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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

#291

Post by asenna »

I'm not sure why people are not focusing as much on the other major issue this step was taken for - Terrorism funding and economic destabilization attempts from across the border.

It is known that massive amounts of fake currency is circulating in the economy that have been brought in from Pakistan (kind of like a silent proxy war). Even though the current currency had measures to be distinguished from the fake ones, it was difficult to do so by the common person on the street. The RBI chief has mentioned that the new notes would make it much more difficult to replicate and should be easier to distinguish by a layman.

The above, along with the other massive benefits of addressing the black money issue, this move is definitely a winner. The introduction of UPI (Unified Payments Interface) [1] earlier this year and the heavier black money scrutiny will definitely help India move to a relatively more cashless economy.

[1] https://www.quora.com/How-will-the-UPI-interface-of-NPCI-cha...

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

#292

Post by wav-part »

legolas2412 wrote: post #288
wav-part wrote: post #260

Earlier quoted context omitted.

> I too do not think this move alone would solve "Black Money" problem in long term, but it certainly will go a long way in setting a better trend. Only if the problem is inadequate tax revenue, which is not the problem IMHO. Its tax spending . > All govts till now have been doing politically right thing, rather than morally right. If a Govt., for once, tries to go beyond the vote-politics and do what's right, should…

Don't justify your skirting the laws. Why don't you spend the tax you don't pay to the government to a charity?

I dont want to pay for what I am not getting. Is that so hard to comprehend ?

> Don't justify your skirting the laws.

Breaking laws ? That would be playing right in their hands. I would not give them the satisfication to confiscate my properties and lock me up.

Most of the tax goverments think they should but dont get are legally avoided. They have to be. Otherwise exodus would be catastrophic.

> Why don't you spend the tax you don't pay to the government to a charity?

First my money my rules. Second if the charties help me ofcourse I would for example EFF.

So please justify more of your extortion.

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

#293

Post by wav-part »

legolas2412 wrote: post #287
wav-part wrote: post #236

Earlier quoted context omitted.

> The current method is a way to fight black money. For corruption there are other ways, and maybe some will be taken. "Black money" term is so misplaced, it should be untaxed ruppes. It wont affect untaxed assets (overeseas and here). And guess who has most untaxed ruppes and who cant afford to lose any more ? Low/Middle Class. Good job Modi. You just alienated they very people who voted you in the office.

You really think that the Low/Middle class is the target here? Are the people hoarding crores in cash low/middle class? Low/Middle class is indeed saving 30p per rupee. But they aren't storing them in 1000 rs notes, they are spending that to better their lives. This is really against Medium to big businesses, and rich people like jewellers, goldsmiths and builders.

> You really think that the Low/Middle class is the target here? Are the people hoarding crores in cash low/middle class?

Earning Rs 21,000/mo even in 2nd-tier cities are not uncommon. Your local small nookad shop (mom & pop shop) can easily clear that in one month. And most of them are not in system. So guess who just had their saving (hoarding? lol) evaporated ?

Those who have too much money, has money to hire tax experts. So IDK this really looks like anus-f__king at scale.

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

#294

Post by naveen99 »

Ar-Curunir wrote: post #188
codeisawesome wrote: post #169

Earlier quoted context omitted.

Seriously? Tracking every transaction gives a complete illumination of every individual's life to any government.

This is not tracking any transactions, though? What the cash does once it's out in the wild is not known to the govt.

Yes, but now government is calling back all the cash in the wild. I think they are planning to write down who has how much when they bring it in, I believe in a ledger called a bank account.

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

#295

Post by gozur88 »

parennoob wrote: post #55
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),…

I agree, this is a good first move to get black money that is stored as cash out and taxed. Some forms that still remain are: * Gold * Money funneled into "agricultural income" (which is tax free) * Large properties in metros that are bought and left empty (which raises rates sky-high for ordinary middle class people trying to buy a house there) However, this move is brilliant in that it removes cash as an intermedia…

For large, low volume transactions foreign currency works just as well if it's a pretty common thing.

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

#296

Post by [deleted] »

Scirra_Tom wrote: post #132
slg wrote: post #119

Earlier quoted context omitted.

The grandparent comment wasn't comparing arbitrary units, they were comparing the units of each country's currency denominations. The largest active legal tender in the US is worth $100 while the largest in India was worth $15 (now will be $30). I think it is a fair assumption that those numbers aren't arbitrary and that some thought went into choosing those denominations. That gives you insight into the economies of…

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

[deleted]

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

#297

Post by manigandham »

babyrainbow wrote: post #145
TallGuyShort wrote: post #87

Earlier quoted context omitted.

I don't disagree with your premise, but in this case, how can this screw regular people? If someone has chosen to store a lot of their money as cash instead of in a bank and doesn't know about this, I can see that. Am I missing something else?

I am not an expert. But may be, it is only the small time tax evaders that store black money in local currency...So if someone has stashed away his lives savings in a stack of 1000 Rupee notes, this move will force them to pay taxes. Nothing is still being done to deal with really big fishes. The ones who can really make a difference. So as usual, it is the middle class and lower that are being forced to pay, while t…

Being forced to pay taxes is not a bad thing. Middle class are not "losing" anything.

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

#298

Post by intended »

nileshtrivedi wrote: post #257
intended wrote: post #204

Earlier quoted context omitted.

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 ?

How about the fact that only 1% Indians pay Income tax? https://www.thequint.com/hot-wire/2016/05/01/only-1-per-cent... The official number of millionnaires in India are ridiculously low. This is not due to tax exemptions, but due to income not being declared in the first place.

That's absurd though - if 1% pay income tax, the issue isn't black money, but the fact that the unorganized sector is far larger than the organized sector. And this again a known aspect of the Indian economy.

India has historically been an agrarian society, then a bureaucratically driven planned economy and only post 1990, has it been free market.

That means there's not been enough time for the economy to ensure a good distribution and generation of wealth. Is it unsurprising that wealth distribution is skewed ?

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

#299

Post by intended »

legolas2412 wrote: post #287
wav-part wrote: post #236

Earlier quoted context omitted.

> The current method is a way to fight black money. For corruption there are other ways, and maybe some will be taken. "Black money" term is so misplaced, it should be untaxed ruppes. It wont affect untaxed assets (overeseas and here). And guess who has most untaxed ruppes and who cant afford to lose any more ? Low/Middle Class. Good job Modi. You just alienated they very people who voted you in the office.

You really think that the Low/Middle class is the target here? Are the people hoarding crores in cash low/middle class? Low/Middle class is indeed saving 30p per rupee. But they aren't storing them in 1000 rs notes, they are spending that to better their lives. This is really against Medium to big businesses, and rich people like jewellers, goldsmiths and builders.

I think the intended target doesn't matter, because the collateral damage is much larger.

I am genuinely unsure as to how this will play out - I see the good intentions and the executional hazards.

Facts about the economy - it's largely unorganized. Meaning builders and jeweler are not as large as the people doing labor and other mom/pop transactions.

Being unorganized they don't have bank accounts (also ,exams that wealth is stored in assets like gold).

M1 money, is 27 trillion. If 60% of that is in 500/1000s that's 16 trillion. Which has become useless over night, and will disproportionately affect those unorganized people who aren't on the Internet or HN.

The other effect is that yes, people are going to be unable to do black real estate transactions. But this has happened before and it didn't end those particular transactions.

I'm guessing this will be a windfall gain for PSU banks and the exchequer.

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

#300

Post by wav-part »

asenna wrote: post #285
wav-part wrote: post #222

Earlier quoted context omitted.

> 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 accoun…

> this does not even account for 1% of tax spending. Yes, but there are a few other areas that take a major portion of the take spending which we forget to acknowledge in such discussions because it does not affect us muddle-class / affluent people directly - Defense, subsidy of urea and other rural benefits programs (yes, agriculture is in a mess and a lot more can be done but with the introduction of Aadhaar and Ja…

> However, on the economic front, India is really moving in the right direction - Focusing on Startups and business friendly policy changes, making brand India attractive to the world (FDI),

The red tapes that should not have exist in first place but yes step in right direction.

> passing the GST (massive task and looking to be implemented pretty quickly come April),

Its reduction in tax burden (allegedly).

> introduction of UPI [1] (this will definitely move the country forward to a more cashless economy), integration of all the digital services (Aadhaar, Digital Locker, etc),

More surveillance ? That will only be used for good, right ?

> black money declaration schemes and prosecutions (The situation on the ground is actually changing, people are much more scared of hoarding black money now)

Depends on who is hoarding. If its your local shop, government has no right to interfere unless what they get from the government is more than what they pay in taxes.

You misunderstand my previous comment. I am saying government is like a mob that extort money in return for not f__king your shit up (and that is puttign it lightly). And Indian Governments (from 1950-today) are the biggest the world has ever seen, actively exploiting billion people.

I dont think government has inherent right/duty to tax its people or to assume the duty of developing infrastructure etc. In my opinion government has only two task 1. Defend its people. 2. Maximizing profit for its natural resources. Everything else should be left at competing private companies.

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