I come from a lower-middle-class family in Kolkata, and I can say from experience that a lot of older people (my parents!) are over the moon with the whole thing. My mother, in particular, has suddenly turned into some sort of Modi fangirl, saying stuff like, "See what he's doing for the country!" (and variations on that). At some level, it's just the fact that anyone who replaces years of (perceived?) inaction with something striking -- however naive, or well-intentioned-albeit-disastrous-in-the-long-run -- will elicit this kind of reaction.

I imagine for people like my parents, the cost of going to a bank and getting all their suddenly-demonetised banknotes exchanged (which we anyway had very little of) isn't too much. And when some restaurant, say, or a drugstore, is unwilling to accept one of the new 2000-rupee notes, we have credit/debit cards to fall back on. The fact that that people may not have Aadhaar[1] cards or voter ID cards stored safely somewhere, that not everyone has bank accounts which hold >99% (excuse the arbitrary figure) of the money they have, that not everyone has the ability to spend what might possibly be the better part of a day walking to $DEITY knows where the nearest bank is (probably to be turned away because they're out of cash or because the line is a kilometre too long) -- that the very act of going to a bank may not be as trivial or no-brainer-like to everyone as it is to oneself! -- is something we have to work very hard to even imagine. And the cash they have stored is, in many cases, all they have. (Remember what I said about not having a bank account?)

Cash, for us, is what we use for bags of chips and ice-cream and sheets of graph paper and ... bus fare, I guess? Cash, to someone living from day to day, is everything.

edit: yay downvotes, I can tick that off my list

[1]: https://en.wikipedia.org/wiki/Aadhaar

There is atleast some indication that the Modi government took some steps in the prior years/months to strategically encircle the medium to big hoarders of black money and soothe the impact of the drastic demonetization step on the poor. Having said that any action of this magnitude is bound to have misplanning, unintended consequences and hardship

2013 Under previous government Replace subsidies with direct deposits in bank accounts of poor citizens[1]

2014 Under Modi Massive push to open bank accounts for poor people which seems to have bought banking to many households who never previously had one[2]

2015 Renegotiation of Tax treaties and Information sharing treating with tax heavens[3][4]

Window for hoaders of black money to declare it for a flat penalty[5]

2016 Demonetization

A more detailed step by step account http://indiatoday.intoday.in/story/prime-minister-modi-surgi...

[1] http://www.voanews.com/a/india-replaces-subsidies-for-the-po... [2] http://qz.com/257548/the-response-to-modi-governments-first-... [3]http://swarajyamag.com/economy/campaign-against-black-money-... [4]http://pib.nic.in/newsite/PrintRelease.aspx?relid=146245 [5] http://www.thehindu.com/news/national/10-things-to-know-abou...

The timing is suspicious though, ahead of state elections in the key states of UP, Punjab, Gujarat and Goa. For campaigns that are largely fought on cash, depriving other parties of cash is the biggest advantage.

Better timing would have been to wait until adoption of the Government's own pan-Indian electronic payment scheme ('Unified Payment Interface'), including giving small vendors card reading devices.

There is always a major election coming up in India. By the time we're done with Gujarat (2018), there will be Rajasthan and a few others coming up. Not to mention the next Lok Sabha (Parliament) elections in 2019.

Yes, the timing does mean that major political parties in UP would be hurt because their insane amount of hoarded cash is in trouble but really, is that a bad thing?

As pointed out in comments above, this step does make sense given what the govt. has been trying to do to fight black money in the past 2 years.

In fact Modi keeps mentioning that this is not the last of the steps and there will be more measures coming into affect soon. Keeping the hoarders scared was really needed here.

If you're on the ground in India, you can tell people are thinking twice before selling their properties for cash (it's very common for people to sell for 70/30 or so ratio for white and black money) / other hoarding activities.

> If you're on the ground in India, you can tell people are thinking twice before selling their properties for cash (it's very common for people to sell for 70/30 or so ratio for white and black money) / other hoarding activities.

On the other hand, demand for gold has gone up. That's definitely a more fungible form of black money than property.

The bad or unfair thing is if the BJP is hurt less than its competitors, which is possible if they have more of the newly valid currency to spend. Whether they accumulated this before or after the announcement is irrelevant; but there is now a scarcity which can be manipulated.

>The timing is suspicious though

Well, there are elections every year [1] in India in some or the other key states. Not denying what you are saying but any timing would raise political eyebrows. IMO average citizens have no problem with politicians drumbeating things that has positive impact.

[1] http://www.elections.in/upcoming-elections-in-india.html

Even as a self-confessed critic of Modi, I have to admit that these hiccups are only temporary.

What's more disturbing to me is the rumors I've heard from some wealthy friends' parents that they've already found loopholes to launder money through charitable trusts

>>What's more disturbing to me is the rumors I've heard from some wealthy friends' parents that they've already found loopholes to launder money through charitable trusts

This has existed forever. Cleaning up is not easy as most religions run their worship places under these trusts.

Politically very hard to deal with this situation.

BBC is right in its analysis, this measure only targets 20% of Indian wealth. The richest 5% owning 80% of Indian wealth are at ease, only poor and middle class troubled. Moreover this 20% money will be available to them as cheap loans. The total money owed by big corporates in India is way bigger then this parallel black money. Also the person Rajan who was planning to reign this loans is forced out of office. Modi is Indian version of Donald trump building Great Wall across India against corruption in media. A normal Indian will never know that black money outside of India far outweigh anything in Indian homes.

Demonetization is not a magical wand that will remove all the black money overnight. Now people who says it only for red middle and lower classes, know that it affected mostly people with black money in cash. Cash hoarders, Hawala money, counterfeit money and cash involved in rigging elections, help terrorism and many such illicit activities. Yes, middle class people will have to bear the pain of changing their currency but look at what it is bringing to you. And yes, it is first step, time will come and other sources of Black money will also be taken care of, matter of time, wait and watch. Even writing one such long comment takes time, let alone removing corrupt money fro a nation of 1.2 Billion where people love to ease taxes.

The BBC is always like this. You should have seen the bias in the 2014 general elections, they did not want Narendra Modi to win and become the prime minister and they made that very clear in every article leading up to the election. He did end up winning. When India successfully sent a probe to Mars the BBC suggested the money could be better spent elsewhere. I would not rely on the BBC for India news, or even United States news for the matter.

If you relied on the BBC for India news you wouldn't ever want to visit because you'd be afraid you would get raped as soon as you step out of the airport. In the case of the USA, you wouldn't even make it out of the airport, you would be shot dead at the baggage carousel. What annoys me most is I am forced by law to pay for such news reporting.

That might be true, but your Indian colleagues are probably well off with much of their transactions happening in plastic/electronic anyways, so this will have very little effect on their day to day lives. Since much of the Indian economy is cash based, there is a lot of frustration in the working class and there is a serious cash (as in bank notes) crunch.

I do accept this fact. Is there better option? I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

I don't know if there is a better option but the GoI definitely didn't think this throughly. Countries that demonetized in the past did this over a span of a time to prevent panic and fear. If the Govt set a deadline instead of abolishing them overnight that would go a lot smoother. Sure, that'll give 'some' tax evaders time to plan their 'exit' smoothly but it'll make lives of millions so much easier. Most likely, the evaders use that money to buy gold, so the Govt can temporarily track all gold purchases (they do it anyways for puchases over 2 lakh rupees). Even if they end up spending the cash on inflated real estate, they're in someways helping the economy instead of hoarding the cash and will end up in someone's bank account eventually. Also, all the big tax evaders rarely hoard cash. They usually have offshore accounts and sophisticated corporate structures.

Secondly, the new notes being minted have no additional security features. The RBI confirmed that the new 500 and 2000 bank notes carry the same security features as the previous ones, which probably makes it similarly easy to counterfeit. The RBI previously claimed that it would take 5-6 years to design notes with new security features and I think they should've waited until they have better bank notes to curb fake notes.

> I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

I have no hope for this country to find such views on HN of all places.

EDIT: I acknowledge this is low content comment. So I quote "the first job of an economist is to tell governments what they cannot do". Please sit back and give this a fair read [1].

[1] https://mises.org/about-mises/what-austrian-economics

Nope. This decision seems to have happened at the whim of 3 people - the PM, the finance minister, the RBI governor. Clearly they didn't even proof read the notes. The back side of the 2k rupee notes is a mess. They screwed up the spelling of 2 in Hindi and 1000 in Urdu making it Bazaar from Hazaar

"Two" appears as "दो" (do) in Hindi in the 2000 INR notes. This looks correct to me: https://en.wikipedia.org/wiki/File:2000_INR_Rev_2016.jpg (see the left edge of the note just below the string "2016").

If you are talking about "दोन" (don) appearing twice within the pink rectangular box, that's Konkani and Marathi, not Hindi. Two is indeed written as "दोन" (don) in Konkani and Marathi.

Then the question arises why write it like that twice. Why is not written in Hindi even once?

I thought I have explained that already in my previous comment. It is written like that twice because "Two" is "दोन" in Konkani as well as Marathi. Both languages are used in the language panel of the reverse side of the note.

"Two thousand rupees" (in English) = "दोन हजार रुपया" (in Konkani) = "दोन हजार रुपये" (in Marathi).

This is nothing new about the new 2000 INR notes. This is true for the older 5 INR, 10 INR, 20 INR, 50 INR, 100 INR, 500 INR and 1000 INR notes as well. The language panel shows only 15 of the 22 official languages of India, in alphabetical order. The 6th language in the language panel is Konkani and the 8th one is Marathi.

I have also explained in my previous comment that the denomination is also written in Hindi. Why do you think it is not written in Hindi even once? In fact, the denomination is written in Hindi on the reverse side of every note, outside the language panel, either at the bottom left corner or at the left edge. In fact, in the new 2000 INR notes, "दो हज़ार रुपये" is written in Hindi at the left edge of the reverse side of the note.

I can read Urdu and from what I can make out in images of the note, the Urdu text is fine. The font could have been better. The orthographic sign that makes the H in 'hazaar' is correct; the 'be' nuqta is a different shape. There should have been a hair-width's space after the 'dal' in 'do', but it is easily readable as 'dal' and not 'lam' as some people are claiming.

Yes. So, can I read Urdu and the hey looks like a bey. ب has the dot below it which you can clearly see in all images. ح doesn't have any dots beneath it.

Hazaar is spelt with a choti he which does have that inverted comma under it (clearly distinguishable from a nuqta by the elongated head shape, as it is on the note (but it is tiny because the font size is tiny)).

Here's an example of hazaar with the spelling I mean: https://lh3.ggpht.com/FXu7LY_Ki5uDcYTcOWwMSxAL0lC9ttGLbNZrrT...

>>I do accept this fact. Is there better option?

Which fact do you not accept? Do you believe every person in India has a bank account? Every person has credit cards? Debit cards?

Do you believe purchasing chain from production to end consumers has infrastructure for electronic transactions? Or that there is a way to make the economy run when close to 80% of the money is taken out of circulation?

>>I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

That doesn't mean much when the results on the ground say the opposite.

Well, due to Prime Minister's Jan Dhan Yojana scheme, a lot more people have bank accounts and debit cards now. Over 220 million bank accounts were opened since 2014. People who have those accounts can actually make use of them now.

A lot more != All, let alone that. A lot more != Everybody-in-the-purchase-chain.

Now it was a known fact that 80% of the currency will go out of rotation. Now regardless of whether you have an account, 80% of the money people use to trade is gone!

Doesn't help if you have a account either. You don't have money to buy stuff.

Your point is if(and that is a big 'if' given 80% is gone!) you have money you could deposit it. Not spend it.

Well, I didn't actually say 'lot more == all'. I was just mentioning that PMJDY bank accounts and debit cards would ease things a bit for the people who have them, compared to the days when they had no bank accounts whatsoever (remember, PMJDY bank accounts are specially tailored for people with low income and/or unstructured income). Anyway, you don't need a bank account to exchange demonetized currency notes.

Biggest motivator for those accounts was not the privilege to have a bank account. But direct deposits in case the government wanted to pay the farmers and alike. That was the whole point in linking those to Aadhar too!

Now I'm not saying that this won't be possible. But its just these kind of changes can't be done with a throw of switch. You need to do a lot of incremental work before you can even think of this kind of big risky moves. Roll backs are hard, and in this case impossible(will lead to increase in inflation if done). Nor can you sit down quietly as there is no real way to put money back into circulation.

We all want to change the world. But we have to understand we need to change the world with consensus from people we want the changes to effect. The world is not in a hurry, and everything/everyone has their own priorities. You need to work with all that. Tech idealism is great, but at times something like this comes to remind us we know nothing about the daily complexities of other citizens.

Actually the previous time that this was shared on HN, the article clearly pointed out that less than 25% of the accounts are actually active.

Yes. Now, a lot of PMJDY bank accounts are seeing activity. This could be the case where people actually using their accounts, or could be the case where they are being misused to stash black money. In any case, GoI is looking into it[1].

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

Not necessarily. It is never a good premise to expect good faith from politicians.

Rather than attacking the messenger and correlating it with the anecdotal evidence from the people you know, try to look at this objectively.

- The white-collar middle class of course is lauding this move. Most of them (us) use digital money, are educated, want to see the corruption eradicated etc.

- BUT, the majority of the population is poor, working class, not education enough. India is still a cash-based economy. Poor people have all their savings in either cash or gold. Women in India still hide money from their husbands.

- Business - Real Estate, Transport, what have you, is still done in cash. Soon, the truckers who get paid in these denominations will stop getting paid, and stop bringing in food to the cities. What then?

- A kid has already died because the private hospital refused to accept the currency.

- There is talk going on about a possible Bank Run.

- Most importantly, I firmly believe this was a political move to cripple his opponents in the upcoming elections in the heartland states of India. He's lost the last few state elections despite going to rallies himself. This is him tightening his grip on the power.

- Now we know why Mr. Raghuram Rajan left the RBI and has gone back to U Chicago.

- Edit: Oh yeah, the new note only contain one non-English script, devnagari. The language and culture wars that took 2 decades to resolve will begin anew.

The privileged HN readers here who are like "I'll just order from Amazon" live in such a bubble that it's hilarious. This is the most brazen and irresponsible move that this govt has ever done. It's a draconian ruling that in the name of progress, is going to (already has) ruin the lives of the poor people of this country who have nothing to do with the daily corruption.

The middle class will hail Mr. Modi as a visionary, drinking his kool-aid, click Purchase and go about its business. To call this a "temporary hiccup" is callous and frankly, disgusting.

> There is talk going on about a possible Bank Run.

Mind sharing any source? As per my layman knowledge, what's happening here is opposite. Bank have received $30B [1] so far in deposits in last few days.

[1]http://www.forbes.com/sites/timworstall/2016/11/13/indias-gr...

> Oh yeah, the new note only contain one non-English script, devnagari.

Other scripts are on the back.

Script-wise, it looks like the previous notes: https://en.wikipedia.org/wiki/File:2000_INR_Rev_2016.jpg

the kid did not die due to refusal of news. see the news article and the on record statement

The Indian media spreads rumor;all the time

"There is talk going on about a possible Bank Run."

Stop spreading false rumors that will cause fear or alarm to the public. It's an offense, according to Section 505, in the Indian Penal Code: https://indiankanoon.org/doc/1198526/

the kid did not die due to refusal of notes.

cite source.

Perfectly said. The audience on hacker news is so privileged and enbubbled its hilarious. I can see the Modi trolls are already hilariously threatening you.

Isn't this what's happening even in the US though? Look at the 2016 US election and how it was reported. Hardly impartial or rational. I mean where are the people cheering for Trump and their view points?

The Fairness Doctrine was partially removed in 1987 and completely removed in 2011. There's no legal requirement that a news organization be impartial any more. If you want balanced news you need to watch multiple sources and decide what really happened yourself.

https://en.wikipedia.org/wiki/Fairness_Doctrine

> Hardly impartial or rational. I mean where are the people cheering for Trump and their view points?

In other highly impartial and irrational places, like breitbart, the_donald and other conservative media sources.

Human beings as a species are highly partial (was the word you were looking for) and irrational. Aside from the internet, the low population density, rural areas of the US are heavily pro-Trump.

Fair enough :) I meant on television. I guess Fox News. And maybe I'm in the online echo chamber. It's really hard to tell.

Trumps facebook groups, twitter feeds, and the aforementioned subreddits around his campaign are non-stop pumping out Trump love.

The Internet is only as much of an echo chamber as you let it be. You can always go look in those alternative forums.

But most of those places are exactly the same kind of echo chambers...just for a different side

Spot on. We need new media with more diverse viewpoints and more viewers for this new content. Why does every airport always have CNN on by default?

I've long suspected CNN pays airports for this.

Those Trump supporters exist, I'm sure. I've never met any of them in California, though. I assume the media has the same problem.

Many Trump supporters in California are afraid to declare their support openly.

And not without reason; Trump supporters have been assaulted.

I don't know. I'm the only American-born scientist in my research lab (though not only US citizen), but is that really uncommon in tech? So maybe my situation is different? Living next to UCLA probably doesn't make it easier to mix with Trump supporters. When I was in China a few months before...well, expats aren't exactly known for being xenophobic white people.

Characterizing Trump supporters as "xenophobic white people" probably doesn't make it easier to mix with them either.

You may know Trump supporters who just don't want to fight about it.

In LA county, Clinton got 60+% of the vote, I don't know many here (just moved from Beijing to LA in August), but they were all more apprehensive than me about the election results. I honestly think I've never met a trump supporter in real life, how many immigrants (many of the people I know) were enthusiastic about Trump anyways?

Abroad is the last place to meet a republican (at least outside of the high earning senior manager demographic), let alone a trump supporter. Ya, they just might not be talking about it, but it is a very self selective bunch of people that are going to be basically migrant workers in another country, they won't be anti immigrant since that would be too hypocrititical.

You, a single person, not meeting a single Trump supporter may not be surprising. You may tend to meet only like-minded people. But the media is/must be a different animal: they should spend time trying to gauze the social moods from different strata of the society. But in USA, it seems most of the mainstream media is serving to Saudi funded Democrats [1]. So there is no news critical of Clinton, nor Islamic ideology. That's one of the important points what triggered people's support for Trump.

edit: added link

[1] https://www.youtube.com/watch?v=Ex9ldUHSgjs

The fact that the clinton foundation took Saudi money is an issue but hardly germane to any current discussion and link you provided was of extremely low quality and contained disreputable nonsense like the theory that Obama is a cryto muslim.

It would be great if you wouldn't pollute hacker news with this.

If one group promotes eating dirt and tree bark and another proposes we dine on sandwiches you may unsurprisingly find that the media promotes one message more often than the other.

Totally agree with you. I have read couple of BBC articles, they show same negativity

The move was _intially_ welcomed, but as the days went on massive flaws in execution became obvious. Hence people are upset.

Source: I am an Indian living in the US who has immediate family living in India.

If you follow the Palestine-Israel conflict to any degree you'll realise very quickly that BBC only ever reports on anything that's pro-Israel and never the other way.

They write like they know everything in the world but still they don't twist the facts. Also if some good was done they write like 'oh look these ex slaves have done this good' and if bad' oh look the poor bastards are adding just another bad thing to the list'. These are metaphors and they don't literally write this! And many neutral toned articles are mistaken as negative by nationalists here.

Actions against corruption are always tough. There is no easy way to get black money out. Short term it will hurt even common people but this will play out nicely in longer term.

>My understanding is that India's new rules on the high denomination notes was intended to curtail corruption...

How can this curtail corruption?

It was primarily intended to bring out undeclared income and wipe out counterfeit notes.

However, IMHO, undeclared income facilitates corruption.

BBC is right in its analysis, this measure only targets 20% of Indian wealth. The richest 5% owning 80% of Indian wealth are at ease, only poor and middle class troubled. Moreover this 20% money will be available to them as cheap loans. The total money owed by big corporates in India is way bigger then this parallel black money. Also the person Rajan who was planning to reign this loans is forced out of office.

Modi is Indian version of Donald trump building Great Wall across India against corruption in media.

A normal Indian will never know that black money outside of India far outweigh anything in Indian homes.

I am not sure about BBC but now people know why Rajan previous RBI governor and govt has differences and he was forced out.