Even among the upper/middle classes, usage of plastic money isn't very popular. Apparently only 10% of transactions happen through plastic money. Even in Delhi, you'll find that cash is used most frequently. Also, some can afford to skip work and go stand in a queue. That's not an option for many.
India politics thread
- Thread starter Shiva87
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Yes, that is true, I do the same, I can have 5 credit cards in my wallet but I pay in cash, and those transactions are done through choice, 10% is actually rather high, I don't I use cards even that much especially if you exclude online payments. Obviously everyone prefers withdrawing cash from an ATM instead of using that card because a) cash works everywhere and b) most places charge 2% for using a card.
But in times like these, surely they can be sensible enough to forget about those things and not hoard the cash that others might need more. That's what I'm doing anyway (I'm in Delhi) and I'm doing as much as transactions through my card, including the smallest things like buying groceries - use a supermart and for a few days or places that accept a card. That applies to plenty others and I can be 100% sure that there are people who can easily survive cashless for this phase yet are still rushing to the banks for depositing/withdrawing like morons. It is how it is in this society. People act first, think second.
Not true at all. I have relatives in business and one in particular working for the govt, the sheer amount of cash they have at any time at home is absolutely staggering.
Nope. Just have a look at how big the Hawala system still is.
I thought I would make a few points based on how the discussion has been going over the last few pages.
--> I would like to first address the re-calibration of ATMs to take up to 2-3 weeks.
It is indeed true that it would take 2-3 weeks for re-calibration. But that does not imply ATMs will not be able to dispense cash. They would still be able to dispense cash with lower denominations.
--> The banks should have been prepared a better way
There are around 2 lakh ATMs in the entire country. If the government had issued a directive to recalibrate the ATMs so that they are compatible with the new notes, then they would have taken the surprise out of it and given the game away. This would have given result to the poor and unaware suffering because they would have been used as pawns for exchange of the higher denomination notes.
--> The government should not have printed 2000 notes.
We are indeed striving towards a cashless economy, but just completely eliminating the higher denomination at one go is simply too big a risk and will create panic and chaos.
--> This will not eliminate black money as people will simply buy gold or have their money held in foreign accounts.
Firstly, I don't think anyone is saying that just with this one move, all of the black money will be eliminated. I expect more moves to follow. Gold is not manufactured in India, so the government knows how much is coming in. And even if someone buys gold, at some point of time in the future they would have to sell it, and that means it has to be brought into the system. Its not as if we are going back to the ages of barter system.
Secondly, the move also renders money in higher denominations held by drug dealers, mafia and people who fund terrorists useless because lets face it, those guys are certainly not coming into the system.
Thirdly, prior to this move, the government had requested any individual holding accounts in other countries to declare these accounts and come clean. If they haven't, and they try to bring in the money into the country then the government will know who it is. India now has treaties with Switzerland, Panama and similar tax havens and according to the Finance Minister, these countries have promised to provide real time information.
--> This causes a lot of inconvenience to the poor and the common man
While I agree with the fact that this causes inconvenience, eventually this will pan out well for the country.
Also I find that many parties, journalists are simply hiding behind this idea that the 'poor' are the most inconvenienced. The 'poor' stand in queue to get rations from the government stores and I never saw any of these journalists sympathize with them before and write long articles about it. I find the sudden 'love' that some parties,journalists are showing now for the poor, to be rather hypocritical.
As for the general public, as I have said previously, people can stand in a long line to watch their favorite movie on the first day, or get a Jio SIM, or stand outside the H & M store,or go to a roadies audition, but suddenly can't tolerate standing in front of a bank. What can I say
.
--> I would like to first address the re-calibration of ATMs to take up to 2-3 weeks.
It is indeed true that it would take 2-3 weeks for re-calibration. But that does not imply ATMs will not be able to dispense cash. They would still be able to dispense cash with lower denominations.
--> The banks should have been prepared a better way
There are around 2 lakh ATMs in the entire country. If the government had issued a directive to recalibrate the ATMs so that they are compatible with the new notes, then they would have taken the surprise out of it and given the game away. This would have given result to the poor and unaware suffering because they would have been used as pawns for exchange of the higher denomination notes.
--> The government should not have printed 2000 notes.
We are indeed striving towards a cashless economy, but just completely eliminating the higher denomination at one go is simply too big a risk and will create panic and chaos.
--> This will not eliminate black money as people will simply buy gold or have their money held in foreign accounts.
Firstly, I don't think anyone is saying that just with this one move, all of the black money will be eliminated. I expect more moves to follow. Gold is not manufactured in India, so the government knows how much is coming in. And even if someone buys gold, at some point of time in the future they would have to sell it, and that means it has to be brought into the system. Its not as if we are going back to the ages of barter system.
Secondly, the move also renders money in higher denominations held by drug dealers, mafia and people who fund terrorists useless because lets face it, those guys are certainly not coming into the system.
Thirdly, prior to this move, the government had requested any individual holding accounts in other countries to declare these accounts and come clean. If they haven't, and they try to bring in the money into the country then the government will know who it is. India now has treaties with Switzerland, Panama and similar tax havens and according to the Finance Minister, these countries have promised to provide real time information.
--> This causes a lot of inconvenience to the poor and the common man
While I agree with the fact that this causes inconvenience, eventually this will pan out well for the country.
Also I find that many parties, journalists are simply hiding behind this idea that the 'poor' are the most inconvenienced. The 'poor' stand in queue to get rations from the government stores and I never saw any of these journalists sympathize with them before and write long articles about it. I find the sudden 'love' that some parties,journalists are showing now for the poor, to be rather hypocritical.
As for the general public, as I have said previously, people can stand in a long line to watch their favorite movie on the first day, or get a Jio SIM, or stand outside the H & M store,or go to a roadies audition, but suddenly can't tolerate standing in front of a bank. What can I say
.Good post.
I thought I would make a few points based on how the discussion has been going over the last few pages.
--> I would like to first address the re-calibration of ATMs to take up to 2-3 weeks.
It is indeed true that it would take 2-3 weeks for re-calibration. But that does not imply ATMs will not be able to dispense cash. They would still be able to dispense cash with lower denominations.
--> The banks should have been prepared a better way
There are around 2 lakh ATMs in the entire country. If the government had issued a directive to recalibrate the ATMs so that they are compatible with the new notes, then they would have taken the surprise out of it and given the game away. This would have given result to the poor and unaware suffering because they would have been used as pawns for exchange of the higher denomination notes.
--> The government should not have printed 2000 notes.
We are indeed striving towards a cashless economy, but just completely eliminating the higher denomination at one go is simply too big a risk and will create panic and chaos.
--> This will not eliminate black money as people will simply buy gold or have their money held in foreign accounts.
Firstly, I don't think anyone is saying that just with this one move, all of the black money will be eliminated. I expect more moves to follow. Gold is not manufactured in India, so the government knows how much is coming in. And even if someone buys gold, at some point of time in the future they would have to sell it, and that means it has to be brought into the system. Its not as if we are going back to the ages of barter system.
Secondly, the move also renders money in higher denominations held by drug dealers, mafia and people who fund terrorists useless because lets face it, those guys are certainly not coming into the system.
Thirdly, prior to this move, the government had requested any individual holding accounts in other countries to declare these accounts and come clean. If they haven't, and they try to bring in the money into the country then the government will know who it is. India now has treaties with Switzerland, Panama and similar tax havens and according to the Finance Minister, these countries have promised to provide real time information.
--> This causes a lot of inconvenience to the poor and the common man
While I agree with the fact that this causes inconvenience, eventually this will pan out well for the country.
Also I find that many parties, journalists are simply hiding behind this idea that the 'poor' are the most inconvenienced. The 'poor' stand in queue to get rations from the government stores and I never saw any of these journalists sympathize with them before and write long articles about it. I find the sudden 'love' that some parties,journalists are showing now for the poor, to be rather hypocritical.
As for the general public, as I have said previously, people can stand in a long line to watch their favorite movie on the first day, or get a Jio SIM, or stand outside the H & M store,or go to a roadies audition, but suddenly can't tolerate standing in front of a bank. What can I say
Fantastic post. Nailed each and every point.
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Good summary @newgiz
Agree with most of your points but this one is absurd. If they wanted the bigger denomination then they should only have brought the new 500 note in market. If that wasn't enough then the 1000 rupees would have been fine. But there was absolutely no need for the 2000 rupees note. Bringing a new higher denomination note when you are fighting black money is a moronic action.
This was confusing to me as well, however they have said that they will be making only a limited amount of this currency available and it will be tracked in terms of how much is in the market. Basicially they said, they won't make the same mistakes as they did with the 1000 rupee notes. Hopefully we move away from the 1000 and the 2000 denominations and keep 500 as the max.
Maybe this would be a step in the next 5-8 years when India gets in to more digital transactions and almost everyone has an active bank account.
The RBI actually proposed a 5000 and 10000 note but the government rejected the proposal. The circulation of the 2000 would be limited though. There won't be a case of printing endless amounts of it.
TDS= tax deducted at source, The thing is every transaction my business makes is recorded and tds duly deducted, once the return goes(monthly return) there is record of it with the tax authorities and when i have to pay advance tax i deduct that tds amount to take out net tax payable. What i mean is once TDS is deducted there is no way i can make or want to make the transaction of the record. For example i sell three companies products say cadbury,nestle and ITC to wholesellers who sell it to retailers who sell it to customers, the company will only sell me goods with tax paid and TDS deducted on the commission i earn, hence no way that any money is black. The chain gets brocken when there are multiple wholesellers but once you are dealer 100 % transactions have to be recorded and matched with the country. Then there is small case of C FORMS too that you have to attach to verify sale and receive comission at end of the year so a double check ensures any left over discrepancy are covered.
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Issues in ATM withdrawal,cash exchange will be there for at least few days, but these are minor issue considering the benefit in long run.
It would take minimum six months to see the actual implication of this measure,one think for sure real estate price will go down.People looking to buy new houses can start planning There are lot of unsold house in those high rise building in metros and builders doesn't want to come down on the price and now with less cash in system they should budge.
It would take minimum six months to see the actual implication of this measure,one think for sure real estate price will go down.People looking to buy new houses can start planning
There are lot of unsold house in those high rise building in metros and builders doesn't want to come down on the price and now with less cash in system they should budge.The more i go into the market, the more i see mostly poor suffering. The super rich were most likely already knowing what was happening, They got their black money set early. I dont get the idea that prices of real estate will come down, frankly speaking i think it will only be 20 % and that will be recovered within a year or two. The construction material or the labour(labour costs usually amount to more than 50 %) of the flat price will already have been paid. The labour work on daily wage and mostly were paid in black money and once that money is out new projects cannot be started, even if they are labour will get lesser money and projects will take even more time.
For eg it takes 100 labour to build a house in 100 days, every labour charges 100 rs per day. What happens when this 10,000/day does not exist? A huge investment group say xyz have 500 projects on the go in india that means they will need to replace Rs 50,00,000 per day. Even if they are financing 50 % project in white money they will lose half the labour as they cannot pay them like they were paying them, that will cause more problems and unemployment and when hunger strikes people will turn to crime/drugs. This is only including labour cost, what about material procurement?
People who think its a little pain before gain underestimate the money that is not accounted for but is running this country. I know its not morally correct but that money does pay for many people's daily needs of food and shelter. The starting effect is people are right now working on credit once the credit reaches a limit, the cash will be demanded by people and when that happens the real problems will hit. I know and expect those who have a job to not understand thee small people problems because they are doing everything in white and feel vindicated by it but the eventual crunch will hit them too maybe it will hit them last, but it will. I am not saying we should support black money not at all, i just think the effects have been not entirely calculated. The chaiwala, sabziwala, labour,mistry bhaiya, presswala etc will be hit first and then this effect will tumble forward.
For eg it takes 100 labour to build a house in 100 days, every labour charges 100 rs per day. What happens when this 10,000/day does not exist? A huge investment group say xyz have 500 projects on the go in india that means they will need to replace Rs 50,00,000 per day. Even if they are financing 50 % project in white money they will lose half the labour as they cannot pay them like they were paying them, that will cause more problems and unemployment and when hunger strikes people will turn to crime/drugs. This is only including labour cost, what about material procurement?
People who think its a little pain before gain underestimate the money that is not accounted for but is running this country. I know its not morally correct but that money does pay for many people's daily needs of food and shelter. The starting effect is people are right now working on credit once the credit reaches a limit, the cash will be demanded by people and when that happens the real problems will hit. I know and expect those who have a job to not understand thee small people problems because they are doing everything in white and feel vindicated by it but the eventual crunch will hit them too maybe it will hit them last, but it will. I am not saying we should support black money not at all, i just think the effects have been not entirely calculated. The chaiwala, sabziwala, labour,mistry bhaiya, presswala etc will be hit first and then this effect will tumble forward.
Finally found this. Every one of you need to read this
Yup, the priveledged like us have never stood in long lines for hours.
Why govt’s demonetisation move may fail to win the war against black money- Appu Esthose Suresh, Hindustan Times, New Delhi
| - Updated: Nov 12, 2016 09:01 IST
A resident hands a Rs 500 note to a money lender at his shop in Hyderabad on November 9, as he seeks to exchange it for lesser denominations. (AFP)- black money from the economy as hoarders keep a tiny portion of their ill-gotten wealth in hard cash, going by income-tax data.
Cash recovery has been less than 6% of the undisclosed income seized from tax evaders, shows an HT analysis of data from tax raids from financial year 2012-13 onwards.
In a move that received a mixed response, Prime Minister Narendra Modi announced on Tuesday night a recall of the two currency denominations and set a 50-day deadline to exchange old banknotes with new at banks and post offices. Critics argued the move would do little to unearth black money hoarded by the rich who park their cash in different asset classes than keep it idle.
Tax data seem to bear that out. For instance, in income-tax probes from April 1 to October 31 this financial year, black-money holders accepted having stashed Rs 7,700 crore worth of ill-gotten assets. The cash component was merely Rs 408 crore or 5%. The remaining was invested in business, stocks, real estate and benami bank accounts, the data show. Financial year 2015-16 saw the highest black-money detection in the period, of which 6% was cash.
The actual proportion of cash would be even lower as the tax department’s classification of seizures considers currency and ornaments as one unit.
One of the reasons why tax evaders and corrupt public officials prefer not to stash cash could be the sheer logistics of it. Rs 1 crore in Rs 1,000 notes, if stashed evenly, occupies one sq ft and weighs 13 kg. Rs 100 crore would weigh 1.3 tons and occupy an area the size of a three-wheeler goods carrier, making the movement of cash without detection difficult.
Ill-gotten wealth mostly enters the formal economic system through real estate and shell companies, a finance ministry source said.
HT reported on Thursday the currency switch could result in hardship for low-income groups as only 28%-32% of Indians have access to financial institutions, including post offices and banks. Further, 33% of the 138,626 bank branches are in 60 Tier-1 and Tier-2 cities, leaving rural India at a huge disadvantage
- Appu Esthose Suresh, Hindustan Times, New Delhi
Just exchanged my 4k for 2 2k notes. The new notes look a bit crap.
Yeah it feels like monopoly money. Meh.
Literally my first reaction when I saw it!
Ha ha to be fair whenever I have been to other countries, I feel like the currency in these countries looks crap simply because it doesn't 'feel' like money. Its just a general feeling because we are used to our currency notes for a long time.
Could someone please explain to the revered professor how 'Cash for Votes' works and how Real estate sales work.I would be thankful.
Edit: Just doing a simple google search on the revered professor shows his leanings. He believes 'Foreign investments put Jobs at risk' and also believes capitalism is a bane.
Tldr: It's a brilliant move. The economist article you published has an one sided analysis and does not account for the money entering into the system. The HT article does not account for the bucket size of each transaction, and takes sum of whole as opposed to sum of individual parts.
Long story:
Let me first off state that the claim that black money would be erased due to this one action is false pretense. The term as is pointed out in the article you posted, refers to ill gotten gains due to misrepresentation of income.
However, one aspect that does not seem to be discussed is the disruption of existing buying power of people who misrepresented their income. Whether this be small house owners who sold their house, or SMEs who dealt with cash transactions. If they did deposit this money in the bank, they'd have had to use their PAN to account for it. If they didn't, then they did hoard the cash below their bed, which now is worthless.
My basic understanding is that the minute this misrepresented money enters into any form of legal transaction (Bank deposits etc.), they enter into the economic realm of the nation. And if it does get accounted for in the formal economic realm then it no longer is in the black system.
If this leads to more money into the formal economic system, then we have to a large extent reduced the buying power of the people in this practice.
I still don't see why you're taking this as a be all and end all solution as opposed to a small step towards curbing the black money system.
Also, the articles you seem to be posting seem to misrepresent facts and figures. The right analysis would include the % of transactions, in rural India, which involves Rs. 500 and Rs 1000 notes. You'd also have to calculate the bucket size of each transaction to identify if it really brings the country to a halt.
Even if 1% of the population, each hoarding Rs. 1 Cr in unaccounted money, are wiped clean. That's 1% of 1.7 billion = 17 million * 1 cr = Thats (17*10^6) * (10*10^6) = Rs. 170 * 10^12 (170*10^5 crores) wiped out of the system or brought into the system. How is that not a win?
Hindustan Times, a newspaper owned by a Congress RajyaSabha member Shobhana Bhartia, is really getting desperate in spreading negative news about this fantastic initiative. Nothing to see here guys.
True, I only watch Zee News for real unbiased news coverage.
The revered professor also not understanding simple point that govt is not actually looking to get all black money in system. That they attempted with the scheme available for declaration till 30th Sep. This move is wipe out the black and counterfeit money and also increase cost of carrying black money in future.
The revered professor is from JNU, is a Marxist and is telling govt how they don't understand capitalism
. Too much fun I say. Yes, Prof...we don't need a JNU marxist prof to educate us on such matters. Where ideology of such people took country is apparent for everyone to see.Wonder if Sudhir has showed actual evidence of the nano GPS chip
A newbie, @Dorian Gray , shared following 2 links via PM to share with everyone:
http://www.livemint.com/Money/WTRdjKNoA2OCsI0cWquYxN/We-did-say-we-wanted-less-corruption.html
https://www.facebook.com/tayal.vishesh/posts/10153889120272382
The first link I had shared too, few pages back, probably on page 2 or 3.
Great name btw, Dorian Gray
http://www.livemint.com/Money/WTRdjKNoA2OCsI0cWquYxN/We-did-say-we-wanted-less-corruption.html
https://www.facebook.com/tayal.vishesh/posts/10153889120272382
The first link I had shared too, few pages back, probably on page 2 or 3.
Great name btw, Dorian Gray
This is a highly idiotic way of thinking by this guy. You need to convert money using PAN card in most banks or through your account. So even if you try to be clever, it will throw suspicion. It's not like people stand in the banks looking for people with suitcases of money.
Even if you get someone else to do it, you need to find 1000s of people who will be willing to take your money and convert on your behalf and even then, a previously unaccounted money which nobody knew circulated now comes into the system.
It's not foolproof but this guy seems to have his thoughts confused
People have cash at home, it's very common. You can deposit upto 2.5 Lakh without any problem from the income tax department.
Which is my point. Any black money would have long gone around in the form of investment, gold, real estate, etc.
They did in fact. See this link.
https://m.rbi.org.in/Scripts/NotificationUser.aspx?Id=10674&Mode=0
Rbi has been asking banks to dispense lower denomination notes since 5 May. Banks not following this is not their fault. Banks never thought something like this was coming. Can't blame the RBI for this!
Hypocritical or not, they are still stories of people who will bear the brunt of this, even if this is a step taken for the greater good. The fact that the media is talking about the poor only to serve their larger self serving agenda is neither here or there.
Besides, ration shops, if one considers your example, exist universally; banks don't.
He said that?Wonder if Sudhir has showed actual evidence of the nano GPS chip
Well even if banks don't post office do, don't they?
Edit: Also the connectivity to banks has improved a lot in the last 5 years now. They are not as inaccessible as you might think.
My father is a bank manager and he worked in a remote area as a bank manager for a year. Access to the place my father worked, was only via a single bus that used to run twice a day.
He said that?
http://www.newscrunch.in/2016/11/ri...xplains-how-nano-gps-chips-work-rs-2000-notesHe said that?
feck knows how much WhatsApp bollocks these turds pass off as news. We already know there's a horde of idiots ready to believe anything that glorifies the government.
Yeah, but I tried exchanging my money in Sanchi, no cash. Ditto in Delhi apparently. Using post offices is a good idea but clearly the implementation is faulty.Well even if banks don't post office do, don't they?
On top of it, in Bhopal the server is down so cards aren't working.