Ignore the thread title for a moment and please read up on the primary reason why this was done.
India politics thread
- Thread starter Shiva87
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Please educate me.
Whatever the reasons, the implementation has been poor. Are we allowed to say that? Better arrangements should have been made for the groups of people I mentioned. And I'm now seeing most ATMs will only be operational in 2-3 weeks.
Poor are in 'panic' is the line which is propagated to create panic 
. The poor don't carry lots of 500 and 1000s. Tourists are not able to do card transactions? Anyway a 2-3 days inconvenience to tourists is not a good enough reason to not tackle black money problem of country. It doesn't even classify as collateral damage.
. The poor don't carry lots of 500 and 1000s. Tourists are not able to do card transactions? Anyway a 2-3 days inconvenience to tourists is not a good enough reason to not tackle black money problem of country. It doesn't even classify as collateral damage.No one is denying that, but to say that the ruling wasn't worth the hassle couldn't be more mental.
The implementation could have been done better, I said the same earlier today. But, thats quite different to saying what's been done isnt worth the hassle.
I expect they weren't prepared because they weren't informed beforehand due to the need for secrecy. Here the banks can take an hour even to process simple things so it's no surprise that demand on this level is overwhelming them.
Both customers and service providers are too accustomed to doing everything in cash, even when it would be simpler to just use a card.
I'm saying that under the assumption that it isn't possible to have such a drastic ruling like this and not expect those groups of people to suffer. I would have preferred something less ambitious. Maybe start with just 1000s. Yes the impact would have been less, but you have to balance it out with the feasibility and the impact on the common man. The sheer size and scale of implementation required was always going to cause chaos.
It's a hassle for you and me. Tell that to someone with no money for food, transport or accommodation and they'll say it's a lot worse than just a hassle.
Felt sorry for the poor guy at the solitary exchange desk in IGI T3 yesterday, he was getting hell from everyone and the hour long queue with people running the risk of missing their flights was fairly ugly. Didn't help that he was standing in front of a sign saying foreign nationals would be limited to changing INR10k but when you got to the front he was having to limit it to 5k and rounding down all the exchanges to the nearest notes he had due to having no smaller denominations in rupees and a rapidly diminishing supply of $,£, € and Yen.
I was only left with 1 useless 500R note in the end but seeing how many others quit the queue for fear of missing flights or had way in excess of the 5k limit I do wonder how much profit India stands to gain by writing off legitimate currency in the pockets of tourists. I'd suspect the black economy is loving it in reality given the number of taxis and others willing to tout for the illegal notes at a fraction of their face value, the only ones hard hit by it will be the poor and old who relied on a few notes squirreled away as their emergency backup and stand to lose it all.
I was only left with 1 useless 500R note in the end but seeing how many others quit the queue for fear of missing flights or had way in excess of the 5k limit I do wonder how much profit India stands to gain by writing off legitimate currency in the pockets of tourists. I'd suspect the black economy is loving it in reality given the number of taxis and others willing to tout for the illegal notes at a fraction of their face value, the only ones hard hit by it will be the poor and old who relied on a few notes squirreled away as their emergency backup and stand to lose it all.
Yup. That's exactly what it is done for. Assuming 10,000 foreign tourists affected by this(way too much assumption), each for 10K rupees, the amount will be 10 Cr. Definitely the amount for which Govt will take such step and a amount the 'black market' will drool over.
Please explain me how poor and old stand to lose it all, especially as those were 'few notes.'
Its more about lack of availability than an inability to dispense though. That could have been better handled by ensuring that the circulation of 100 Rs currencies increased leading up to this change. That's what screwed most people as we're used to having 500s from the ATMs which became useless till exchanged. Similarly, once the change was made, the availability of this currency at banks could have been better handled.
In any case, I do understand that the logistics of something so huge in a country as big as ours was always going to be tough. Just that it could have been handled better.
Yeah, its pretty much impossible to execute something as big without anyone suffering to various degrees. A gradual change wasnt possible though, any warning in terms of timing or a gradual withdrawal as you suggested makes it pointless to different degrees. I dont believe people have simply ended up with no money. The provision of exchanging them started just a day later and people have spare cash in smaller denominations all the time to survive the interim.
Of course most tourists are able to do card transactions, but how many places are capable of taking them? Taxis - no, smaller restaurants -no, apparently even the entrance booths to tourist attractions like the Taj Mahal. It's not just being able to function day to day though, it's what you can do with the currency you purchased at the usually extortionate exchange rates when you flew out 2 days earlier that is suddenly rendered useless or if you are lucky will be taken back at an even worse exchange rate if you are lucky enough to have the time to queue.Poor are in 'panic' is the line which is propagated to create panic
I was at an international conference in Delhi with around 1,000 participants of whom I'd say 60% were from outside India, they were all inconvenienced and buggered around by this and will all be a lot less likely to agree to suggestions to host such a conference in India again. The conference venue was hosting 3 other similarly sized conferences at the same time, add up a few more like that and you're beginning to talk collateral damage to India's reputation as somewhere capable of hosting such events, especially given the smog that was combined with the currency Modi-fication.
The banks are simply not prepared to deal with this. The situation will likely take even a month to normalize.
When those few notes amount to your whole life savings, when you're illiterate, indigent, homeless or even just live in rural areas with poor access then the chances of you having a bank account or the paperwork necessary to get them changed are minimal. Please explain to me how those people aren't suffering?
Most of them were covered by JDY?
To be honest the preparations this time while not enough has been better than what you'd expect from an Indian govt.
What I am hearing is that this move was planned somewhere closer to January/February 2017 but a genuine fear of the news of demonetization of Rs. 500 and Rs. 1000 getting leaked basically forced the hand of the government to prepone the move.
I've seen it first hand. I can tell you stories about tourists who will never return to our country. And even after the banks opened, many ran out of cash or weren't able to serve everyone before closing.
Ah that would have been an interesting idea. Fair point.
Uber, Ola etc accept card transactions. I don't know how small restaurants you are talking about. Many small size restaurants accept cards. My next door grocery shop guy with revenue per day smaller than many small restaurants accepts card. Unless you go into really small restaurant, which I doubt tourists go to often for health worries, card should do.
There maybe some inconvenience, maybe little more for tourists and I do have sympathy but it is not a factor to stop this important step. Staggered implementation or with a prior notice of long duration will defeat purpose. Huge steps come with some inconvenience but this is hardly collateral damage. I don't really think this is going to cause collateral damage to India's reputation. I am finding it tough to imagine the corruption and graft issue over the years didn't affect the reputation but a step which is good will. Let's see.
The money has not become useless is the first thing you need to understand. They don't need bank account as well. A simple ID will do the job and get amount exchanged. No 'paperwork' is needed. There was a scheme for opening bank account for poor by govt in 2014-15 which has benefited many poor (my own cook told that she opened an account through it, previously she had none.
Only the 100 rs notes existing in system can be brought in play. Don't think they can pump in more money in system without affecting monetary policy? You were in bank, you tell me
While the step looks good on paper, and the panic among baniyas and business family has been lot of fun, I doubt this will do much to get rid of the black money problem.
My biggest gripe is with the government reintroducing new 500, 1000, 2000 notes. They need to make large cash transactions inconvenient. But my reintroducing new currency of larger denomination we will get to the old stage in a few years. They should hace started printing more 100 notes for a few months and that would have made it easier.
We don't need these bigger notes. The rich should be paying using legitimate means instead of bundles of 1000s. The poor actually are inconvenienced by being paid in bigger notes because they need the change eventually. So introducing a Rs 2000 note when you are actually fighting black money is an absolute moronic move.
Secondly they shouldn't be going on record saying things like you can deposit upto 2.5 L without any worry. This will only encourage black money hoarders to deposit money in multiple accounts. They should have just said continue as before and then caught those doing dodgy deposits.
Thirdly this will only scratch the surface of black money problem. Everyone who is rich enough or have rich friends have made a jugaad, this is hardly going to get more than 5% of black money back. This will only make it a little difficult to spend money for a few months.
Also the economy is fecked for a few days. There is no one in the market buying anything. The poor are in day long queues. The rich are out of black money to spend.
The Government must take steps to make India a cashless economy. Ban higher denominations for good and make it easier for people to use plastic money. Cancel all card transaction charges across banks. Make it compulsary for all shops to have card swiping machines. And make sure that all taxis have card machines.
Doing something is better than doing nothing though. And I do appreciate this step.
My biggest gripe is with the government reintroducing new 500, 1000, 2000 notes. They need to make large cash transactions inconvenient. But my reintroducing new currency of larger denomination we will get to the old stage in a few years. They should hace started printing more 100 notes for a few months and that would have made it easier.
We don't need these bigger notes. The rich should be paying using legitimate means instead of bundles of 1000s. The poor actually are inconvenienced by being paid in bigger notes because they need the change eventually. So introducing a Rs 2000 note when you are actually fighting black money is an absolute moronic move.
Secondly they shouldn't be going on record saying things like you can deposit upto 2.5 L without any worry. This will only encourage black money hoarders to deposit money in multiple accounts. They should have just said continue as before and then caught those doing dodgy deposits.
Thirdly this will only scratch the surface of black money problem. Everyone who is rich enough or have rich friends have made a jugaad, this is hardly going to get more than 5% of black money back. This will only make it a little difficult to spend money for a few months.
Also the economy is fecked for a few days. There is no one in the market buying anything. The poor are in day long queues. The rich are out of black money to spend.
The Government must take steps to make India a cashless economy. Ban higher denominations for good and make it easier for people to use plastic money. Cancel all card transaction charges across banks. Make it compulsary for all shops to have card swiping machines. And make sure that all taxis have card machines.
Doing something is better than doing nothing though. And I do appreciate this step.
Fair enough, I'll take your word for it.
Not saying they should have printed more 100s. The ones in the system already stored up in vaults could be moved to the marketplace via ATMs. RBI can direct banks to dispense more 100s without raising any suspicion.Only the 100 rs notes existing in system can be brought in play. Don't think they can pump in more money in system without affecting monetary policy? You were in bank, you tell me
Jaitley has already said the same. That is the target. Will take time though, especially given we are not developed country and literacy rate is not upto that mark. It is a step in that direction though.
About rest of your post, Government is not trying to get black money back completely. It is getting eradicated from system. The money they got back was from those who declared till 30th Sep. This step is also about increasing the cost of carrying black money in big amount. Yes issue of black money won't totally go away and new notes are coming in (not of 1000 btw, till now) but think about it. Can a person again afford to have 100s of Crores of black money at risk by going that way? or trade-off will be to do transactions legally and be safe.
The counterfeit money is also key behind this step. That is getting wiped out totally.
I know what you mean about people depositing money in relative's account or multiple accounts but see that it can't be done for a big amount. How many multiple account you will put it in? 2.5L each of 20 accounts? Still not a big money when we talk about black money. Also, once you deposit, it becomes white and comes into system. A trail is formed. Questions can arise on source of it.
One thing I do agree with is that we should not have reintroduced the higher denomination notes. Would have helped to move to a cashless economy.
I see. Don't know they will have enough to change composition in market of denominations completely although yes, something in that direction by banks will be helpful.
Yup, especially 2000. 500 is OK, 2000 I don't see the need of when objective is cashless economy.
The sort of people that have crores stashed away will have learnt their lesson - always put it in gold, property or foreign bank accounts.
Oh yes, a complete change in the market denomination could not have been done. But even if ATMs started dispensing more in 100s say a month leading up to the change, people would be holding enough 100s when the time came to prevent immediate panic.
Introducing 2000 Rs notes is bizarre imo. Just let the max denomination be 500.
Of course, but that's a long, long prospect, given our size, population and depth. We don't even have IDs, let alone bank accounts for everyone.
I mean a country like England, which is a lot smaller, lesser people and more developed than India still cannot go cashless, when you can pretty much do everything with a credit card over there. And guess what kind of things you need cash for mainly - not the legal kinds. And all that amount that is paid in cash for illegal activities starting from an eigth of herb to anything goes to people who deal those activities and further up, and clearly is a massive problem economically. Similarly it is for every other nation and part of the reason a lot of governments won't readily agree for it, because it benefits them as well. But going completely cashless is simple a pipe dream for a country like India right now.
Myself, another Brit and an Indian colleague from Delhi had meetings down in Goa last month and went to a small seafront restaurant in the evening and were half way through the meal when we noticed the no credit card sign behind the bar. Deepali had been there before and paid by card but it seems the card system in the area was down, as were the ATMs we later found, fortunately I had more than enough cash on me to meet the bill as I'm used to things that should work one way in India not working unless there's cash involved. Please don't tell me where I can or can't eat or go as a foreigner, this was my 49th trip into India, I've covered almost the whole country in the 15+ years I've been working there and actually had an apartment there for 2 years when I commuted in regularly for weeks or months at a time.
I understand why the move was taken but am also sure that those with large amounts of money hidden from the tax man will have already found ways to get around the rules to ensure their losses are minimised, the corrupt in India are among the most creative and innovative I have ever encountered. Since that is the case then those who will suffer most are the poor, illiterate and rural masses for whom 1,000 Rs is a significant amount.
As for there being no paperwork necessary, the bathroom's the only place where that is generally true in India. Even as a foreign national departing at the airport changing most of the useless currency I was saddled with involved the completion of 2 declaration forms, copies taken of my passport and boarding pass and signatures on 2 other certificates and the government receipt. If you can't see how that is a deterrent to the poor, if they are even close enough to a bank to take their cash in then you maybe need to get out and experience the real India a bit more.
Fair enough. Gold buying can create trail. Govt has already asked details of gold purchases in big cities.
With property, customers used to get cash discount, as that money will go in builder's black money. Let's see if builders will still do. Some experts are already warning of real estate bubble bursting and as an investment it might not be great idea.
Yes I really hope that this will discourage black money in real estate. Gold buying can create a trail but the type I'm talking about is illegal and done without proper records, which is what these people will do.
I didn't tell you where to go eat, read properly. I will infact love for them to experience smaller restaurants or even road-side ones as those are most likely to serve taste buds. I was talking about a general tourist and how likely he is to go to restaurant with no card.
Also by same logic of yours, don't tell me about real India, I don't need to learn from you about it. Go interact with some poor on this topic and then come back and educate me. I have already talked with some in my capacity and they coolly told that not only they got it exchanged, they deposited some too.
Your point is very unclear. You've mentioned challenges you faced in the airport at the end and then suddenly related them to what someone in India would face to get their money converted. All that was required was an ID proof and a 1 page form, that's it. It's as easy/paperless as it gets.
I am wondering where can I go and moan about the extra questions I was asked at US port on my business visit compared to white guys on other counters and the inconvenience it caused me. Or the overall racial profiling issue since 2002.
See, in the end, people in our country are always going to invent maverick ways to circumvent laws. It is not just about black money. All we can expect govt to do is take steps so that it becomes deterrent to many and carries a big risk.
Obviously this is a good thing and we should all support it, but it is very fair to say that the planning has been very poor. Personally, I don't have much to lose because a card works fine for me, but if you're a tourist you're in for a harrowing time. Especially in places like Sanchi where I am presently.
Not to mention the poor. It is estimated that 85% of the currency in circulation was in 500 and 1000 rupee notes. Plus if you're a daily wage earner in sectors like construction (which I suspect accounts for a majority of the urban poor) you're likely to receive wages in higher denominations. I've read of cases where people have cash, but mostly in the banned denominations: there was this one report of a person with 7 rupees. Plus quite a lot of them don't have ID or don't carry it everywhere.
This is a good step but you planning could have been better. Telling the poor to go to banks and stand in queue for the whole day and expect it to work out is not practical. What do you do in some of the areas where there isn't proper electricity never mind a bank in the vicinity...
Not to mention the poor. It is estimated that 85% of the currency in circulation was in 500 and 1000 rupee notes. Plus if you're a daily wage earner in sectors like construction (which I suspect accounts for a majority of the urban poor) you're likely to receive wages in higher denominations. I've read of cases where people have cash, but mostly in the banned denominations: there was this one report of a person with 7 rupees. Plus quite a lot of them don't have ID or don't carry it everywhere.
This is a good step but you planning could have been better. Telling the poor to go to banks and stand in queue for the whole day and expect it to work out is not practical. What do you do in some of the areas where there isn't proper electricity never mind a bank in the vicinity...
Fecking hell! Please dont act like those people who bring Pakistan, North Korea, and Saudi Arabia into discussion whenever civil liberties in India are questioned.
Re: the lower class 'suffering'. The queues would be better if middle/upper class people who can work on cards for a while and would have enough cash to survive till then wait for some time and let the ones more in need get their money exchanged first. That is a pretty big reason behind the chaos. Although expecting that is a long shot from our population.
Perhaps having some way of giving priority to the ones more in need could have been come up with, but hindsight is a glorious thing.
Perhaps having some way of giving priority to the ones more in need could have been come up with, but hindsight is a glorious thing.
More than black money this should be about fake currency. Let's face it, the idea that people have black money stashed in their bed is very Bollywood, but I'm sure nobody has done it since the 80s. This move has to be supported by other actions: tackle rerouting of black money in the form of investment, black money in jewellery, tackling funding of elections (an election for a provincial assembly saw an amount of Rs. 100 crore being recovered!),etc.
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Not really. The whole point is, a country, when it takes big step, is in its own interest. It is not exactly to harm tourists but it may end up in inconvenience. At that time, I was quite amused to being questioned in stern manner, when I was there for couple of months only but understood that it will happen.
Similarly, such a big step here won't be based on what each and every individual feels about it and whether it causes some inconvenience to them. If anything, govt has made provision for tourists too.
Counterfeit money point is getting missed completely in discussions at many places. It is actually of more importance.