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Earlier quoted context omitted.
BTW, the letter from RBI employees was about mismanagement rather than demonetization perse - http://timesofindia.indiatimes.com/business/india-business/f... That article that you linked seems to be intentionally ambiguous.
It was about mismanagement stemming from the demonetization, loss of autonomy of the RBI.
All Positive comments here are made by those who don't live in india and are influenced by massive propaganda machinery that ruling parting of india is running. As someone who actually lives in india, I am vouch that Demonetisation was a disaster of all sorts. Ruling party kept justifying this failure by shifting the goal posts again and again. Here is a piece which describes in detail, this monumental failure of ind…
This would eventually reach to a point when new currency would die out in the hands of the old currency. Why? Because what Indian govt has done is not 'demonetization' rather they have announced that they would stop printing more old currency and start printing a new currency. But it's like USG issuing Bitcoin like currency (without the electronicy parts, but with the fixed supply, and anonymity of cash).
In other words, the old Indian currency is the perfect black market currency created, and it will just keep gaining value over time as new currency keeps losing value.
My prediction was for at least 4-5 years, but pleasantly surprised to have it come true in only a few years.
It's one of the most expected outcomes. But still for the government to go ahead and do this was primarily two reasons: 1. PR: The current Indian Govt was suffering from Beefgate and PM Modi was criticised for not making any comments on it but touring the world. While Modi was seemed to be an economic reformer, nothing of that sort happened until that. Hence this Demonetisation came up to showcase "PM Modi has done t…
Earlier quoted context omitted.
Governments have so much leverage they don't need to be efficient to be a huge net benefit. Consider the cost to build and maintain a road network vs. the benefits it brings. PS: Further, it's not a question of collecting more money from everyone it's a question of collecting the same money from everyone which is a benefit even if you end up burning the extra money.
> Governments have so much leverage they don't need to be efficient to be a huge net benefit. But aren't you just saying that when you have $1 Billion then paying $500k more to a contractor doesn't seem that bad based on the net benefit it would bring to have a dream home. But imagine if this was a charity (something which govt is, if we look at it a certain way), that inefficiency means more people could have benefi…
India is a case in point, they have enough infrastructure to allow for rapid growth even with a highly corrupt government. While they could do a better job, the increasing standard of living allows for ever improving government services even without increasing efficiency. Further, as standers keep rising the pressure and ability to reduce corruption increases both because governments can directly pay more and because better options show up outside of government.
PS: In the US and I suspect most other countries you can reduce your tax burden by donating just fine. So, taxes are effectively a non issue in terms of charitable donations. Thus tax evasion is simply money people are keeping for personal use.
>Arun Jaitley, finance minister, on Thursday defended the demonetisation at a conference in New Delhi. He admitted that black money had come back into the banking system, but said that tax officials were combing through people’s accounts to identify and tax it. >He said: “The fact that money has got into the banking system does not mean that it is all now legitimate . . . The money got identified with the owner whom…
Nobody with big money worth chasing after deposited money in the banks. There are some real estate developers who preferred to throw money in lakes than give it back to the government.
>>An elaborate exercise is going on and I read multiple stories where the tax dept is sending notices to people with dubious deposits.
Basically any body smart enough to put it back into the bank has long covered their tracks. Also it will take forever given the population scale.
>>Digital payments certainly went up, people started using bank accounts.
Temporarily, I'm back to DeMo days. People and shops around me too. These days if you say you will pay by PayTm they just give you blank stare and ask you to come back by cash.
Earlier quoted context omitted.
Isn't auditing for tax purposes a means of annulling black money?
It is, but the initial claim was that this would basically convert the millions of rupees of black money that's hidden away into worthless paper. That was the promise on which millions of poor Indians were asked to stand in long lines—that even if it inconveniences them, it would inconvenience the rich and corrupt even more. Clearly that did not happen.
http://mashable.com/2016/11/16/india-people-dying-demonetiza...
No scheme can eliminate the evils 100%. However, overall it had pretty strong positive impact on economy. Many of the roadside merchants who used to be exclusively cash only, have started accepting dizital payments. All those on-record transactions are now part of formal banking system, instead of earlier don't-bother-about-tax approach. Combine this with the recent roll out of GST, we are on a very progressive path…
Overall it has permanently destroyed trust in governments actions. Most big money people money I know today trust only two things to park their money: Gold and Real estate. Worsening the home affordability problem.
>>Many of the roadside merchants who used to be exclusively cash only, have started accepting dizital payments.
Their business was destroyed so badly that they had to use digital wallets just to fill their stomachs.
>>All those on-record transactions are now part of formal banking system, instead of earlier don't-bother-about-tax approach.
They were temporarily. They are back to being normal again.
>>Combine this with the recent roll out of GST, we are on a very progressive path and with good momentum.
Some people even say the current government doesn't even have a clue what it is doing, and it will take somebody prudent next time to fix the mess created currently.
All Positive comments here are made by those who don't live in india and are influenced by massive propaganda machinery that ruling parting of india is running. As someone who actually lives in india, I am vouch that Demonetisation was a disaster of all sorts. Ruling party kept justifying this failure by shifting the goal posts again and again. Here is a piece which describes in detail, this monumental failure of ind…
In November I predicted this to my Indian friends (who were quite excited by the new changes) that a rational Indian person shouldn't throw away their old black money, because this money would make a come back in a few years, when the new money starts to lose value due to inflation (Indian Rupee is inflated by the govt at a crazy rate, because that's how the govt funds itself in lieu of taxes). This would eventually…
So you recon that instead of parallel economy using Govt. issued notes - better to shift to old (but invalid) notes?
The only problem is mainstream will not accept old notes from them.
The major sources of black money in cash(which is a very small % of the total black money) are from 1) capitalist - industry owners, builders 2) politicians/bureaucracy 3) SME - small & medium enterprises, doctors 4) Informal sector - smaller shops, daily labour
By definition, 1) & 2) are not affected by this. Those that get mentioned in the news are mostly anecdata/propoganda. It is the 3) & 4) that are mostly hit by this which, alongwith the government, is one of the biggest employment generator. The wealthy among them get away by variety of means. 4) are the worst affected even though most of them don't earn enough to be taxed.
All the talk of fighting corruption is doublespeak when, in the finance bill, they allowed for unlimited anonymous corporate donation to political parties
The cost of printing & distribution of new notes was 80 Billion Rupees [0], up from 34 Billion Rupees the previous year. The amount of fake currency detected from all the notes which were returned was .... wait a minute ... 400 Million Rupees [0]. Though this was a statistical detection mechanism and even if you double the estimates, it is barely 1% of just the cost of printing new notes. To speak nothing of the economic destruction it caused.
[0] https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx...
All Positive comments here are made by those who don't live in india and are influenced by massive propaganda machinery that ruling parting of india is running. As someone who actually lives in india, I am vouch that Demonetisation was a disaster of all sorts. Ruling party kept justifying this failure by shifting the goal posts again and again. Here is a piece which describes in detail, this monumental failure of ind…
In November I predicted this to my Indian friends (who were quite excited by the new changes) that a rational Indian person shouldn't throw away their old black money, because this money would make a come back in a few years, when the new money starts to lose value due to inflation (Indian Rupee is inflated by the govt at a crazy rate, because that's how the govt funds itself in lieu of taxes). This would eventually…
Very interesting. I was looking for an answer to how the Indian government even funds itself with only 1% of the population paying taxes (which also suffers from tax evasion). Could you please explain more how inflation is used in lieu of taxes?
Thanks.