India's demonetisation of Rs. 500 and Rs. 1000 notes • Hacker News Board

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#201

Post by intended » Tue, Nov 08, 2016, 7:26 PM UTC

josu wrote: post #54

h43k3r wrote: post #6

For international readers: Rs 500 and Rs 1000 are the highest denominations notes in India. Other available denominations are Rs 100, 50, 20, 10. This is such a major move to curb black money in the history of Indian Politics and Economy

Just to add to your comment, the highest denomination note in India is worth just $1.5USD. According to the Global Findex by the World Bank [1] 47% of the Indian population doesn't have a bank account. And only 22% of the population have debit cards. I don't know, this seems too extreme to me. Certainly 500 euro notes or 100 dollar bills are very useful in dark markets, but the Rs 1000 note was just worth $15USD. Thi…

So I spoke to economists friends asap - and while I share your views, the point added was that wealth is not stored as cash by most people, but as jewelry, assets, cattle and so on.

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#202

Post by denzil_correa » Tue, Nov 08, 2016, 7:27 PM UTC

sandeshd wrote: post #98

csomar wrote: post #64

Earlier quoted context omitted.

Changing $100 notes to $200 notes will open a new black market for converting 2 x $100 notes to $200. I think just removing the $100 note is safer.

2K notes are not just piece of paper, it does have NGC (Nano GPS Chip) by which income tax department can track the location and exact amount have stashed nearby that location. So sending that amount to some other country or keeping that money underground will be the most foolish thing one can do.

Do not believe in WhatsApp forwards.

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#203

Post by pavanky » Tue, Nov 08, 2016, 7:27 PM UTC

denzil_correa wrote: post #197

aub3bhat wrote: post #32

This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged),…

> This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. This is not the first time this has happened. It happened in March 2014. https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=...

This is slightly different. All 500 and 1000 rupee notes in circulation right now are being demonetized. In previous cases demonetization was done for older currency over a longer period of time.

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#204

Post by intended » Tue, Nov 08, 2016, 7:28 PM UTC

solutionyogi wrote: post #52

I am originally from India, living in NYC for last 10 years. Black money is a major problem in India, it's directly fueling This is an ingenious way to handle the problem at its root. I don't know how Government is going to handle this transition in a country as big and diverse as India. Personally, I prefer the rip-off-the-band-aid approach. The only thing I disagree with is the ATM daily/weekly withdrawal limit (10…

Who says black money is a major problem in India ?

I keep hearing this, and then I see no proof. Right now I see people conflating the unorganized sector with black money - and these are two separate things.

Any ideas where I could find supporting data from a major economic body ?

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#205

Post by pravula » Tue, Nov 08, 2016, 7:30 PM UTC

greglindahl wrote: post #115

aub3bhat wrote: post #32

This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged),…

It's worth noting that withdrawing certain banknotes is a classic move. Here's North Korea doing it in 2009: https://en.wikipedia.org/wiki/North_Korean_won#2009_revaluat... And the US did it in 1969: https://en.wikipedia.org/wiki/Large_denominations_of_United_... In both cases it appears that the main goal was tax revenue. In NK, against private traders, and in the US, against organized crime.

And India doing it in 1978 (http://www.thehindubusinessline.com/money-and-banking/highva...)

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#206

Post by intended » Tue, Nov 08, 2016, 7:31 PM UTC

twblalock wrote: post #165

abraham_s wrote: post #134

500 and 1000 Ruppee note cease to be legal tender as of today midnight. Everyone who has them can get it exchanged for 100 ruppee notes in banks,post offices etc until Dec 31. You need to provide a valid id to do an exchange, which means that the transaction will be traceable and Income Tax department (Indian version of IRS) will be matching them to declared income. ATM and banks are closed for the next couple of day…

I would imagine that most of the wealthy Indian tax evaders have their money in Swiss bank accounts rather than large stacks of rupee banknotes hidden in their basement.

Most wealthy tax evaders have long since brought their money back and laundered it already.

Tax Windows have been open for a long while, people seem to forget that there's been multiple amnesty Windows, the oldest being in the 90s iirc (could be late 80s).

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#207

Post by pritambaral » Tue, Nov 08, 2016, 7:32 PM UTC

fgpwd wrote: post #178

sfifs wrote: post #148

Earlier quoted context omitted.

A currency is useful only if you can buy products and services with it. In India, you buy things in Rupees. Tou can't buy Rupees with dollars without an ID at which point the government knows anyway it's probably just simpler to pay your taxes

There is Bitcoin though

I remember reading about the Indian government passing regulations for the tight control of Bitcoin₹ transactions in the country.

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#208

Post by aninhumer » Tue, Nov 08, 2016, 7:36 PM UTC

slg wrote: post #161

Scirra_Tom wrote: post #132

Earlier quoted context omitted.

Largest banknote in UK is £50, largest in EU is €500. That does not imply a staggering difference in purchasing power between £ and €.

I wasn't particurarly supporting the argument that it is a foolproof way to measure buying power. Just that the decisions central banks make about their currency denominations aren't arbitrary and they do lend insight into the economies that they manage. The €500 probably isn't about buying power but it does tell something about the motivations for easing a transition to the Euro. In fact, now that the transition has…

Some £100 notes are circulated by some Scottish and Northern Irish banks (which are allowed to print their own currency), but given how rare the £50 note is, I'd expect the £100s be very rare even locally, and almost non-existent anywhere in England.

They almost certainly wouldn't be accepted anywhere except banks (many shops are suspicious of even low value non-standard notes), so I don't know if you can really call that "in circulation throughout the UK".

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#209

Post by anupshinde » Tue, Nov 08, 2016, 7:37 PM UTC

Black money and such a large parallel economy had become a big problem. And like it or not, we were being forced to stay a part of it while trying to get out of it.

This sudden demonetisation has not curbed the problem, but it has hit a RESET switch on the parallel economy (black money). That is great news. First, people will not want to lose their money and this will result in huge tax-inflows. Second, some people will get prosecuted for tax evasion - sending a strong signal. High tax rates will still drive a small percentage of people to evade taxes. But upgraded technology will delay recurrence of large scale black money problem, probably for decades to come.

Long queues at ATMs and petrol(gas)-stations. I thought it could turn into an anarchy kind of situation. But most people feel happy about this inconvenient but necessary decision.

Re: India's demonetisation of Rs. 500 and Rs. 1000 notes

#210

Post by dvndvn » Tue, Nov 08, 2016, 7:38 PM UTC

anuraj wrote: post #199

One of the most idiotic decisions ever - just wait and watch the anger on the streets in the coming days. India is not ready to be a cashless economy - it is eons away with its illiterate masses.

Who said India will become cashless? Illiterate and poor masses don't have to worry about how to transact in electronic money. They can happily have cash, whatever little amount they have and enjoy just like they are doing today. Its just the elite goons that will have trouble.