Didn't they report that almost all the cash came back - proving that there was basically no black money returned and the only people they inconvenienced was ordinary citizens with their hard-earned cash reserves?
-- 2$-3$ billion worth of old currency IT department last year.
-- The total tax base is increased. Evidence of this is that PAN card applications have increased 3x (Daily Issuance of PAN Nearly Triples Post Demonetisation), number of people filing tax has grown a lot [Income tax base expands by 9.1 mn people after note ban) and net tax collections is also significantly up. This is good for a lot of reasons. It makes the taxation fair and also can help government increased budgetary allocations.
-- Economy is able to run normally with 20% lower currency levels.Which makes it harder for households to hoard money. When money is not hoarded, it makes for greater efficiency in the economy.
-- Bank deposits have grown significantly
-- Digital banking became a way of life atleast in the urban India.
No it didnt [1]
>The total tax base is increased.
Questionable [2]
[1] http://www.livemint.com/Industry/S0AwBRAYuGbJw0SoXOaUaO/One-...
[2] https://www.ndtv.com/india-news/did-demonetisation-increase-...
https://thewire.in/168434/fact-check-claims-increase-income-...
http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-...
>No it didnt
Average ~25-30% growth in urban india.[1]
> Questionable
Seriously ? Official data is available. Can't you judge it yourself? Communist 'thewire' is your source that too for when there is official clarifications?[4]
[1] https://timesofindia.indiatimes.com/img/61556580/Master.jpg
[2] https://timesofindia.indiatimes.com/img/61556578/Master.jpg
[3] https://www.rbi.org.in/scripts/neftview.aspx
[4] http://pib.nic.in/newsite/PrintRelease.aspx?relid=170087
[5] http://indianexpress.com/article/business/demonetisation-imp...
The value of your comment dropped with this statement. Calling something or someone as “communist” and using it as a derogatory term in an unrelated context is inappropriate, IMO.
It is not name calling when the editors have a history with the ideology. Its a common knowledge. If you ask them they will say the same (In india, its not a derogatory term) !.
In other countries, we call this 'saving for retirement.'
People did some PayTM when they had no cash.
These days if you ask them for a digital transaction, they smile at you gently and ask you trade in cash.
I can't even remember the last time I used cards/PayTM to buy anything near my home. Even for online buying I use cash on delivery, where I pay through cash. Have to, as my mom or dad have to receive the package at home.
Structural reforms are way harder in India than people are thinking. Trust me, Indians care only to optimize for personal gains, and personal gains ONLY. Everything else comes secondary. You can use a hammer and smash approach. People have their own timelines as to what you do.
Nobody here is in a hurry to sign up for your world disruption scheme.
Indian's are just like any other middle,lower-middle income society. They are careful where they spend money. Your parents are part of 'late majority' in the Diffusion of innovations curve [2]. Look what collage kids do not parents.
[1] https://telecom.economictimes.indiatimes.com/tele-talk/mobil...
I buy clothes from the main road, from the vendor who keeps 'Pick any shirt for 250/-'. Recently I bought a fidget spinner for my nephew from a hawker. I eat out at near the Idly shop near my home where a grandma cooks breakfast, with her son, and bajji and bonda snacks in the evening.
None of these guys accept cards or PayTM. And that is how most of the Bangalore is and how it works.
Bangalore has a lot of this tech crowd, who live in pockets in areas around IT parks and thinks that how the whole universe looks.
Chalk it up to the successful propaganda by the party. Anybody against it was either a corrupt/black money hoarder or unpatriotic or both.Nobody wanted to be labeled that with the growing nationalism. Of all the leaders of corporate houses only one spoke out against demonetization.
>> This has reduced bank lending rates. Banks are offering housing, business and other loans at a lower rate.
Yes, a major side-effect of this is that banks flushed with cash can show a reduction in NPAs(which is a major crisis India's banking sector is grappling with), and can freely lend again, which will lead to more NPAs down the line.
And nice try on using NPAs as an argument. Not denying it could have been a factor but simply saying that was the reason the govt made such a big move vs. potential tax benefits & getting ppl to open more bank accounts seems ignorant.
It's invested domestically in real estate, art, gold, or other assets, or held offshore, either in the form of freely convertible currency or other assets, which is why 98.96% of the cash was returned.
I strongly doubt a significant number of criminals openly advertised their possession of black money by returning it themselves.
Modi's ploy was an unmitigated failure.
There was a huge collateral cost, I don't think anyone can deny that, but whether it was worth is still too early to call.
For such a disruptive event, that's pathetic.
The only winner was the banking system, who saw one of their major competitors (cash), hobbled. Modi now seems to be saying that this was the point all along.
AKA, If you started with X money hidden then you don't get to keep 100% of that money if you hand it to other people to deposit.
On top of that people where caught, so actual black money disappearing was much greater than 1%.
It is to get the people making the decision reelected. It is to give the government party control of the spending of other political parties that might replace them [1].
This decision had a very specific aim, and achieved exactly that aim. In very predictable fashion it did a ridiculous amount of economic damage to the country in the process, but that shows nothing more than what the priorities of Mr. Modi are.
It was very well received (judging by voting afterwards) and further cemented the current party into power. That was the purpose. That aim was achieved. Why was the timing what it was ? It was election time ... [2]
Immediately before this "make or break" (dixit BBC) election BJP suddenly made itself the only party capable of doling out cash and other direct political favors in that state. Coincidence ?
No.
[1] https://www.forbes.com/sites/timworstall/2016/12/17/this-is-...
How many? 10? 20? After than what happens? People stop taking bribes? Start paying taxes?
Drive around Bangalore anytime during day light. See how many policemen are standing every 1 km negotiating bribes from motorcycle/car users. Go for property registration anywhere, go see what is the going rate for a single registration...
Things like Demonetization changed/changes NOTHING. You need to change people. And that is next to impossible in India.
>>Even though most of the money made back into system
0 Black Money came back into the system, as per the government's own admission.
>>Expect some drastic policy changes with real estate, corporate taxation and gold.
So we learn nothing from the mistakes?
Only thing this will do, is make millions of people jobless. Destroy family incomes, disrupt their ability to provide for their families and put the economy in tremendous strife.
For any policy to work, People need to cooperate. In India its basically every one, all the time optimizing only for personal profit. The only thing you will end up doing in this set up is harming a lot of innocent people, and end up providing immunity training to the crooks.
Nope. I don’t expect any changes on real estate or corporate taxation, except to help people who have/control them become richer and have even more lax regulation. A lot of real estate is held by politicians of all political parties. So there’s no reason they’d shoot themselves in the foot. One “maverick” Prime Minister cannot overrule hundreds of others with vested interests, however clean or idealistic he may project himself to be.
As for corporates, the NDA government is highly favorable to them. The tax rates are set to decrease as announced a couple of years ago anyway.
Gold is probably a slightly easier target. It has already seen restrictions before, which means the rich and powerful likely don’t hold too much of it or transact a lot with it.
I so wish GRR Martin had put this in GoT. Then most Indians would have been aware of it. I'll repeat it here once again.
Not all black money is in cash. Not all cash is black money.
A major portion is in real estate, gold, businesses and other financial assets. Cash is just ~8-10% of the economy.
Most people with unaccounted cash had access to networks which would launder it for them. Even if you have a digital trail, the justice system is not digital. Sure some would have to pay up, but a majority would have enough accountants/lawyers to avoid the taxes.
People complaining about black money in India, forget that the relatively low consumer prices that they enjoy is partly due to black money. If one wants the SMEs to pay their taxes, the consumer should be ready to pay more in price. People want low prices, low taxes and no black money/corruption. Well, pick any two.
>> 1) people would think twice before hoarding onto cash and keep it hidden from the govt
Or they could change the govt :).
And I would abstain from using absolute stance like you are using. I think this move definitely falls into the grey territory.
That said, there were some benefits 1) people would think twice before hoarding onto cash and keep it hidden from the govt 2) more people would use banking facilities as the govt basically forced a lot of people to create bank accounts and deposit cash there for easy tracking. Also, there are long term tax benefits for the govt too given now it has a snapshot of who exchanged how much black money (in old notes) with the new notes. As such, the answer isn't black or white here.