1.cash riots for lack of cash in every market.... Indias 70 % population use cash.
2.Normally 10% of ATM's don't work.. Now it's 95% of them not working.The anger is raising every minute.... It will be unsustainable if riots breakdown...please do something creative "Lets not become another riot hit country."
3.Demonitisation caused Prices of perishables to raise /it will kill the dealers. The big market yards all deal with cash.... It's nightmare to ask them to even do basic signature forget asking them to do fund transfer. It's far too tough and far too many people are being left behind because they are illiterate. Everything will skyrocket from here.
4.Realty will fall 40%. With it all support industries like Telecom and Infra industry. Only infra projects which get government payments will be sustainable. Rest in single sweep go down to no point of return.
5.The illiterate and masses are the most effected with this move. Remember 80% of Indians earn less than 2lakh. All they get is daily payments... I got at least 5autowalas and others to open bank account. When I looked at the scale of getting 50crore Indians onboard is far too much to little time of 30 days.
It's become war on the poor and illiterate instead of black money hoarders. I am sure there are better and more suitable solutions instead of this mess.
Dear Smart HN reader,Kindly suggest ways what do from here on,otherwise the poor will suffer because they are not smart enough to open bank accounts.
I will publish solutions suggested here to all news agencies.
Relax! its more complicated and worse than that. You can't put in 1000's and 500's into ATM's anymore. Nor can you put 2000's as dimensions of the notes have changed! What that means is you need to put in all 100's. Basically the capacity of an ATM just came down by a factor of 10x. Worse there not many 100's going around. Whatever people get is going into hoarding(due to uncertainty of the future). Now imagine moving that kind of cash across every single ATM in India. And replenishing those machines every few hours. This is a logistical nightmare at gigantic levels. Banks aren't dispensing meaningful cash either, nor do a lot of people have bank accounts. So its a double whammy.
People aren't buying non essential goods. Clothing, Electronics others etc industry is suffering by the minute. There is no money to payout lower middle class and poor people. On top of this you see secondary effects like food running out, or getting expensive. No fuel. Emergency services in peril because hospitals aren't taking cash.
They need to find solution to the crisis within Monday before the poor have a last-straw-on-the-camel's-back situation, and something ugly unfolds from there on.
1.EMERGENCIES
2.FOOD
3.RIOTS
4.LAW ENFORCEMENT BECOMES NIGHTMARE.
5.Everybody is calm till supplies last. Locality by locality, then city by city and state by state will fall. Fall in terms of food supplies ,emergency services,transportation and then riots.
Actually what scares me is India has never had this situation before so nobody has this 'Whats next' knowledge to even think rationally about the whole situation.
But by looks like it that, credit kirana shop economy is quite close to collapse.
Hope they mobilize distribution on a war footing now.
*1kg tomato is going for 30paisa in market yard. Average cost is Rs.13 ...thats 99.99% loss in value. .This is killing farmers and in another 10days you will see farmer suicides because they can't get price for their produce due lack of cash. The farmers are dumping their produce and going home depressed. This is not fair by anymeans.
While cities will see skyrocketing of price because of lack of stock.
Modi has hit at the heart of Indian economy of Farmers. They just are helpless ,the panic is rising every minute and it will create chaos in matter days.
Even for those with bank accounts, it is a huge mess. ATMs are rarely filled, and when they do, empty in an hour. You can only withdraw about 35$ worth of money a day from ATMs, and about 200$ worth per week by cheque. People have to wait (literally) hours to draw their daily 'allowance'or convert the old notes into new ones.
Hundreds of thousands of ATMs need hardware (the new currency notes are different in size so the existing dispensers need to be replaced) and software (to dispense only fixed quantities of new notes). The latter is being programmed literally on the fly, and is quite buggy.
Meanwhile politicians and others who've been sitting on huge piles of money are getting it 'washed'/converted into legal money through a mind boggling array of creative schemes. The people who are suffering are those with 'normal' cash flows, from salaries etc, on which taxes have already been paid.
This may or may not have been a good idea in the abstract, but the implementation is a huge huge mess. [1]
Public anger is beginning to rise [2], and many black jokes are going around that have the theme, "The Prime Minister made a dramatic announcement, then went to Japan to ride on high speed trains. We citizens are so screwed". This is being applauded by people of Indian origin who don't live in India. As I said above, the idea seems good in the abstract, but the execution is terrible.
Personal Experience: I had to wait 3 hours + in Bangalore to get 35$ worth of small note currency.
It's apparent that execution left many things unconsidered. Having a high-denomination bill (Rs. 2000), which is practically useless for most purchases, and insufficient quantity of the low-denomination bills (Rs 100), is as bad as it gets; the transition is going to fairly painful for the whole population.
That being said, I would avoid lamenting the troubles of middle-class and poor when the rich are going to be unscathed. It's true that some leaks would impossible to plug, and people would find clever ways to get some of their money through, a great deal of ill-gotten riches is going to affected by this. It'd be almost impossible to launder monstrous amount of cash that sits inside coffers of those who invariably assumed that they were immune; the mandated limits simply make it impractical.
When you're buying a house in India, there is no way you can go about it in honest means. The seller would usually ask half the amount being handed in cash to avoid taxes. Almost everywhere, a large slew of businesses always avoid paying any kind of tax. The pattern is so ingrained that it's almost become a habit. And this is only tip of the iceberg — political donations, bribes, illegal trades, hawala all stem from the same thing.
Maybe I am speaking from an ivory tower, but if this instills a good habit in minds of people — of being part of a transparent economy — probably the benefits would far outweigh the cons.
> but if this instills a good habit in minds of people — of being part of a transparent economy...
Noble thought but unfortunately, not likely to happen. At least, not at a scale large enough to make any difference.
IMO, the only way that an effective change could come about is cleansing of the political/bureaucratic/governmental systems - and corrupt ways there of - and the current actions will only go to boost those (ways) even further.
> Personal Experience: I had to wait 3 hours + in Bangalore to get 35$ worth of small note currency.
Not trying to argue about this. But I had Rs 75 in my wallet when the announcement was done, and since then I never had to go to an ATM. Didn't have any problems whatsoever.
I have monthly account books running in vegetable and grocery shops. And they have given their account nos. The only time there was an issue was at the barber shop, where I offered to pay by paytm, but the guy said to pay later. So yea, I haven't had to go to an atm, and I don't think I need to unless there comes a pressing need.
$35 is a pack of big macs in the SV. It could be days/weeks/months??? of revenues for a remote village in Indian. A dollar figure doesn't tell about the costs of living, it's misleading at best, manipulation at worst.
And we don't know the exchange rate either. So how many Rs 500 note is $35... not a clue.
no, because these were private conversations, by people who trust me to keep my mouth shut, about ongoing operations. Suffice to say many powerful people in the government are involved. Maybe sometime in the future, when all this madness is behind us.
Nothing wrong with daydreaming or living in your own bubble because
1. Go to your jeweler and ask them to sell gold with a predated receipt.
> Jewelers are getting raided now
2. Pay loans to small time farmers at a discount and have change that at the bank.
> Too much labor work here and nothing much to gain
3. Buy cars at pre dated receipts for your relatives etc.
> How many cars you can buy? 5? No benefits here. And, you
think you can get predated receipts just like that?
4. Invest in innovative chit fund schemes/pygmies.
> Also not much to gain here.
Looks like you are thinking about common man here. Instead think about people who have at least 30 crores of black money. They are the ones who are hit hard by this govt plan. They are never going to go out and deal with peanuts.
Talking to my colleagues in India, it sounds like it's going to get a lot worse. Many are resorting to barter trade. There's a huge and rising black market buying Rs. 500 and Rs. 1000 currency notes at a discount. Banks are either closed or out of cash. ATM's are rarely topped up and the government claims they will take weeks to fix.
Some banks are seeing so much cash being deposited, it's weird. I was sent a photo of plastic bags full of cash tossed on the floor in the corner of a bank.
People are starting to get very very restless and often violent. Not surprising, as I hear they're queueing for six to eight hours only to be told there was no more cash to dispense.
The intentions were good, but this could be the act that topples the Modi government. This is a disaster in the making.
I'm on vacation in India right now, and the impact on tourism has been ridiculous. We've had to spend our time being driven to dozens of ATMs in search of one that's open, and even when we find one we can only withdraw ~$100 worth of notes (even using 2 different debit cards). That might be enough for a typical Indian's cash needs, but it's clearly not enough for us to be able to pay for meals, activities, lodging, and transportation for the day.
It's frustrating because it also forces me to be more tight-fisted with my money than I would like to be. The amounts aren't consequential to me, so I would ordinarily tip very generously. In this situation, I've had to be somewhat stingy with tips in order to have enough money to eat and pay my bills.
It's a stressful experience for tourists, and it's almost certainly costing workers in the tourism industry a significant amount of money.
To put the values in perspective: I paid a driver to drive me 5 hours to an airport today. The drive cost 4,900 rupees. When I include a tip, that becomes 3x the daily per-card ATM withdrawal limit.
Tourists where only cash is accepted are the most effected. They didn't come to India to stand in queue to pay fo meals.... They came to travel freely.
I can see every minute it will become nightmare because nobody wants to spend because they don't have change. In matter month the tourism which relies on cash will be dead.
"Delhi Chief Minister Arvind Kejriwal has alleged that there is a huge scam behind the scrapping of Rs. 500 and Rs. 1,000 notes.
“In the name of tackling corruption, a scam is being carried out on a large scale... On November 8, when Prime Minister Narendra Modi announced that Rs. 500 and Rs. 1,000 notes will not be legal tenders any more, all friends and BJP people, who actually have all the black money, were informed prior. Those who had large amounts of black money got enough to time to take care of it", he said.
That’s the allegation. And it’s worth noting that Mr. Kejriwal is the leader of a political party distinctly in opposition to that of PM Modi.
I used to like Kejriwal but not anymore. He has a problem. He will just disagree to everything said and done by Modi govt. I understand they both are from different parties but why he have to disagree on every single thing?
First he dragged PayTM into this. He said Modi has some 'deal' on this with PayTM. Later he deleted (not apologized) that tweet after response from PayTM founder.
Once again, your plan is as good as the implementation. Many places have hour long queues, emergency services have been denied and the unorganized sector which mostly deals in cash has been hit very badly. There have been places where soiled notes have had to be issued due to shortage [0]. New notes would take time to reload into ATMs as the ATM machines require recalibration due to size, software and hardware [1].
The new currency notes have no new security features [2]. So, this is just a break until new fake notes will be circulated in the market. It is important to note that the same government had called a similar move anti-poor back in 2014 [3].
> So, this is just a break until new fake notes will be circulated in the market.
This. And so, the tens or hundreds of millions who are suffering due to this ill conceived and thoughtlessly implemented policy would have suffered for little national gain in the end.
The government have much less replacements in cash for the cash being circulated. They need most of the money to go virtual, to bank accounts. They need every possible money to be tracked.
I didn't have an active bank account until now. Most of my purchases were done in cash (as any villager would do).
My online purchases were done through some of my friends' accounts. I don't even give my address for shipping.
The Facts:
Justdial used to generate total 1000 leads a day across 10 industries(realty,services,transport etc) in one city.
Number leads per day
Nov 1st :986.
Nov 2nd: 977
Nov 3rd: 956
Nov 8th: 705
Nov 9th: 403
Nov 10th:212
Nov 11th: 156
Remember more than 200 companies are effected because of this in one city alone. India has 2300 small towns n cities. Imagine the scale of business lost.
Lost business or leads not created because of demonetisation is huge. At this rate more than 70% of business turn over will be lost and this will kill small business completely.
When 80% of money in India is with top 5% and they also hoard most of the black money. Moreover this money is already abroad or in some legal investment with the help of govt. I failed to understand why to go behind poor 80% and trouble their daily life. I think it's pure populist political move directed towards state election next month. Since ruling govt supporter already have money stashed abroad and will bring back.
No meaning in depositing money in banks to lend at loss to big supporters of current govt like ambani, Adani etc. Rajan was forced to go out. He would have never supported such foolish political move to trouble common man in India.
> I failed to understand why to go behind poor 80% and trouble their daily life
Taxes. The gov't can lock your bank account or take money from it if you don't pay your taxes. Then they are going to invent more taxes to be able to pay skyrocketing sovereign debt. Fines also. Then they will make you register other assets such as gold, art etc. and have it confiscated if you fail to do so. And it's not only India, it's allover the world. Good luck trying to pay in the EU with 500 euro bills or even 200 euro bills. Maybe after you exchange them at the bank and have your personal data on file. The US? Try to pay with cash in excess of $100. You do not have a credit card? Then you must be 1. a terrorist, 2. drug dealer or 3. laundering money.
I certainly expect them to try this in the US, but I don't expect them to succeed.
As it is, following Sutton's Law, I expect they're going to go after retirement accounts first "because that's where the money is", 10 times as much based on a minute with Google now, and it's a lot easier to get at.
Rajan stood for poor India... He saw through this... He was told to go.
My respect for rajan grew all the more the day I learnt that he had reservations about demonetisation plan.... .. I can see clearly why he was asked to go.
This will certainly go down as the _most_ irresponsible act in the history of independent India.
There are n+1 ways in which such a policy could have been implemented without causing such massive amounts of hardship to tens of millions of citizens; especially the masses at the lower rungs of the economy, but that is the flip side of democracy.
And, to add insult to injury, the prime minister of India, shortly after announcing this madness, flew away to Japan and has been enjoying bullet train rides with his Japanese counterpart. God bless him and God bless India.
Never seen this before, or at least never consciously seen this, but this article uses the word 'crore' to denote 10M. So instead of saying 28% of 115 million accounts that were opened, they say 28% of 11.5 crore accounts. Such a great thing that there's all these different regions of the world that use English almost unchanged, yet with these small cultural differences.
We don't usually use million or billion. We use lakh (100 thousand) and crore (10 million). This is very common. Most news papers don't ever use the terms million or billion. Many Indians find it hard to understand what million and billion stands for.
Modi started with a very small policy when he came into office, where all Indians can easily get a bank account and ATM card.
What he did here is to build on top of this framework. If people decided not the open a bank account and now are in a panic. Also people in India always used Cash (not necessarily black money). There is still time to open a bank account and deposit money.
I find it amazing that there is now 200 banknote and then only 2000. And there is only a moderate amount of the 200s not the crazy amount that is required for giving 9 200s as change when you buys something worth 200 with a 2000.
The notes in circulation currently are only the old Rs. 100 notes and a few new Rs. 2000 notes. You are right that for small to moderate daily purchases costing between 500-1500, it does not make any sense. The new Rs. 2000 notes are essentially useless for now since no one can give you change for that.
I think this move was more towards promoting a cashless economy than towards fighting black money. A large number of people are being forced to enter the banking system this way, and bringing in a lot of money with them. The state bank of India alone has acquired ₹38677Cr. or 5.7 billion USD in just 3 days since the announcement. And this is just one bank, and much more will come soon.
There has been a push towards digital citizenship right from the beginning of this government. The first move was a reversal on the party's stance towards UID or Aadhar - an ID based on the biometric database of the entire Indian population. The party moved from being opposed to the UID, to supporting and even pushing it ahead. Then we saw a push towards payment banks such as Paytm, and a push towards every citizen to get a bank account. The government even opened an API for these payment banks to exchange money amongst themselves. I think the way it works is that users can now get IDs similar to email addresses, like abc@paytm or xyz@pockets and can exchange money similar to sending email, regardless of the wallet or bank account they use.
The demonetization is just one more step in the big project of digitising the Indian citizenship. The next step could be linking all bank accounts to the UID, and enabling payment authentication based on the biometrics from the UID, essentially making your UID your only bank account number.
This is in a way also a global experiment, as if a country such as India can implement a biometrics based ID/Authentication system, integrate them with the payments system and eliminate cash; that achievement in itself would serve as a big push towards a global cashless economy.
As far as the black money is concerned, there are already a lot of people willing to exchange old notes for new ones in return for a 20% or so commission. This is done by showing the money as savings from poor people, exchanging the notes in their name, paying them a small cut and getting away with the new, "white" money. The question is how much can be exchanged this way. Someone with a few thousand dollars over the allowed amount may not have much problem getting the money converted this way, but those with stockpiles having millions of dollars stacked away would definitely feel some pain. There are already stories of people dumping cash in garbage and of cash found floating in oceans.
A journalist from Kanpur published about the demonetization move about weeks ago, so I am guessing a lot of big parties involved would also have known about in advance, and laundered their money in time. I don't know how successful this move would be in curtailing black money, but it is already bringing returns for the Indian banking system.
Why? That's the whole deal about currencies. It's worth what the market thinks it's worth. A US$ is worth around 13,000 Indonesian Rupiah, about a hundred Japanese Yen and around 22,000 Vietnamese Doung. They're just numbers.
Are you asking how much it would cost a middle class family to live in the US for a month?
It varies wildly between parts of the US, and the rural vs urban areas. In Boston Massachusetts, for example, the median family of 5 makes about $6,000 after taxes ($84,195/year before taxes). In poorer areas/states, like Mississippi, families of 5 live on average, with $3,700/month after taxes.
Food, clothing, housing is 10x cheaper in india at non luxury quality. Internet, electricity, gasoline is more expensive than the west. A few things like corruption free living are just not available though. Hopefully this will change after changes like this. I am very optimistic.
The govt pushed everyone to create an account in any bank with any govt id card. This account operates/comes at free cost if you are operating under 50k rupees per year. This has been asked for almost 2yrs and public made aware of it. They clearly advertised that any govt benefits or subsidy will come through bank account only and its made mandatory for benefitting.
Now if those people are blaming govt for banning those notes, i find it funny.
If they are business people who are trading in lakhs, they must file Income Tax which in turn require bank account
If they are poor people who earns less than 1 lakh, i dont find a reason why they cant directly go to bank account and exchange money in next 1 month.
"If they are poor people who earns less than 1 lakh, i dont find a reason why they cant directly go to bank account and exchange money in next 1 month."
Perhaps because they can't wait a month before their next meal or fuel for their scooters or for household expenses?
"Now if those people are blaming govt for banning those notes, i find it funny."
I find it funny that some people find it funny that 85% of the currency bills in circulation are invalidated overnight. Maybe it's funny if all diesel vehicles are banned overnight because they pollute a lot? Or if mobile phones are banned overnight since they are used by terrorists?
You mean to say people living meal to meal have all 500s and 1000s ? How else to push for cashless economy even after 2yrs plea to operate bank a/cs ? The only reason traders deal cash is to underreport income and avoid taxes. If villagers use mobiles today, they will use plastic cards tomorrow. Wearing helmets, condoms, filing IT returns, are all necessities. Ignorance not an excuse.
Tell that to the millions of illiterate/semi-literate, lower-class people across the length and breadth of the country who are suffering right now. But wait - you don't need to. Modi already did.
This is not just affecting people without bank accounts. ATMs are unapproachable even now because of the insane queues. Some places require you to pay merchant charges for using credit cards. Transactions < 100 Rs cannot be paid for with credit cards. Some of us are better off because of credit cards, paytm etc, but I think most people are struggling.
You are absolutely right, it succeeds in making the banking facilities a mandatory step to any sort of financial transaction that can be tracked and overlooked by the government. It sucks coz the banking sector is still quite backwards in many ways but everyone sees the good intention
Isn't vehicle insurance or medicare similarly securing respective businesses? Remember, India is a welfare state and it can mandate laws for greater good.
1.cash riots for lack of cash in every market.... Indias 70 % population use cash.
2.Normally 10% of ATM's don't work.. Now it's 95% of them not working.The anger is raising every minute.... It will be unsustainable if riots breakdown...please do something creative "Lets not become another riot hit country."
3.Demonitisation caused Prices of perishables to raise /it will kill the dealers. The big market yards all deal with cash.... It's nightmare to ask them to even do basic signature forget asking them to do fund transfer. It's far too tough and far too many people are being left behind because they are illiterate. Everything will skyrocket from here.
4.Realty will fall 40%. With it all support industries like Telecom and Infra industry. Only infra projects which get government payments will be sustainable. Rest in single sweep go down to no point of return.
5.The illiterate and masses are the most effected with this move. Remember 80% of Indians earn less than 2lakh. All they get is daily payments... I got at least 5autowalas and others to open bank account. When I looked at the scale of getting 50crore Indians onboard is far too much to little time of 30 days.
It's become war on the poor and illiterate instead of black money hoarders. I am sure there are better and more suitable solutions instead of this mess.
Dear Smart HN reader,Kindly suggest ways what do from here on,otherwise the poor will suffer because they are not smart enough to open bank accounts. I will publish solutions suggested here to all news agencies.