The timing of the demonetization has not been proper. It is Diwali season and shopping is at the peak. But it has been hit very badly. Secondly during the diwali season people travel a lot. All the people travelling have been badly hit.
Interesting analysis. Thank you.
Hilarious! I'm sure that's what it looks like from the air conditioned, high security cars and offices of US officials, but I'm sorry to say you have no clue about life in the developing economy trenches.
How do you explain the deserted cash-only roadside shops and hawker stalls which are usually bustling with activity after office hours? Why do you think people are beating up bank and ATM staff when they can't get legal tender to feed their families? Why are seriously ill patients being turned away by pharmacies, doctors, and hospitals and being forced to borrow from loan sharks to pay their dues? Why are the normally choked peak hour streets suddenly so easy to navigate ?
Finally, what difference will this badly bungled surgical strike on the common man's wallet make to the biggest black money culprits, considering the government is bringing back both the 500 and the 1,000 Rupee notes, while adding the 2,000 Rupee note for their hoarding convenience?
How do you explain the deserted cash-only roadside shops and hawker stalls which are usually bustling with activity after office hours? Why do you think people are beating up bank and ATM staff when they can't get legal tender to feed their families? Why are seriously ill patients being turned away by pharmacies, doctors, and hospitals and being forced to borrow from loan sharks to pay their dues? Why are the normally choked peak hour streets suddenly so easy to navigate ?
Finally, what difference will this badly bungled surgical strike on the common man's wallet make to the biggest black money culprits, considering the government is bringing back both the 500 and the 1,000 Rupee notes, while adding the 2,000 Rupee note for their hoarding convenience?
My grandparents are 93 and 83 years old in a small-sized town. They live by themselves on government pension. They can't stand in long lines, but their pension money comes in notes of 500/1000. Yesterday, my grandmother presented my mother with a unique dilemma: should I burn the notes, or should I have some one exchange it at the bank for me? Of course, exchange it at the bank, my mom said. Well, turns out there is a new business in these small towns. There are people who will exchange the high denominations for lower ones and bring them back to my grandmother, but he wants a 10% commission. So my grandparents, old and frail, are paying 400 R. per 4000 R. for being old pensioners.
I could keep talking about a million scenarios of inconvenience. I could also talk about a million different ways in which black money can be kept black. Gold. Opening up a 100 accounts under names of various family members and depositing cash in them for an amount that is non-taxable. But I won't.
And there will be those who will read this and say, well your parents should be living with your grandparents because who lets their old parents live alone? I will say to you, if my mother had a choice she would, if my father had a massive business and didn't have to go to work everyday he would.
There will be many more who will say, we as citizens should be willing to suffer the pain and the cost for our country's good.
But I want to ask all of you, what good comes off of hurting the common man?
I could keep talking about a million scenarios of inconvenience. I could also talk about a million different ways in which black money can be kept black. Gold. Opening up a 100 accounts under names of various family members and depositing cash in them for an amount that is non-taxable. But I won't.
And there will be those who will read this and say, well your parents should be living with your grandparents because who lets their old parents live alone? I will say to you, if my mother had a choice she would, if my father had a massive business and didn't have to go to work everyday he would.
There will be many more who will say, we as citizens should be willing to suffer the pain and the cost for our country's good.
But I want to ask all of you, what good comes off of hurting the common man?
5
Ignorance is not good. If your grandparents are that old and living alone I am sure they can go at least to the bank and ask policeman and people to bypass the line. India is not some medieval country-people, bank officials,policemen are all ready to help out each other .
You ask for what's in for common people, well property rates will bottom out, gold rates will go down, billions of unaccounted money that has been hoarded over the years will destroyed leading to low fiscal deficit and low inflation.
Please come to India and feel the pulse of the common people.
You ask for what's in for common people, well property rates will bottom out, gold rates will go down, billions of unaccounted money that has been hoarded over the years will destroyed leading to low fiscal deficit and low inflation.
Please come to India and feel the pulse of the common people.
1
Re: "Opening up a 100 accounts under names of various family members and depositing cash in them for an amount that is non-taxable." : Not anymore. Each account is tied to an Income Tax Permanent Account Number ("PAN").
1
Anwesha Bhattacharjee doesn't get the whole long term goal of this move by the government. Suppose, your grandparents paid the 10% commission and got the valid currency- in that case are they are done!. Next month's salary will be in the right denomination so no need to worry about long term suffering. Only need to be concerned if they were hoarding 500's and 1000's currency notes, even then they have a legitimate source. Why not think of one month's 10% of the pension(paid as commission) as a charity for a good cause? I am sure you can find a few loose change somewhere in the Texas home of yours to send them if that 10% of their pension is such a huge sum for the elderly grandparents.
1
This decision shows clearly, how little the government works for the people. A small elite is corrupt; everyone else gets punished for this. How can you remove 80% of currency from circulation in such a short time? Who compensates you if you loose time from work to change currency? What if you were ill/traveling and could not get to stand in a line for 10 hours ... Also is this even legal? The whole concept of a currency is based on a promise. How can you break a promise so blatantly?
8
The worst hit have been the daily earners like the small shopkeepers and daily workers. Since a few days, they have no income at all. Political parties, businessmen, terrorists, havala operators etc. who had hard cash in 500 and 1000 rupee denominations have been doomed. The elections in UP has been hit very badly. The biggest mistake the government made was, not making alternative currencies available within a few hours. Three days are over and still the banks are struggling to meet the contingency.
Yesterday a man in my neighbourhood died of a heart attack. He had stashed away liquid cash in denominations of 500 and 1000 in unaccounted wealth. Overnight all his money became scrap paper. Three days after the announcement by the government, the man is no more. I bet many must have died in similar way. Many people might have died in hospitals due to lack of treatment since they could not make timely payments.
1
Well said, Ravi.
Whether it is legal is debatable, but I would certainly consider it low on moral grounds.
Whoever prints the currency ( and its not always the Government as everybody thinks), the real ownership of that currency should be with the person who has earned it.
If the ownership was transferred to an individual as compensation for his efforts, and it was done when 1000 and 500 notes were legal, wouldn't the change of law be invalid on moral grounds.
Just some food for thought for political philosophers.
Whether it is legal is debatable, but I would certainly consider it low on moral grounds.
Whoever prints the currency ( and its not always the Government as everybody thinks), the real ownership of that currency should be with the person who has earned it.
If the ownership was transferred to an individual as compensation for his efforts, and it was done when 1000 and 500 notes were legal, wouldn't the change of law be invalid on moral grounds.
Just some food for thought for political philosophers.
There are too many direction of enquiry that the NYT should follow through and investigate:
1) 86% of the monetary base in cash is in 500 and 1000 Rupee denomination of which even if 30% moved into the banking system, will vastly improve the liquidity of the banks and reduce the NPA ratios at these banks.
2) The demonetization is a huge windfall for the Indian Government as the the new monetary instruments will be introduced through the banking system and could represent additional Government equity in the banks. This in turn will show up in additional semi-annual dividend flow to the Government and subsequently a higher rating for the banks.
3) The GDP numbers for the next two to three quarters could move lower as cash spending on consumer products and services will surely decline. The current inventory at wholesale and retail will have to be marked lower and bring inflation down. This gives RBI room to lower the monetary rate.
4) Fiscally the Government can either show lower deficits and increase infra spending or both.
5) The spread between GOLD in USD and Rupee is now 100% and will definitely increase smuggling of the precious metal into the country.
I just wish the new monetary instruments would have been designed not with serial numbers but a 3d graphic code, which consumers could used there cellphone cameras to verify authenticity - additionally if the app is used to check a valid note a small log then is recorded at a cloud server with the ID, GPS, date and time
1) 86% of the monetary base in cash is in 500 and 1000 Rupee denomination of which even if 30% moved into the banking system, will vastly improve the liquidity of the banks and reduce the NPA ratios at these banks.
2) The demonetization is a huge windfall for the Indian Government as the the new monetary instruments will be introduced through the banking system and could represent additional Government equity in the banks. This in turn will show up in additional semi-annual dividend flow to the Government and subsequently a higher rating for the banks.
3) The GDP numbers for the next two to three quarters could move lower as cash spending on consumer products and services will surely decline. The current inventory at wholesale and retail will have to be marked lower and bring inflation down. This gives RBI room to lower the monetary rate.
4) Fiscally the Government can either show lower deficits and increase infra spending or both.
5) The spread between GOLD in USD and Rupee is now 100% and will definitely increase smuggling of the precious metal into the country.
I just wish the new monetary instruments would have been designed not with serial numbers but a 3d graphic code, which consumers could used there cellphone cameras to verify authenticity - additionally if the app is used to check a valid note a small log then is recorded at a cloud server with the ID, GPS, date and time
1
Corruption and bribery are not caused by, nor are the result of 500 and 1000 rupee notes. In fact, such stringent tactics will probably give rise to more corrupt practices.
The real purpose of Modi's move is to wield more power and have complete control over every Indians personal finances. From credit cards that are embedded with radio frequency chips that even monitor your whereabouts, to electronic transactions that are traceable and known not only to the banks but to the State agencies as well, a digitalized currency will, in the long term, leave Indians exposed and powerless in front of their government.
The real purpose of Modi's move is to wield more power and have complete control over every Indians personal finances. From credit cards that are embedded with radio frequency chips that even monitor your whereabouts, to electronic transactions that are traceable and known not only to the banks but to the State agencies as well, a digitalized currency will, in the long term, leave Indians exposed and powerless in front of their government.
1
That is hilarious on all accounts. A man sitting in Pakistan using 1970s movie plot to describe Indian credit cards fitted with RF chips used by government for surveillance. That's not how economy or technology works.
For RF chips to work they need an electrical source to work not possible in a plastic card. Cash transactions promote bribery and put money out of tax net.Every government in world is promoting plastic money. Undocumented money is not a fundamental right, governments have full right to know the finances of individual for tax assessment.
I thought Pakistanis might be having more knowledge about it considering there PM Nawaz Sharif is accused of money laundering in Panama scandal
For RF chips to work they need an electrical source to work not possible in a plastic card. Cash transactions promote bribery and put money out of tax net.Every government in world is promoting plastic money. Undocumented money is not a fundamental right, governments have full right to know the finances of individual for tax assessment.
I thought Pakistanis might be having more knowledge about it considering there PM Nawaz Sharif is accused of money laundering in Panama scandal
2
This is no movie plot.
There are over 35 million cards with RFID chips utilizing radio frequency technology that are being used in USA currently.
I am not going to debate the merits of governments power vs individual privacy.
Let the Indians find out for themselves whats in store for them.
There are over 35 million cards with RFID chips utilizing radio frequency technology that are being used in USA currently.
I am not going to debate the merits of governments power vs individual privacy.
Let the Indians find out for themselves whats in store for them.
HRK: Read up on RFID.
Credit cards have chips storing data, but not RFID. An EZ-Pass-type transponder has RFID.
The US does not need 35 million cards with "RFID" chips for tracking. The 300 million or so cellphones keep telling where anyone is, about every fifteen seconds. And guess who can access it, for the 300 million+ phones in the US, or the billions around the world.
Credit cards have chips storing data, but not RFID. An EZ-Pass-type transponder has RFID.
The US does not need 35 million cards with "RFID" chips for tracking. The 300 million or so cellphones keep telling where anyone is, about every fifteen seconds. And guess who can access it, for the 300 million+ phones in the US, or the billions around the world.
Rubbish... 80% of people live in Villages... they are not worried... this news seems like paid one... I am from India, I know there will be chaos for a week or two and then India will get adjusted to normality....
5
M Kumar, who lives in India, understands the dynamic of this process well.
The true villager feels almost nothing. The small-town dweller in inconvenienced.
The middle class home feeds the family from stocks in the household "godown" for three days and replenishes when the new currency is available.
A nuisance, but not a tragedy.
The true villager feels almost nothing. The small-town dweller in inconvenienced.
The middle class home feeds the family from stocks in the household "godown" for three days and replenishes when the new currency is available.
A nuisance, but not a tragedy.
1
I remember carrying a backpack full of 1000 Rupee bills (it is heavy!) when I purchased an apartment. The seller would not accept more than 40% of the selling price in white (check), demanded the 60% be paid in cash. Needless to say, the official price of the apartment as registered, was 40% of what I paid.
I am thrilled at the way Modi performed this "surgical strike". People stand in line for days to buy a movie ticket, standing in line is nothing new in India.
All these whining about inconvenience is actually grief over the hoards of money that is worthless now.
Only problem is, the system returns back to square one in a year or two. This shock treatment should be given every 2-3 years so people are fed up of cash/underground economy.
I am thrilled at the way Modi performed this "surgical strike". People stand in line for days to buy a movie ticket, standing in line is nothing new in India.
All these whining about inconvenience is actually grief over the hoards of money that is worthless now.
Only problem is, the system returns back to square one in a year or two. This shock treatment should be given every 2-3 years so people are fed up of cash/underground economy.
7
Since the illegal Swiss bank accounts can not be touched, because the ruling the information about them was obtain illegal. We need a house cleaning for what we know exits outside the tax law but should be subject to them.
1
why would anyone in the world have holdings in Ruppees in a Swiss bank account. By the time the money has traveled to and fro, its worth 40% less, and that doesn't account for inflation.
How do I get rid of Rs.6000 in Rs.500 note I have with me here in the USA?
Legally, you are not supposed to carry Indian Rupees out of India.
So, you have 12 good pieces of art that you can frame and display!
So, you have 12 good pieces of art that you can frame and display!
Talk to the Manager of an Indian bank in Chicago or LA. All arrangements are done for that.
INR 6000. That's US$85. Don't lose too much sleep.
3
"Currency ban agitates India" - a misleading title for a on-sided article. I expected better than this from the New York Times. The vast majority of Indians do not have bundles of Rs. 500 and Rs. 1000 notes. Those who have legally acquired the money can exchange them in the next seven weeks. Only people upset are those who do business on a cash basis, and don't pay tax on their earnings. And of course corrupt politicians, drug dealers and terrorists. Maybe your title should be more explicit on the Indians who are agitated.
7
Our friends in India are happy with this move. I would like coverage of what the tourists and business travelers can expect. I am surely among thousands about to leave for a trip there.
6
As a repeat business traveler with several 1000s of Rupees I brought from my last trip, I plan to give 500 Rupee notes to poor people. I don't have the time and patience to deal with bank officials, stand in lines for hours only to be told that I am missing this or the other form in a clear attempt to frustrate my getting the money back.
Cost of doing business in India. Which obviously is factored in.
Cost of doing business in India. Which obviously is factored in.
very biased article, as expected from an existing super power towards a future one. It is the boldest move apart from Obamacare in the 21st century across the globe. Great going PM Modi. He finished corruption overnight.
7
That assertion is ridiculous. You have no idea about the ingenuity of people who want to bribe and want to get bribed. The thing in India is that you can not get anything done without a bribe. Government services are so poor that people are willing to pay them. So, they will find a way.
Correct, TT.
This inconceniences the payers and receivers of bribes and the participants of larger forms of corruption.
It does not end them.
Corruption in India (and many other countries) is structural. The economic rules and regulations invite it. And folks come to accept it.
Currency moves like this do not cure the disease. They provide a bit of short term comfort to the non-corrupt along with a bit of inconvenience.
This inconceniences the payers and receivers of bribes and the participants of larger forms of corruption.
It does not end them.
Corruption in India (and many other countries) is structural. The economic rules and regulations invite it. And folks come to accept it.
Currency moves like this do not cure the disease. They provide a bit of short term comfort to the non-corrupt along with a bit of inconvenience.
1
We talk with our friends and relatives in various parts in India almost each day. There has been no considerable trouble for anyone in following through with this much needed, albeit bold, plan of action. Of course, NYT writers, with their Indian cohorts and half-educated "journalists" (?) have to always see the glass half-full when it comes to reporting on things Indian and about India. What a joke!
11
We are told that most black money is held in gold not cash. Also, if this is a one time thing, how does that change behavior. what is to prevent the new notes to be used in the same way as the current ones.
2
Next on the Mr Modi agenda should be how to curb the pollution in Delhi which is reaching astronomical figures.This should be on top of his to-do list .
It seems to be a temporary measure. The govt. plans
to issue new 500 and 2,000 rupee notes. Same black
money and undeclared income would ensue. In 1978
the same measure was adopted and after some years
the black money accumulated. It is the battle of mindset.
Unless high earners understand that they have to pay
taxes the cycle will continue to repeat.
to issue new 500 and 2,000 rupee notes. Same black
money and undeclared income would ensue. In 1978
the same measure was adopted and after some years
the black money accumulated. It is the battle of mindset.
Unless high earners understand that they have to pay
taxes the cycle will continue to repeat.
4
With each family having a bank account, the the government's ability to monitor transactions electronically, this is not the same as Mrs. Gandhi's 1978 de-monetization of 10, 5 and 1 thousand rupee banknotes.
3
true but not true, now all will be under radar and folks will be really "scared" to hold black money or pursue such.
1
The reason Mr.Singhal (quoted in the article) is so distraught is because he has a wholesale shop in Old Delhi. This particular market works entirely in cash, and Mr.Singhal (and other shop owners in the area) have probably not paid a paisa in taxes in their entire lives. I know quite a few people like him, and they are quite proud of the fact that they have never paid any taxes. The move by the Modi government is actually aimed precisely at Mr.Singhal, and the fact that this has distressed him is proof of its success.
34
Well said. I have dealt with some traders in Old Delhi/Ajmeri Gate area. Wearing Rolexes and Omegas, but at the end of the day, 95+% of the sales in cash that go home or into a safe, and not as check/draft deposits into the bank account that the business maintains, with great unease, for the tax authorities.
If they could, they would do all business in cash.
If they could, they would do all business in cash.
4
The Marwaris and Gujerati traders in Raj's anecdote would, indeed prefer to do all their business in cash.
So would American plumbers, painters, carpenters, landscapers, and roofers.
Self employed people in all nations are tempted to evade tax by seeking cash remuneration.
It is a bit easier in Ajmeri Gate and Chandni Chowk than on 5th Avenue.... but it happens in both venues.
So would American plumbers, painters, carpenters, landscapers, and roofers.
Self employed people in all nations are tempted to evade tax by seeking cash remuneration.
It is a bit easier in Ajmeri Gate and Chandni Chowk than on 5th Avenue.... but it happens in both venues.
1
Did Modi and his family also stand in line, or is this another example of the Elite oppressing the common people.
4
This is a common practice of banning currency. Has nothing to do with oppressing.
2
Actually, no. And his few relatives, and the Prime Minister himself, have a rather spartan lifestyle.
3
Don't show your ignorance. Common folks may be inconvenienced for a few days, it is actually the elites who are now stuck with unaccountable millions of useless paper.
1
Other posters have pointed to the short term focus of this article, so I won't belabor the point. I had to pay "under the table" cash over and above the government charges, to a government official who refused to issue a death certificate for my father who died. His body had to be cremated within 24 hours. This was not the only occasion that I had to bribe the government but it was the most painful one. As someone whose internal boiling at corruption gave way to helpless submission, I cannot be happier for India and Indians. This move includes government officials which is huge. The short-term inconveniences are nothing compared to the possible long term benefits. No one has done ANYTHING to stop corruption, let alone such a bold move.
On another note, I find that this article is not balanced. The Twitterati, particularly those who are not in positions of public office or other similar kinds of power, have actually endorsed, welcomed and even congratulated the Prime Minister! I see none of that sentiment in this article!
On another note, I find that this article is not balanced. The Twitterati, particularly those who are not in positions of public office or other similar kinds of power, have actually endorsed, welcomed and even congratulated the Prime Minister! I see none of that sentiment in this article!
16
Trump's election has exposed mainstream media's incompetence, and this article is another example of how the mainstream media is so out of touch with what's happening on the ground. Yes, there are temporary hardships, but for the most part, Indians are happy with the government's move. People were surprised when it happened, and exchanging/depositing old notes is a pain, but people with no black money -- which is a large majority of the population -- are OK with it.
12
It's easy to say that this will cause slight inconvenience and frustration when we sit in our armchairs in a foreign country unaffected by this. Imagine the plight of that poor man and his family not being able to operate on his child or even buy food. imagine the plight of the 10's of thousands who have to waste precious time standing in line at the banks to exchange money when they could be earning their daily bread. the lost business for numerous folks who rely on it to pay their daily bills. In a country like India where 70% of the economy runs on cash this is major jolt to the system. It is going to have repercussions for years. the only affected people are the regular folks. the rich and corrupt will find a myriad numbers of ways to game the system. They may loose a little money now but they will definitely find ways to limit their monetary damage. this changes nothing except cause hardship to the common man
10
The 'poor' don't deal in denominations of 500s and 1000s...yes a few a will suffer right now, but the idea is to eventually move together as a country where one rule is applicable to all!
5
Roo in Toronto says 'The 'poor' don't deal in denominations of 500s and 1000s'.
I do not know what is your definition of poor, but a 500 is nothing much these days. India has changed.
I do not know what is your definition of poor, but a 500 is nothing much these days. India has changed.
1
Yes of course it has changed When I was a boy in India I could buy a plate of Dal/Roti for four annas (one quarter of one rupee)
Today I might pay (in a poor neighborhood) INR 30 for that same plate of Dal and a piece of Roti.
Ditto for most places in the world.
But for the very poor in India, INR500 is still a meaningful sum.
Today I might pay (in a poor neighborhood) INR 30 for that same plate of Dal and a piece of Roti.
Ditto for most places in the world.
But for the very poor in India, INR500 is still a meaningful sum.
It may be relevant to let readers know this Vedic astrology writer’s prediction in article “ 2017 - an opportune year for India with some major worrisome concerns in February- March and August- September” already under submission for publication in India.These yearly predictions are intended to serve as an alert for the nation for strategies to deal with likely planetary influences from cosmos having potential to manifest in some either diluting or reducing such planetary potential scenario. Coming to the economy of the nation during the year , this is what has been said in the article under submission : - “ Economy may be straightened up to an extent”. So it seems one big step or measure of the Govt has come in that direction on the midnight of 8 November 2016 , on the eve of 2017.
Wow. All of this, while the Mangalayan is on the new 2,000 Rupee Note!
Let us change to view the planets slightly differently, like Mangalayan did...
Let us change to view the planets slightly differently, like Mangalayan did...
Why did the enactment of this policy need to be so abrupt? What would have happened differently if people had been given even a couple weeks of notice?
If not, it would give people with illicit money the time to exchange their stash for legal denominations. Thus diluting the intent.
Ordinary people do not loose their money as they can deposit their meager sums into their bank accounts and withdraw their cash in legal tender in small amounts over a period of time.
It is only people who have hoards of 500 and 1000 Rupee denominations and cannot account for how they obtained it, will have problems.
People with hoards of these denomination can also deposit it into their bank accounts. However, the federal Income Tax folks will be keeping an eye on such deposits and seek explanations, if that amount of cash does not match the probability of you maintaing such large sums at any instant based on your income tax filings.
Ordinary people do not loose their money as they can deposit their meager sums into their bank accounts and withdraw their cash in legal tender in small amounts over a period of time.
It is only people who have hoards of 500 and 1000 Rupee denominations and cannot account for how they obtained it, will have problems.
People with hoards of these denomination can also deposit it into their bank accounts. However, the federal Income Tax folks will be keeping an eye on such deposits and seek explanations, if that amount of cash does not match the probability of you maintaing such large sums at any instant based on your income tax filings.
13
It needed to be abrupt to have a real effect. The earlier the announcement, the more time people would have had to avoid or evade the policy. Right now, people involved in a lot of cash-only-under-the-table transactions need to pay double to get gold or instead hand over a significant chunk of their cash to money launderers. With enough notice, they'd have been able to make plenty of careful exchanges to keep their wealth off the books.
2
Well explained.
The move has a positive acceptance largely and a change particularly of this scale will take some time to settle. These are tithing problems and will be over in 2 to 3 weeks time but we have to look at the larger picture which is in the interest of our country. i wish the journalist writing this article should have shown the positive side of this and not handful of people apposing it. Never mind this is one small step towards rising of India, no amount of criticism and hiding the truth can bring it down.
Jai Hind.
Jai Hind.
9
Article appears lopsided. Not expected from such a leading paper. Just two illustrations:
1. My Facebook feed is filled with jubilant citizen and are embracing change whole heartedly. Why article doesn't mention such folks?
2. Many news organizations like bloomberg have quoted huge gain for India ($45b). There are many more positive impacts on India and should be covered.
1. My Facebook feed is filled with jubilant citizen and are embracing change whole heartedly. Why article doesn't mention such folks?
2. Many news organizations like bloomberg have quoted huge gain for India ($45b). There are many more positive impacts on India and should be covered.
9
A 500 rupee bill is worth $7.50.
That is a decent amount of money in india.
2
Bravo Modi - this is the way to get rid of black money and all those corrupt politicians, police, govt workers and others who have made a fortune from bribery and many of them have not paid a single penny of tax will come to realization of their grave mistakes or price they have to pay for their greed.
Corruption is in the roots of the Indian culture, operation and mindset. This is the best way to make these people pay the price. THANK YOU Mr. Modi - Jai Hind!!!
Corruption is in the roots of the Indian culture, operation and mindset. This is the best way to make these people pay the price. THANK YOU Mr. Modi - Jai Hind!!!
5
Yes, this has been a disruptive and inconvenient week for the average Indian citizen. However, the government has planned this out quite thoroughly, so the pain to the common family should ease up within a few more days.
What this move really accomplishes, with one masterstroke, is to wipe out the slush funds and un-taxed cash holdings of the corrupt politicians, bureaucrats and business people. And it does it in a very teachable way, to prevent and minimize the recurrence of this corrosive parallel economic system that has been sapping India’s growth and tax base for decades.
The sweet irony here is that the corrupt have been suddenly and quietly shorn of their ill-gotten or un-taxed cash quite thoroughly, and at the pain of further investigations, they can’t even state or talk about their so-called loss!
I am quite impressed with the Modi government gutsiness in trying this, and even more impressed with how the vast project was compartmentalized, and executed in complete secrecy. It caught even the most informed and connected people unawares, which usually doesn’t occur in India, to the detriment of the common citizen.
What this move really accomplishes, with one masterstroke, is to wipe out the slush funds and un-taxed cash holdings of the corrupt politicians, bureaucrats and business people. And it does it in a very teachable way, to prevent and minimize the recurrence of this corrosive parallel economic system that has been sapping India’s growth and tax base for decades.
The sweet irony here is that the corrupt have been suddenly and quietly shorn of their ill-gotten or un-taxed cash quite thoroughly, and at the pain of further investigations, they can’t even state or talk about their so-called loss!
I am quite impressed with the Modi government gutsiness in trying this, and even more impressed with how the vast project was compartmentalized, and executed in complete secrecy. It caught even the most informed and connected people unawares, which usually doesn’t occur in India, to the detriment of the common citizen.
26
The news does not give a fair picture. It gives an impression that people are opposed to this move of Govt. While most people, even those who had to stand in Q for 2-3 hours, distinctly said in almost all tv channels coverage that they are happy about the decision, though they are facing problems with exchanging money on atm.
The authors have projected completely opposite of the mood whole country has. Why and how they got to project so wrong impression?
The authors have projected completely opposite of the mood whole country has. Why and how they got to project so wrong impression?
12
the same reason that trump won in america - media has no idea what most of people think - too busy projecting their own world-view.
2
ok, good to know. You can always count on Times commenters, even though you cannot always count on the Times.
2
That leaves the 100-rupee note as the highest denomination in circulation. I wish the article had explained to the U.S. reader how an economy can function when the largest piece of paper currency you can carry is worth only US$1.48. On the surface, it's like saying that to combat graft and money laundering we have to remove all bills $5 and up from circulation, and that people can carry only singles.
2
Serious economists here are recommending that the $10. bill be made the largest allowed in circulation. Watch for it.
4
The entire point of the Indian government's move is indeed to cripple the economy - the cash only economy that makes it easy to evade taxes. The average person gets by just fine and will continue to do so. Consider the following:
According to a wage report issued in 2012 by the United Nations' International Labour Organization (ILO), India ranked 69 out of 72 countries listed, with the average monthly wage equivalent to $295 U.S. dollars or just over 18,117 rupees. That puts the average Indian's weekly wage at approximately 350 rupees, which means four notes can cover it.
Take someone else in the United States. Let's say they make $40,000 every year, a bit lower than the average often cited, so they'd make $769 per week. Our largest note is also 100, so we can store a week's pay with eight notes. Twice as much, yet people in the United States manage it.
Comparatively speaking, if India really needs a 1000 rupee note that holds around 3 weeks of the average salary, the United States would need a $2000 note to do the same.
According to a wage report issued in 2012 by the United Nations' International Labour Organization (ILO), India ranked 69 out of 72 countries listed, with the average monthly wage equivalent to $295 U.S. dollars or just over 18,117 rupees. That puts the average Indian's weekly wage at approximately 350 rupees, which means four notes can cover it.
Take someone else in the United States. Let's say they make $40,000 every year, a bit lower than the average often cited, so they'd make $769 per week. Our largest note is also 100, so we can store a week's pay with eight notes. Twice as much, yet people in the United States manage it.
Comparatively speaking, if India really needs a 1000 rupee note that holds around 3 weeks of the average salary, the United States would need a $2000 note to do the same.
If India wants to break inflation, it has to break its massive informal economy. When tax cheating is culturally ingrained, these currency measures are an unfortunate necessity. Certainly though, it is a sign of deep social dysfunction. Tax cheating is also an indication of government rot and political corruption.
6
It doesn't make any sense if Modi is re-introducing Rs. 100 Rs. 2,000 bills/currency.
He should have gradually banned cash transactions over Rs. 5,000, if he really wanted to deal with money laundering and/or blackmoney.
He should have gradually banned cash transactions over Rs. 5,000, if he really wanted to deal with money laundering and/or blackmoney.
5
Once the legitimate but invisible economic activity has been brought in the official ambit, from cash deposits of older currency notes, with no limitations, it will become cashless, and quite traceable.
1
Even if Modi succeeds in draining the swamp, corruption and black money will return in more insidious ways. The common man will pay a heavy price.
In trying to kill the cancer, will the patient survive?
In trying to kill the cancer, will the patient survive?
7
so basically you are saying there is no possible hope, and all efforts are in vain?...that seems pessimist, to say the least. personally, i think this was a brilliant move by modi, and i applaud his intelligent audacity (and frankly i am surprised to be doing so, because my impressions of him heretofore was as a dangerous inflammatory hindu nationalist). the truth of the matter is, anyone who prefers to deal in large amounts of cash is criminal, corrupt, and/or evading taxes (true here in the united states as well).
3
There may be inconvenience and frustration incurred by the people but we have to swallow this bitter pill for long term benefits.Sans the Congress party this initiative have been appreciated not only by the majority of the Indian population but the same views are being echoed by the leading spokesperson of other parties as well.Consequence of this,I believe, is less to do with the corruption and more with the terror organisations which are notorious for counterfeiting.In hindsight this move might be appreciated a whole lot more.What surprises me is the timing of this all with elections in Punjab and Uttar Pradesh scheduled to happen in January this might cost them few votes especially in a state like Uttar Pradesh with large uneducated voters whose frustrations can easily be tapped by opposition parties like SP and BSP.
13
Well said Aakash! Even I believe 102% it will impact losing some vote share. But I am proud this step has been taken by BJP. It was very much needed. Just think about how badly it will impact the campaign in these states because no black money, no campaign. Bitter but truth!
3
They are painful (not for the expats like me) but for certain slices of the population.
Firstly, the very poor don't suffer because they do not have great stashes of currency (and the rules always provide for legal exchange of small stashes). The poor, if they have any assets have land/silver or gold in small quantities and these are not damaged (in fact they appreciate under currency instability).
The rich aren't hurt very much. They might have (say) $20K in local currency in a safe, but most of their liquidity will be in foreign exchange, much of it outside the country. Their major assets: buildings, farms, vehicles, jewellery etc are safe.
The merchant middle class who own shops, and warehouses take a hit. Their modes of business usually require quite a bit of cash. They can turn some in and draw attention from the tax authorities, or they can take a hit.
The professional middle class (teachers, government servants, salaried staff) aren't badly hit.
The big blackmarketeers usually pay a substantial price (they may have $1M or more in currency notes and they cant face the tax authorities) Their best bet is to bribe a high bank officer or treasury officer who gives them say forty cents on the dollar for their stash because the official can convert it behind the scenes.