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

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

#221

Post by sundarurfriend »

Scirra_Tom wrote: post #99
uiri wrote: post #35

Earlier quoted context omitted.

1 USD is ~Rs 66. That is a staggering difference in purchasing power! I would guess that the only note in the US with a similar reputation which is still issued would be the $100. Notes larger than this ($500, $1000, $5000, and $10 000) have been discontinued since 1946 and actively destroyed by the Federal Reserve since 1969. Isn't there a concern that those who were using these high denomination notes just switchin…

> 1 USD is ~Rs 66. That is a staggering difference in purchasing power! How on earth do you derive purchasing power from comparison of arbitrary units? ~Rs 1 does not have the purchasing power of 1 USD,. 1 Zimbabwean dollar does not have the purcahsing power of 1 GBP.

To add some data to this discussion: the Purchasing Power Parity (PPP) was ~17 rupees to 1 dollar as of 2015, as per "The Organisation for Economic Co-operation and Development (OECD)".

The PPP is, in simple terms, the amount of money in each currency that can buy similar amounts of goods; so taking this PPP at face value, what 1 dollar can buy in the US, 17 rupees can buy in India. This is of course not entirely true, because it's an averaged value, and there's other complications, but it's at least a better starting point than assuming Rs 66 per dollar.

[1] https://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE4

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

#222

Post by wav-part »

intended wrote: post #195
rm2889 wrote: post #167

While this sounds great on face value, I doubt this'll solve the root of the problem. Why did we have so much black money in India? Coz people didn't want to pay taxes. Why didn't people want to pay taxes? Because they got nothing in return. Governments (esp Indian) have been historically self serving and power hungry. Tax money is usually either lost by PSUs loaning to the Mallyas of the world or other corrupt bulls…

Hey it's you! there's quite a bit that has been achieved by successive Indian govts on shoe string budgets. We've had the green and white revolutions, the IITs and other edu programs, large medical programs, ISRO (and the sensing tech that comes with it). This is from a once impoverished country which later had to deal with the fallout of weaker institutions, brain drain and corruption/dacoity/booth capturing and a w…

> Don't forget it's a chicken and egg issue as well - without funding you don't get services, which makes you blame the govt and not want to give them more funding.

Tell me how the taxes government already has, doing ?

> We've had the green and white revolutions, the IITs and other edu programs, large medical programs, ISRO (and the sensing tech that comes with it).

Correct me If I am wrong, this does not even account for 1% of tax spending.

> This is from a once impoverished country which later had to deal with the fallout of weaker institutions, brain drain and corruption/dacoity/booth capturing and a whole host of problems that include terrorism and war.

No this is from 60 years governments who still havnt stop exploiting its people.

> taxation is not a choice.

The issue is not taxation. Its where its being spent. If I had more say, I will gladly pay more. But I hope you understand why I would avoid paying (as much as I can, and ofc legally) taxes if its not even being spent on me.

Indian governments (current & previous) has failed its people and its most undeserving of taxes.

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

#223

Post by anuraj »

dvndvn wrote: post #210
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.

You clearly don't understand the implication - wait and watch

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

#224

Post by hash-set »

activatedgeek wrote: post #97
hash-set wrote: post #74

I am not at all comfortable with the elimination of paper currency no matter what the rationale proffered by politicians and government hacks. Control of people from the top down is an ever present risk and cash money has a strong offsetting influence to the nefarious plans of would-be dictators. Put another way: Government is not benevolent and never can be. We should all be very careful.

Who's eliminating paper currency?

Oh, I don't know, in the past 12 months I have read numerous articles floated as trial balloons for the Euro, the USD, and others.

India is creating a specie exchange in order to gain a tax foothold.

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

#225

Post by fgpwd »

pritambaral wrote: post #207
fgpwd wrote: post #178

Earlier quoted context omitted.

There is Bitcoin though

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

But there can still be Bitcoin Bitcoin transactions as an alternative to Paytm et al. It's very unlikely to pick up though I guess.

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

#226

Post by jfoutz »

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.

The US is kind of funny, we've (as far as i know) never withdrawn backing for a bill. If you have a silver certificate, you can spend it on a pack of gum. If you have a $1000 bill, you can deposit it in the bank.

You might have some hassle getting the bank to believe you, of course, those bills are probably in pretty poor shape. But you should be able to exchange them for new currency. Although, it might be worth more to sell to a collector. there aren't that many around.

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

#227

Post by whack »

rm2889 wrote: post #167

While this sounds great on face value, I doubt this'll solve the root of the problem. Why did we have so much black money in India? Coz people didn't want to pay taxes. Why didn't people want to pay taxes? Because they got nothing in return. Governments (esp Indian) have been historically self serving and power hungry. Tax money is usually either lost by PSUs loaning to the Mallyas of the world or other corrupt bulls…

> Why did we have so much black money in India? Coz people didn't want to pay taxes. Why didn't people want to pay taxes? Because they got nothing in return.

Sorry, I don't buy this argument. People in every country, regardless of how good their government is, want to personally pay as little taxes as possible. If people in XYZ-Amazing-Country knew that they could reduce their personal tax bill by 30% in a way that's guaranteed to be safe, a huge portion of the population would take advantage of it too. It's a class Economics tragedy-of-the-commons problem.

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

#228

Post by jpatokal »

Burma (Myanmar) has done this several times for the same declared reason, but with a batshit insane dictator with a predilection for numerology, so their demonetisations went like this:

1985: 50 and 100 kyat notes demonetized, replaced by 15, 35 and 75 kyat notes.

1987: 25, 35 and 75 kyat noted demonetized, replaced by 45 and 90 kyat notes.

https://en.wikipedia.org/wiki/Burmese_kyat#1972-1988

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

#229

Post by asenna »

callmeal wrote: post #125
callahad wrote: post #12

Doh! I was in India earlier this year and forgot to change currencies on the way out. Any ideas for a US national holding 9 of the Rs500 notes?

If you can make a visit by Dec 31, you can get them exchanged at a bank or post office. You may need an account. Details of exchange are not clear.

You can also get them exchanged at RBI offices by March 31st, 2017 [1]

http://economictimes.indiatimes.com/news/politics-and-nation...

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

#230

Post by somethingsright »

rm2889 wrote: post #211
intended wrote: post #195

Earlier quoted context omitted.

Hey it's you! there's quite a bit that has been achieved by successive Indian govts on shoe string budgets. We've had the green and white revolutions, the IITs and other edu programs, large medical programs, ISRO (and the sensing tech that comes with it). This is from a once impoverished country which later had to deal with the fallout of weaker institutions, brain drain and corruption/dacoity/booth capturing and a w…

Hmm as much as I'd like to agree with you, don't think its necessarily spurious on the facts. https://en.wikipedia.org/wiki/Corruption_in_India From another perspective, the Rs 1000 note was demonetized in 1978 as well to curb unaccounted money. More than 30 years later, we've had to do it again because the underlying problem wasn't solved. https://en.wikipedia.org/wiki/Indian_1000-rupee_note Maybe this time it'll wo…

It will work for the current undeclared income. Soon people will begin hoarding the new currency notes. Or become wise and not stash money in currency.

Under the recent tax amnesty scheme if somebody had declared rental income, or business income, they will have to continue declaring it for years to come.

I personally believe that the bigger players in undeclared income are not keeping it in cash, they have assets bought in the names of trusted people, be it cars or properties.

And that is the difference here. Corruption is big players. Undeclared income was for avoiding taxes by mostly regular people.

Corruption had already found a work-around. And even if not, it was free money when they got it; they might not miss it. Regular people were trying to save 30 paise to a rupee that they earned, they will now have to pay it.

The current method is a way to fight black money. For corruption there are other ways, and maybe some will be taken.

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