lucre is so intense."

And the comments one of the reader posted that, "If the desire is to have best the why the construction quality of Govt projects is so poor. To have the best is acceptable to them but to give the best is absent." Not exact words but the message is in those lines.

Originally Posted by sukhoi30

I normally do not quote media reports as I do not believe most of them. But here is a report in TOI which will give you a perspective.

http://timesofindia.indiatimes.com/i...w/55578767.cms

[diyguy]

Originally Posted by sukhoi30

For me, I have to save/plan for several years for a foreign trip, to buy a good car, to buy jewellery for my daughter's marriage, plan my children's education. And there are millions of others too who have this same approach. I am also inconvenienced but to a very limited extent. To me, this demonetization exercise has been a great leveler. Today, that engineer cited in the above article is in the same level or even below me in status

At the end of the article you linked, the engineer claims he has been able to launder the money and his savings are safe. I do not see anyone being leveled. These folks did have sleepless nights and some worries the first few days but things have fallen in place for them. In my immediate circle, there were 3 people with funds accumulated without proper payment of taxes. One had 1.1Cr, another had 2Cr and another had 30L. Of these I know the first and third were able to save their amounts by purchase of products and/or giving money on loan and getting back a lesser amount over a period of time. In these 2 instances there has been no leveling of any kind in fact this has made them confident that come what may, they will find a way out. I have not heard from them that they plan to pay complete taxes going forward. All I have heard is they will be careful to not keep cash in hand and that is the lesson they have learnt!!
I am in your boat in terms of foreign trip and car etc. I am also angry at the folks that they have not paid tax the way I have. I am irritated that people are getting away with their savings intact or eroded marginally. It is the common person that is actually facing hardship today.
We will have to wait and watch how this will benefit folks like you and me and the people who are less fortunate too.

[alpha1]

Mark my words, we will see a spread of bitcoins as a currency of the parallel world.
There will be hawala folks dealing with bitcoins and squaring it off to balance the transactions.

The game will continue as it has been for ages.

[sukhoi30]

Originally Posted by diyguy

I do not see anyone being leveled.

It will be wrong to say that no one is leveled. At least some were. It is also true that there are many who have kept the money in rolling and re-invested or possibly bought material goods entirely in white. All these examples and arguments hold valid in our country.
But my point is that this exercise is being done not to "benefit" or "affect" only few, rather this is part of a larger exercise of eradicating black money, cash dependency, corruption, terror funding etc.
Many here are saying that the entire exercise was not planned out well. That is also true. I don't think Govt. even intended to trouble so many people. Govt. should have planned well and probably chartered out a course for rolling out but it did not happen that way. Note that, if even a whimper of intention leaked out, this or any Govt. would never be able to carry out this exercise in the near future. It would have been an opportunity missed.

Read the below post once more if you have already ...

http://www.team-bhp.com/forum/shifti...ml#post4096432

I have tried to analyze and explain why the entire announcement turned out to be the way it did. Maybe that would explain.

[perty]

Originally Posted by sukhoi30

They all were able to afford this because of the rot in the system. Demonetization has in one shot cleared this rot, at least for a while. Today, if I go to a Govt. official for some task, he will think twice before asking me for a bribe. In fact, I am in a very good position today to expose such official given the mood of the public in the country.

Today, that engineer cited in the above article is in the same level or even below me in status.

Much as I want these people to be severely punished, I would question if these corrupt people are really affected badly. As that article points out, they are busy laundering their wealth and have been successful too at it, probably without having to go through anything of the sort that the general public is facing, like waiting in queues or wondering how they will pay for meals in the coming days. Like all others, the corrupt too are bearing this 'slight inconvenience'. Once the dust settles they will get back to work and work double hard to replenish their store of black money.

The real success will be when policy prevents the recurrence of such corrupt practices, by imposing a severe punishment that acts as an effective deterrent.

[msdivy]

Originally Posted by sukhoi30

Nov 02, 2016 : Dispensation of Rs.100 denomination banknotes through exclusive ATMs

[/b]

This notification seem to be the most direct yet from RBI to the banks. There was clear instruction to banks to calibrate and re-configure ATMs to dispense Rs. 100 notes.

But something happened from then till the day of announcement that is Nov 8th 2016.As you can see, RBI had given 15 days to banks to comply with this request. So, why didn't RBI/Govt wait for 15 days till the ATMs would be re-calibrated?

I strongly believe there was a leak at the top.

Most banks had resorted to dispensing only 500s & 1000s through their ATMs. Their reasoning was to have less frequent cash fills and hence lesser cost of operation. I think RBI acted on complaints from public and directed banks to stack more notes of 100s. All ATMs are already calibrated to dispense 100s. What additions calibration was required? It also mentions just 10% ATMs to exclusively to dispense 100s. What about rest 90%? If 10% takes 15 days, then 90% would take 4 months.

About the leak, what would have happened if it was leaked, which cannot happen now, I mean for the black money holders? They won't deposit. They won't be punished. At worst they might lose some cash, which was anyway bonus.

Originally Posted by sukhoi30

Read the below post once more if you have already ...

http://www.team-bhp.com/forum/shifti...ml#post4096432

I have tried to analyze and explain why the entire announcement turned out to be the way it did. Maybe that would explain.

Sorry, I re-read again. I cannot see any pattern. Those seem regular RBI updates.

BTW, I found this:

Bengaluru: An advertisement allegedly issued by an ashram, which claimed that it would convert demonetised Rs.500 and Rs.1,000 notes into new notes for commission, triggered outrage among citizens in the state.

Link: http://www.bfirst.in/news/namma-ooru...s-have-arrived

[gmhossain]

I have been reading this thread from day one. While merits and demerits have been highlighted many times but often what is missing a simple cost-to-benefit ratio! Let us consider these key numbers for India whose nominal Gross Domestic Product (GDP) is 2.25 trillion USD and with trade deficit of 100 billion USD per year (FY2015-16).

Some key numbers for our economy (FY2015-16):

• Nominal GDP: ~155 lakh crore per year ( or 0.42 lakh crore per day) with growth rate 7.6%
  
• Trade deficit : Import (crude, ..) - Export (software,..) = ~7 lakh crore per year
  
• Demonetized currency: ~14.5 lakh crore

Supposed benefit to Govt:

Tax gain (assuming no significant leakage, efficient tax officials, etc..): 10% of the demonetized currency:

Benefit: 1.45 lakh crore


Some immediate costs ("short-term pains"):

Downgrade to GDP growth: If whole of India operates at 65% efficiency (say around 2/3 capacity) just for 3 weeks, growth rate will grind to around 5.5% for current FY. For first few days, it was virtually like a Bharat Bandh!


Cost 1: Loss of GDP (~2%, up to 31st march 2017): ~ 0.42*0.35*21 = 3.1 lakh Crore

Cost 2: ... let's not count the wastage of sheer man-power


The move has caused large outflow of Foreign Institutional Investors (FII) from Indian market leading rupee to fall by 3.4% (vs USD) in just 2 weeks: On 8th Nov: 1 USD = 66.26 INR. On Nov 23: 1 USD = 68.48 INR. This will further widen the trade deficit . The BSE Sensex has fallen by 6% since Nov 8th. Despite Trump-shock most of major markets have risen during the same period.


I am a salaried person. A part of our savings that was put in a equity portfolio made a decent 20% gain in last one and half years. The entire gain has been wiped out in just last 2 weeks! Exactly, what is the long-term gain one is talking about from demonetization?

[carwatcher]

What is the experts opinion on these points :

a) How the Demonitisation process should have been carried out by the Govt. ?

b) Now as of today, what more the Govt. should do to make it highly effective.?
My opinion on this point is to bring out Judiciary and Police Reforms as well as quick mechanism regarding corruption and bribery complaints against Govt. servants. Of course, easier said than done.

c) With so much noise about Black Money stashed abroad since last many years, how much money is actually left as of now.? Wouldn't the hoarders would have managed to shift it as we have seen that all it takes is a blink of an eye to adjust whatever big is the amount like as claimed in the ToI article few posts ago. Or that is just a lollipop every Govt gives to its public ?

[Sawyer]

Originally Posted by msdivy

I hope the 'risk' part is fully understood while accepting old notes post demonetization. It means in the worst case, Police may file a criminal charge of being a conduit for fake money & black money conversion racket.

Yes Sir, the risk is fully understood, and then dismissed, based on that understanding. Not just by me, but by my entire supporting eco system that has completely insulated me from this chaos. My housing complex has the usual variety of stores, "supermarkets", chemists and vegetable vendors just outside the gate, that continue to accept the old notes even today; and even give change in return. I have therefore been able to postpone the cash in hand deposits to late next month, and have had no need to stand in queues even once for new cash because of how my referred support system is behaving. Even if I had not done so, the total deposit would have been a lot less than the 2.5 lakhs threshold; now, on Dec 20, it will be either zero or nominal.

To the point someone made about earlier about what is happening in the equity markets, my sincere sympathies. My gains have been wiped out too, but I have eliminated any further exposure to the downsides I now see by exiting equity and moving to debt funds; at least capital is intact. So, it isn't bad news at all for me personally.

Nevertheless, I see what is happening around me, and see a future that has a troubled country polarised more than ever before, and I get completely depressed.

Black humour brings to mind a typical Woody Allen comment: "I feel very depressed. So depressed that I contemplate suicide, but I find the thought of suicide even more depressing".

[srishiva]

There are reports that about 6 lakh crores have been deposited in the current exercise. If you add the amount of money exchanged, it could reach about half of the amount that was demonetized ? Not bad other than the physical cash crunch thats being seen.

Coming to lack of queues in ATMs, I travel 22 kms in Bengaluru to office one way and I see no queues. Mostly because I see most ATMs closed ! The few that are open have atleast 20-30 people and in IT parks, the queues are even longer.

[V.Narayan]

This must surely be the fastest growing thread ever on Team BHP. 1200 plus posts in a fortnight. It eclipses the Hyundai i10 versus Honda Jazz light weight world championship battle that waged furiously some months ago. My sympathy for those who have been affected adversely (marriage, illness, house under construction etc) and a chuckle for those who are struggling with their mattresses and trunks filled with the invalid paper. I got back, 2 days ago, after a long tour in SE Asia and clearly missed most of the chaos and excitement. On Tuesday I called my bank branch. They asked me to come over early enough and withdraw up to Rs 24,000 per account per week. Said I would have to come in person. Fair enough. I stood there for about 25 minutes collected my cash and left. It was no more dramatic than that. Inconvenient yes but not traumatic by any chance.

Like many others I run a business with several branches. Some petty expenses are always paid in cash. There was confusion for the first week but the accountants resolved it with the banks and life has moved on. We checked with our junior most employees if any needed a temporary salary advance to tide over. Only a handful out of a few hundred across 6 cities sought help. I don't know what is happening in the rural areas so will not comment. Most of the material floating on the social media seems contrived and exaggerated as is often the case. And as always we have our fill of experts in the media writing articles and commenting. None of them has any responsibility. Words are cheap. The true impact positive or other wise will unfold only over the next 6 months.

This will be a wasted effort if it is not followed up rapidly with much needed tax reforms - from our marginal tax rates to multiplicity of rules to the vast discretion in the hands of the assessing officer to that fact that if the Govt loses in a tax dispute they waste our (tax payers) money by fighting it endlessly till the last appellate stage.

We need to give the Govt a chance. If they don't do anything they are criticized and if they do something they are railed and ranted at. Think of all the terrorist and Maoist outfits that are suddenly broke. No one action will stem black money but we should take those that we can. Black money can never be fully eliminated in any major economy except by eliminating income tax! - not a bad idea actually. Black money, funding of terrorists and punching a knock out blow to competing political parties just before the U.P. elections - this is a three in one ice cream. In fact I would compliment the bank staff who are the real heroes of this saga.

[GrammarNazi]

Originally Posted by V.Narayan

This must surely be the fastest growing thread ever on Team BHP. 1200 plus posts in a fortnight....

My weird, but seemingly (IMO) sensible analogy :

What if Govt arbitrarily switched off the nation's internet & VPNs for 2 months claiming it needs to get rid of a few torrent websites ?

Wouldn't we all be up in arms, wouldn't the empathetic layman who only very occasionally used the internet, understand our plight and assist us in the protest ?

(This is when only 30% of the public is connected to the internet.)

But what has happened is that (in a cash based economy), 84% of the total currency has been suddenly banned to just deal with an estimated 6% "black money".

[FrozeninTime]

SBI has cut the Fixed deposit rate. Its below 4% for 210 days and less than 5% for more than 1 year. Bad days ahead for people like senior citizens investing in fixed deposit.
Those who are planning for taking loan this is the right time as SBI and other banks will be reducing lending rate in a few weeks down the line.

It seems whole exercise will benefit borrowers. I hope in all this hype we dont get carried away and lead to a financial crisis of 2008 in few years down the line due to indiscriminate lending by banks.

Rupee is weak against dollar and forecast by financial rating agency paints a grim picture with fall in growth. We are also witnessing a new phenomenon of Jobless growth just like western economies.

[kiku007]

The quoted FD rates above are for Bulk deposits (1-10 Crores) is what I read. Are you sure it's for below 1 crore as well?