India politics thread

berbatrick

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Reposting from elsewhere:
Won't it be scary for daily-wage earners, small vendors, and labourers who have only-cash savings, can they take enough time off work to deposit this money (if they even have an account)? Many don't even have acceptable IDs to open accounts with. Or live close to banks/post offices.*
Lots of reports about people buying gold too, which makes sense as a logical way to spend 500/1ks without being declared.

Apparently this was tried in 1978 by Morarji Desai!?!

Still, it should be an effective weapon against domestic black money users - mainly builders. Should also affect political parties, depending on where they keep their election cash hoardings. Won't touch anyone big enough to set up a foreign account though.


*The move from food distribution to cash grants had these same issues.
 
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berbatrick

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No idea how true (or widespread) some of those are but the basic point stands IMO.
 

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Half of those points, particularly like "children ran away from 'abusive' home with 'some' cash are just random and frankly too desperate 'what-ifs." Some others are too laughable to even pick out the flaws.

Instead of going around idiotically like that and coming across as a bitter that person could have made a simple point of saying that very poor people may need some helping hand. Without bank account also money can be exchanged. Jan Dhan Yojna Scheme or otherwise can help to open bank account.

Few stupid questions like disabled people not able to go to bank and want to be still self respectful (wonder how they did it till now and if they never went to bank) are answered by RBI already. For those who can't go to bank, they can give authorization letter.

Many more questions answered by RBI:
http://economictimes.indiatimes.com...-answered-by-the-rbi/articleshow/55320904.cms

The govt and RBI are doing many things to ensure very minimal impact for all sections. Still those who are left, that guy with twitter handle can launch an initiative along with similar minded friends, find out all these people who have no ID of any kind, no account but supposedly have piles of cash in 500 and 1000 denomination and are now going to suffer for life and then collect that money, deposit in own account and return their share back to them. We need such visionaries to do something instead of being keyboard warrior.
 

berbatrick

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Swaraj Abhiyan leader Yogendra Yadav tweeted: Positive move against counterfeit currency. Govt overplaying impact on black money. Opposition overplaying transitional problems.

Someone who knows a lot more than me and whose opinions I respect.
 

berbatrick

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http://economictimes.indiatimes.com...-answered-by-the-rbi/articleshow/55320904.cms

The govt and RBI are doing many things to ensure very minimal impact for all sections. Still those who are left, that guy with twitter handle can launch an initiative along with similar minded friends, find out all these people who have no ID of any kind, no account but supposedly have piles of cash in 500 and 1000 denomination and are now going to suffer for life and then collect that money, deposit in own account and return their share back to them. We need such visionaries to do something instead of being keyboard warrior.
No-one is saying they have piles of cash - if they did they wouldn't be without bank accounts or ID. They live from salary-to-salary and any savings they have are likely to be in cash.
And Jean Dreze attempted to do that (getting info about people losing out) when the switch from PDS to cash was tried out, he has written about it - and been attacked by the usual suspects for it.

What if I don't have any bank account?

You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.

What if, if I have only JDY account?

A JDY account holder can avail the exchange facility subject to the caps and other laid down limits in accord with norms and procedures

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst
That's great for the English-speaking class that reads the ET. Do you really think that in these busy banks poor people who rely on others for all documents will find time away from their jobs to file all the paperwork for a new account? Acceptable photo ID? JDY accounts: millions are lying dormant, many were opened by regional bank managers without the actual account holder knowing about it.
Again, I'm not an expert.
But it isn't hard to see that the most excluded people are possibly going to be hurt badly by this.
 

crappycraperson

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Swaraj Abhiyan leader Yogendra Yadav tweeted: Positive move against counterfeit currency. Govt overplaying impact on black money. Opposition overplaying transitional problems.

Someone who knows a lot more than me and whose opinions I respect.
Someone who is also a politician.

The Govt's agenda with this exercise is also to target counterfeit notes in the market, conservative estimate of which is 5000 crores.
 

crappycraperson

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BIG GAME!! Food for thought??

Did Mukesh Ambhani already know about this currency change? He invested billions in Jio & made it free till Dec 30th? Ironic...
& now,the currency exchange will only be allowed till Dec 30th & from Jan 2017 he will start getting returns all in white money!!
a real masterstroke by a visionary businessman or a trick by a fraudster...
only time will tell..
no wonder the Present RBI governor was a financial advisor to Ambani's Reliance group & an inside man..!!
Conspiracy Theories!
WHAT A GAME...Hats off !
Here is how uber rich people in India stash their black money

- Jewelry/ Gold
- Real Estate
- Off shore accounts

Ambani does not have a basement at his house filled with cash. I doubt he even dodges taxes anymore given how much siphons off 'legally' by colluding with Govt.

This task is obviously not the be for it all in terms of the issue of black money. Infact the intend of the exercise is more aimed at counterfeit notes than black money anyway.
 

berbatrick

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Someone who is also a politician.

The Govt's agenda with this exercise is also to target counterfeit notes in the market, conservative estimate of which is 5000 crores.
Yes, with intense personal hatred towards AAP and old hatred against BJP and Cong, and no hope anywhere.
What he said there doesn't seem very controversial, infact it contradicts what I'm saying. (and agrees with the point you made about the Ambanis of this world).


Found this:
http://scroll.in/article/821113/in-...ken-the-trust-our-monetary-system-is-based-on

which basically repeats my guesswork.
 

The Man Himself

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No-one is saying they have piles of cash - if they did they wouldn't be without bank accounts or ID. They live from salary-to-salary and any savings they have are likely to be in cash.
..and if they live 'salary-to-salary' those savings are likely to be not so big that amount of 4K person can't be exchanged. That too if they have that much of amount in 500 or 1000 denomination which is key point. The amount of 4K is per person so people can pool or take help of friends or family who have account.

hat's great for the English-speaking class that reads the ET.
I was expecting this question, wanted to answer in earlier post but thought will wait for it to come up :D. From yesterday I hv got fwds of two pdfs in hindi. There will be details in newspapers too. For illiterates and those are too poor, again who are carrying 500-1000 denomination notes, some help will be needed. Given the window is for 2 months, you can't possibly expect a person to go on with life, doing transactions with people and not find out about this for that long. There are colour TVs with dish antennas in houses of poor who live in badly assembled tin or cardboard huts thanks to corrupt politicians who buy their votes this way so that is another way for people to find out. Unless someone lives under rock for 2 months in country or is a sadhu in Himalayan caves (who doesn't need money anyway :p), I can't think why they will not find about this at all.


In the end, all said and done it is a great initiative. For almost all of independence, we have assumed and expected corruption, black money etc as part of our lives. Even common people in UPA-II had ceased to be surprised at new scandals every few months and had accepted that nothing can be done about black money, this will always be in our system. People had reached such stage where they were saying, "we are OK with politicians taking some cut from public funded money if they at least give us something value added from it." Finally a govt is doing something about it and with concrete steps. So, the desperate attempts like in those tweets do nothing. As I said above and in post on previous topic, we, the educated people should try to help people in our capacity starting from domestic helps at our houses. For rest, again, that keyboard warrior should launch an initiative and help all those who are getting affected 'badly.' He may get award on Republic day for it if done well.
 

berbatrick

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..and if they live 'salary-to-salary' those savings are likely to be not so big that amount of 4K person can't be exchanged. That too if they have that much of amount in 500 or 1000 denomination which is key point. The amount of 4K is per person so people can pool or take help of friends or family who have account.


I was expecting this question, wanted to answer in earlier post but thought will wait for it to come up :D. From yesterday I hv got fwds of two pdfs in hindi. There will be details in newspapers too. For illiterates and those are too poor, again who are carrying 500-1000 denomination notes, some help will be needed. Given the window is for 2 months, you can't possibly expect a person to go on with life, doing transactions with people and not find out about this for that long. There are colour TVs with dish antennas in houses of poor who live in badly assembled tin or cardboard huts thanks to corrupt politicians who buy their votes this way so that is another way for people to find out. Unless someone lives under rock for 2 months in country or is a sadhu in Himalayas caves (who doesn't need money anyway :p), I can't think why they will not find about this at all.


In the end, all said and done it is a great initiative. For almost all of independence, we have assumed and expected corruption, black money etc as part of our lives. Even common people in UPA-II had ceased to be surprised at new scandals every few months and had accepted that nothing can be done about black money, this will always be in our system. People had reached such stage where they were saying, "we are OK with politicians taking some cut from public funded money if they at least give us something value added from it." Finally a govt is doing something about it and with concrete steps. So, the desperate attempts like in those tweets do nothing. As I said above and in post on previous topic, we, the educated people should try to help people in our capacity starting from domestic helps at our houses. For rest, again, that keyboard warrior should launch an initiative and help all those who are getting affected 'badly.' He may get award on Republic day for it if done well.

Isn't the window for conversion only till the end of this week? And the 4 months period you need an affidavit for that?

The reason I think they will have 500/1k notes: "daily-wage" labour in India means their payment is for no. of days work, not per month. However, they get their salary monthly/as a lumpsum from the contractor after work is finished. How much will they get? NREGA daily wage is 160, but often gets underpaid. Let' assume 80. Because of NREGA, landed farmers and building contractors have had to raise their wages. Let's say 75. 75/day >500/week. So you can safely assume they are paid in 500+ notes.

And, yes, while domestic helps may be vulnerable- they aren't what I'm talking about here.
By the standards of the country, slum-dwellers in big cities are doing fine! The median income is ~40k/year which means >50% of the population get <3500/month. And that is because of the vast numbers of people who do irregular, migratory work, who live in tribal areas, etc. For a snapshot of their lives: 26:00 - 29:00 here. Every year as the number of full-time agricultural labourers goes down by millions, manufacturing jobs stay stagnant, and urban service jobs aren't enough to compensate, these people are forced to start doing a series of part-time migratory jobs.
 

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Isn't the window for conversion only till the end of this week?
Nope, 30th Dec.

The reason I think they will have 500/1k notes: "daily-wage" labour in India means their payment is for no. of days work, not per month. However, they get their salary monthly/as a lumpsum from the contractor after work is finished. How much will they get? NREGA daily wage is 160, but often gets underpaid. Let' assume 80. Because of NREGA, landed farmers and building contractors have had to raise their wages. Let's say 75. 75/day >500/week. So you can safely assume they are paid in 500+ notes.
1) These workers will also be spending so at announcement of yesterday shouldn't carry many 500+ notes. It could have been broken into lower denomination. More importantly than these "what-ifs" though, I don't understand why a NREGA worker is having no ID card. To exchange up to 4K, you don't need bank account as well.

And that is because of the vast numbers of people who do irregular, migratory work, who live in tribal areas, etc. For a snapshot of their lives: 26:00 - 29:00 here. Every year as the number of full-time agricultural labourers goes down by millions, manufacturing jobs stay stagnant, and urban service jobs aren't enough to compensate, these people are forced to start doing a series of part-time migratory jobs.
Again, on one hand you are talking about extremely poor who likely have no or very little savings and then asking hypothetical question on what they will do with the higher denomination notes? Also all these people have no ID card?
 

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Window is actually open till end of March. Just that you will have to go through more red tape after end of December
 

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Off Topic - I just think the idea of a 2000 Rupee note to be mental. Imagine going out and losing one of those. You'd be seriously pissed off.
 

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Off Topic - I just think the idea of a 2000 Rupee note to be mental. Imagine going out and losing one of those. You'd be seriously pissed off.
There are a lot of people for whom 500 and 1000 is an unbelievably big amount as well. There's nothing mental in it and it's high time a larger currency to 1000 was introduced. People come up with this nonsense every single time a new currency note is introduced.
 

berbatrick

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Nope, 30th Dec.
Cool, then what is this Monday? I got confused because I know my mother is travelling and doesn't have a card (apart from ATM) so she's in trouble right now and she mentioned Monday.

About the rest: NREGA workers have ID and accounts because after 2008/9 all NREGA payments have been to the account to curb leakages. But this was done over a few months and even then many people didn't get their salary on time.

No, I referred to NREGA as a reference for daily wage levels, to explain why poor people may also have these notes. Even people with a total monthly income <2000 (which is a rough estimate from my assumptions) will get paid with 500 notes, so you can be both extremely poor and have these notes (as part of your savings not necessarily for daily use).
 

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There are a lot of people for whom 500 and 1000 is an unbelievably big amount as well. There's nothing mental in it and it's high time a larger currency to 1000 was introduced. People come up with this nonsense every single time a new currency note is introduced.
I've spent the last 6 years on and off working in Bangladesh. The govt introduced a BDT 1000 note and years later people still bitch about it...it is completely impractical.

No one ever gives you any change for it :mad:

Please note - I did say my comment was off topic and had more to do with the day to day practicalities rather than any overarching transitional problems etc etc or what the stated purpose of the Indian govt might be.
 

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Not true. For the absolute majority of those involved in black money, it's stocked in cash for most parts. Gold and investments are part of the mix ofcourse but the bulk is still cash.

In any case, it's not as if a step like this will simply eradicate black money from the country. A problem that big can never be solved in 1 step. A step like this is a welcome start though.

Even though my immediate family is entirely working class, my extended family is almost entire business class and the sheer amount of cash they stock up is absolutely incredible. There's no doubt this is a big kick in the balls.
What are the top ways for people earn 'black money', where does it come from? Is it just bribes etc or another form of corruption or illegality?
 

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Window is actually open till end of March. Just that you will have to go through more red tape after end of December
I didn't go in that as the section of society we are talking about will struggle with red tape. Or it will be the argument.

Cool, then what is this Monday? I got confused because I know my mother is travelling and doesn't have a card (apart from ATM) so she's in trouble right now and she mentioned Monday.

About the rest: NREGA workers have ID and accounts because after 2008/9 all NREGA payments have been to the account to curb leakages. But this was done over a few months and even then many people didn't get their salary on time.

No, I referred to NREGA as a reference for daily wage levels, to explain why poor people may also have these notes. Even people with a total monthly income <2000 (which is a rough estimate from my assumptions) will get paid with 500 notes, so you can be both extremely poor and have these notes (as part of your savings not necessarily for daily use).
Banks were closed today and will probably be tomorrow and ATMs were going to be closed for a day. Maybe she mentioned Monday for the time she assumed she can go to bank next but banks are going to be open on Saturday and Sunday. Plus ATMs should be active again from tomorrow.

Having 500 notes is not a problem even if one doesn't have bank account. They can get it exchanged from tomorrow/day after provided they have ID.
 

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What are the top ways for people earn 'black money', where does it come from? Is it just bribes etc or another form of corruption or illegality?
People who run small businesses like to deal in cash to avoid taxes on profit.

Uber rich using western technique to route money to tax free offshare banks.. again to avoid tax.

Any person or establishment taking bribe or earning money via an illegal manner
 

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A friend just told me about a begger who approached his uncle with the dilemma that he has 13lakh in cash and he doesn't know what to do.
:eek: - I am guessing pumping it into a bank account? Or atleast a small part of it.
 

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Possibly the largest 'legit' money laundering operation in the subcontinent is the real estate business and that's from personal experience.
 

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What are the top ways for people earn 'black money', where does it come from? Is it just bribes etc or another form of corruption or illegality?
Unaccounted sales.

For eg. you go to a garments shop and purchase a shirt for Rs.1200. You pay in cash and dont take the receipt. This 1200 bucks would translate into unaccounted income for the shopkeeper as no VAT and/or income tax would be paid by the shopkeeper. Now consider if that shopkeeper has an daily sales of Rs. 30,000/-. He would account daily sales of Rs. 7,000 to Rs. 8,000 in his books. The rest would translate into his black money.
 

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What will happen to the money? it supposedly just disappears from the economy?

Woulnt it have been better to make the black money merchants spend the money, to get it into the global economy in a way that also strengthened India? I cant think of a way, but Ive not thought about it. Im sure a bunch of Indian economists could spend a couple of weeks and crack a win win system.
 

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What will happen to the money? it supposedly just disappears from the economy?

Woulnt it have been better to make the black money merchants spend the money, to get it into the global economy in a way that also strengthened India? I cant think of a way, but Ive not thought about it. Im sure a bunch of Indian economists could spend a couple of weeks and crack a win win system.
Govt had a scheme in place until September 30 of this year wherein you could disclose your unaccounted/black money, pay the tax on it and bring it into the system. This move now is basically a feck you by the government to people who could and should have declared their unaccounted income when the opportunity was given to them.
 

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Possibly the largest 'legit' money laundering operation in the subcontinent is the real estate business and that's from personal experience.
100% this.
1 cr house in Bombay - pay 60 L in cash and 40 in check. feck OFF!
 

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What are the top ways for people earn 'black money', where does it come from? Is it just bribes etc or another form of corruption or illegality?
Businesses(including private clinics run by doctors) dealing in cash(without bills), real estate where you pay a huge portion via cash(off the books), bribes, commissions, etc. Basically any earning that these guys have where they don't show the income and thus avoid tax.
 

berbatrick

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I didn't go in that as the section of society we are talking about will struggle with red tape. Or it will be the argument.



Banks were closed today and will probably be tomorrow and ATMs were going to be closed for a day. Maybe she mentioned Monday for the time she assumed she can go to bank next but banks are going to be open on Saturday and Sunday. Plus ATMs should be active again from tomorrow.

Having 500 notes is not a problem even if one doesn't have bank account. They can get it exchanged from tomorrow/day after provided they have ID.
Ok, that means I misunderstood. Will go home tonight and read the ET article.
 

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Govt had a scheme in place until September 30 of this year wherein you could disclose your unaccounted/black money, pay the tax on it and bring it into the system. This move now is basically a feck you by the government to people who could and should have declared their unaccounted income when the opportunity was given to them.
nothing wrong with that lol serves the evaders right.
 

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http://www.livemint.com/Money/WTRdjKNoA2OCsI0cWquYxN/We-did-say-we-wanted-less-corruption.html

Some of us in India have paid, what I call, the ‘honesty tax’ for decades. Our money is salaried, there is nothing on top, we pay our taxes, keep our accounts clean, pay for large spends by card, do real estate deals in white and become the guys who obey traffic signals while others in bigger cars zoom away with a smirk. We pull out our cards and carry home our small shopping bag. The guy in the next aisle pulls out a brick of cash and thumbs out a lakh in notes to take home the high-value gadget. We drive our Maruti home with the EMI (equated monthly instalment) sitting in the backseat, the luxury SUV guy comes with a sack of cash and scrapes our car out of his way. We wait to buy a house with white money, don’t get the choice set, pay more and end up feeling like losers for being honest.

For decades, the honest have felt like fools in a nation that runs on graft. The complicity, and active encouragement, of the political leadership gave feet, legs and body to this parallel economy. There is a saying that in any organisation 25% of the people will be honest, always; 25% will be corrupt, always; and the middle 50% will look at the boss and do what he does. The political boss has spoken in India finally, giving teeth to the war against corruption by making currency notes of Rs500 and Rs1,000 worthless overnight.

Why will this help? It makes the current stash of undeclared cash useless. Those who did not take the government seriously and did not declare their unaccounted income by 30 September, by paying a 45% tax plus penalty, now see a 100% loss rather than a partial loss. Those who converted their cash into gold, art and real estate—the three sumps of black money—will sit on their assets for a while. When they do sell, the deal is likely to be completed electronically rather than in cash. With buyers unable to pay with old stashes of cash, how will the sellers sell? They will either barter or be forced to use a bank to route the money. Barter may work: in 2008, during the financial crisis, certain kinds of art became currency, after the price inflation in gold made it a bubble. Something similar may happen here too. Is it the end of black money? No. This is about raising the cost of keeping unaccounted for cash. There will be an underground market for sure: already you hear of a Rs1,000 note selling for Rs300 in the Mumbai grey market, but it just gets tougher to keep it black.

What about conversion to gold and real estate? Yes, conversion to gold will happen. But think it through— will you see a guy pull out five gold coins to buy an iPad at a mall? The government is just making the use of black money difficult. Why give just 4 hours? What would have happened in a month? It may have made the transition easier. Two things. One: cash would have been converted to gold and high-value purchases over the month. Already there are reports of brisk sales by jewellers till early morning of 9 November. Cash hoarders would have found ways to convert their money.

Two: cash that was about to die, would have found its way to the weakest in the food chain: those who don’t know they have to, or don’t have the power to, say no to getting paid with such notes.

End note

It’s not as if Prime Minister Narendra Modi has not taken a risk—both personal and political. The move to demonetise currency notes, to suck out black money, will upset BJP’s key constituency: traders, realtors and small businessmen. The ground speak is that this government doesn’t know how to do dhanda (business)—who pays 30% tax anyway? It is unlikely that the party cadres preparing for election were prepared with Rs100 currency notes. If other parties have lost money, so has the BJP cadre. This is a big political risk. Modi is probably calculating that things would settle down in the next 18 months before the next general election. Modi also risks short-term growth by removing cash from the market. This cash pays for jewellery, high-value cars, gadgets, clothes, hotel bills. By suddenly making the stashes of cash useless, he risks offtake of goods from the market, which could affect the economy.

So the risk is real. Modi has taken a calculated gamble and we’re all hoping that it pays off. No transition is painless. He is pressing the reset button on corruption. We, who had so desperately wanted to kill corruption, now need to support this bold move by the government.
 

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The above is very well written. Personally, I am very happy with what has been done and echo the sentiments of the writer.

I am a salaried employee and don't carry any cash. In fact when this announcement was made I had about 300 bucks in cash. Credit/debit cards are there for a purpose and usually I only transact using these. For a long time, people who do businesses and hoard money illegally have gotten away with their deeds and thought they could never be touched. This big feck you from the government has left them numb.

I would say this is one of the best policy decisions taken by a prime minister in the last 20 years. This decision needed balls, because it will affect him politically (because you know those who had all their cash stashed will be pissed off right now and probably won't vote for him).

Just to add a few more points to what has been said in the above article. In one step the counterfeit currency which accounts to apparently 1-3% in the market will be rendered useless, and funding terrorism/militancy from within is made difficult.
 

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Thats a really interesting explanation and a far better write up than the BBC gave it the other day, but my question is that my understanding is that a lot of people, in particular in the poor rural areas live entirely off cash and don't have a back account of any sort (I understand you can take something like up to 5000 rupees a day into a bank and deposit them but can't do anything else, is that correct?)

So doesn't this in effect mean that a huge portion of the population have had their money made worthless and have been given no recourse as to how to convert it back in to real currency?