Rs 500 and 1000 Currency Notes Abolished

Alchemist

Administrator
Staff member
#2
I don't see any reason why this should be seen as a negative for the market.

It is a well intended move.

However, I feel it will create lot of practical problems, especially for business where cash is the primary form of payment.

It is believed that 86% of India's cash is in 500 and 1000 notes and so you can imagine what will happen in next few weeks.
 

Alchemist

Administrator
Staff member
#3
Real estate will be worst hit.

Real estate companies have to make large payments in cash, but receive electronic cash.

There is a possibility of black market being created for exchanging notes. 50 and 100 rupee notes will be in high demand and may command a premium.

500 and 1000 rupee notes will go at a discount.

Overnight, petrol pumps will become pseudo-banks for black money hoarders.
 
#4
Great step.......RESET, Reboot button pressed to the persistent hanging of the economy....!!!

No way out for money changers also....all deposit above 2L will be checked for corresponding income...else 200% penalty..+ TAX....plus constant monitoring the end of life of the person by IT dept.

Mafia/Drug/Real Estate/Jewellers ...all in dumps..!!

Wipe out of all RE developers...many will come on roads...you will hear lot of suicides and crime rise between the black economy hoarders.

Market will have no impact ...rather have positive impact.,,,some black money will enter into banks ...which in turn will be able to lend..fueling growth ...also govt will earn tax and penalty money which will be used in infra.

...Only known "dirty " companies will like DLF etc will suffer..or go bankrupt.
 

Alchemist

Administrator
Staff member
#5
Market will have no impact ...rather have positive impact.,,,some black money will enter into banks ...which in turn will be able to lend..fueling growth ...also govt will earn tax and penalty money which will be used in infra.

...Only known "dirty " companies will like DLF etc will suffer..or go bankrupt.
The problems with banks, especially PSU banks, is not that they don't have money to lend. The problem is their capital base has been significantly eroded and thus they are hesitant to lend, especially to industries.

This move will definitely help banks because it will have a positive impact on their CASA deposits.

It is a good move, but would have been really great if 500 and 2000 notes had not be introduced.

If 500 and 1000 notes had been totally replaced by 100 notes, people would have slowly shifted to payments by cheques and other electronic modes.

I know it would have been a herculean task to replace 1000 and 500 notes with 100 notes, but I think it would have been worth the effort.

Many people have been saying that this move will bring down corruption, but I don't see how.

On the contrary, I feel corruption rates will go up as people will now try to recover all the money that they have "lost".

A lot of money will be removed from the economy and thus we can expect both inflation and consumption to come down in the medium term. Lower interest rates will follow, which will be good for the economy.
 
#7
It is a good move, but would have been really great if 500 and 2000 notes had not be introduced.

If 500 and 1000 notes had been totally replaced by 100 notes, people would have slowly shifted to payments by cheques and other electronic modes.
The anonymity of cash is very important. Say I am a journalist or someone who the govt doesn't like. They can comb through all my transactions & find something or the other to hang on him. With the over proliferation of criminal laws, everyone is a criminal - everyone breaks the law - it's just that everyone is not prosecuted. Or let's say the journalist wants to pay an expensive prostitute - should he carry a bag of 100Rs? If he pays electronically & the govt comes to know about it, they can blackmail him. Say the journalist has an informer about the govt (like DeepThroat) - and the informer wants to get paid - how does he pay him, cannot pay electronically - the govt can track who is the informer.

The anonymity of cash is very very important in a democracy.
 

San Yad

Active member
#8
The anonymity of cash is very important. Say I am a journalist or someone who the govt doesn't like. They can comb through all my transactions & find something or the other to hang on him. With the over proliferation of criminal laws, everyone is a criminal - everyone breaks the law - it's just that everyone is not prosecuted. Or let's say the journalist wants to pay an expensive prostitute - should he carry a bag of 100Rs? If he pays electronically & the govt comes to know about it, they can blackmail him. Say the journalist has an informer about the govt (like DeepThroat) - and the informer wants to get paid - how does he pay him, cannot pay electronically - the govt can track who is the informer.

The anonymity of cash is very very important in a democracy.
Understand. but there are many ways to pay for such services.

People can find the way specially in India. Let say if a person receives payment from another for his job done (whatever job it is) is fine until his tax payer slab maintained or below the bank minimum requirement of cash flow in his account so that it does not come in check with bank notice for tax office purpose.

2nd, how you will eradicate corruption by scraping old note and introducing both Rs 500 and Rs 2000 note available immediately or later in future?

No Doubt, scrapping the note will definitely affect the normal or businessman or even poor people's daily routine. At the end of the day everyone will be back on track somehow.

As Alchemist rightly said that Rs 500 and Rs 1000 should be banned.

If Rs 500 note comes in the market then the normal routine will start. Would not affect the future cash in and out flow. Even more corruption when you get Rs 2000 in coming days for daily routine payments.

In general glossary shop I do not see that NETS machine will be introducing soon in next many years in India. The reason is simple as it comes with charges. So small traders will definitely avoid such their profit eating bugs.

Even many place in developed country small traders, do not carry such machines for payment. Cash flow is still there and you can think how far behind we are if we follow them.

Happy Investing!
 

ramkasi

Active member
#9
As Alchemist rightly said that Rs 500 and Rs 1000 should be banned.


Even many place in developed country small traders, do not carry such machines for payment
Now after reintroducing 500, it's time for 1000 to come back.

Rs 1000 notes to be make a comeback with new design - Moneycontrol.com

Does any one have idea of how much amount used to print the banned notes + amount needed to destroy them + amount needed to print new papers. my guess is HUGE amount may be in thousands of crore I guess.
 

San Yad

Active member
#10
Now after reintroducing 500, it's time for 1000 to come back.

Rs 1000 notes to be make a comeback with new design - Moneycontrol.com

Does any one have idea of how much amount used to print the banned notes + amount needed to destroy them + amount needed to print new papers. my guess is HUGE amount may be in thousands of crore I guess.
Ramkasi, definitely the amount is huge and no doubt it is bearable by the govt. It would not affect much on our revenue or GDP.

But was that the motto behind this scraping of note? NO

I think Govt thinks that the fake currency deployed/printed from outside India or printed within India will be halted for time being and the cash floated for all uncommon activities will be halted too.

And of course withing India People will try to exchange currency so the amount will be gone to banks.

So we will smooth and huge cash flow for banks in figures. By that mean inflation figures will come down for sure temporarily.

On that basis the growth figure will be manipulated and can be shown positive. ( But in real no where is the growth)

But the big question still knock the door whether our economy improves for long term?
But does this help to eradicate all such activities if the same note and even higher value note (Rs 2000) will come back?

Lets discuss, the flip side of this scenario.

Lets say Govt needs to introduce new Rs 2000 note . They might not do that just simply introducing it as there would be a lots of arguments.

So somehow the floating money will be scrapped by reintroducing new notes of Rs 500, 1000, and you will see new note Rs 2000.

Hence no one will be talking what is the need for Rs 2000 note?

Have we ever given a thought why we need a bigger value note of Rs 2000?

That's my personal thought. it could be that way too. I might be wrong though.

Happy Investing!
 

Alchemist

Administrator
Staff member
#11
Today Shriram Transport and M&M Financial are down sharply.

I took me some time to figure out why.

Both have significant exposure to road transport business.

Road transport is significantly cash based. I don't remember seeing any truck driver or taxi driver buy fuel with card.

It is thin margin business. Whatever money that a truck owner makes, a good part of it goes to driver's/helper's salary, fuel costs, maintenance and taxes.

After that, some goes to repaying loans.

Now suddenly 85% of India's cash is non-usable.

Petrol pumps will stop accepting 500 and 1000 notes after tonight.

It will a big challenge for transporters to keep their businesses running without adequate cash.

If transport sector freezes because of lack of cash, it will affect the financers badly.
 

Alchemist

Administrator
Staff member
#12
"Since these notes were de-monetised today drivers in Indore, Kolkata, etc., were facing problems in even eating food as these notes were not being accepted at dhabas." He said even the limit of exchanging Rs 4,000 per day would fail to yield much relief as drivers had to carry Rs 50,000 to Rs 65,000 while traveling to distant places. He said transportation work would suffer till the situation became normal.
Ban puts a brake on truck movements
 

ramkasi

Active member
#13
No Doubt, scrapping the note will definitely affect the normal or businessman or even poor people's daily routine. At the end of the day everyone will be back on track somehow.

As Alchemist rightly said that Rs 500 and Rs 1000 should be banned.

Happy Investing![/b]
I am fast running out of liquid cash, the amount I used to kept for some urgent requirements [ABOUT 25000] was deposited in to my account yesterday.

I can't wait hours out side bank to take what belongs to me.

People who are waiting out side the banks including very senior citizens,women are all common people are paying price for being honest Because they don't even have cash for daily needs.

Before demonetization the govt. should have taken corrective steps and should have made available lots of 100 notes to public to avoid unnecessary panic among public. At least they should have made mobile ATMs available to public.
 
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Atiker

Active member
#14
What stops Modi from demonetizing the newly introduced 500 and 2000 notes in near future ? He is a master.

I guess the corrupt will be wary of keeping cash in future.
 

Alchemist

Administrator
Staff member
#15
What stops Modi from demonetizing the newly introduced 500 and 2000 notes in near future ? He is a master.

I guess the corrupt will be wary of keeping cash in future.
The biggest corruption beneficiaries don't keep much cash anyway.

Imagine how much space would 100 crore cash take, even in 2000 rupee notes.

The biggies convert their black money into white using dummy companies, trusts, fakes farm income, fake exports etc.

There are two root causes of black money in India - corruption and high tax rates.

Neither are being really addressed effectively.

(Taxes are higher in the many western economies, but people there crib less about taxes because they are getting something worth in return).
 

ramkasi

Active member
#16
The biggest corruption beneficiaries don't keep much cash anyway.

fakes farm income
I don't understand why the farm income is totally exempted in India, what is wrong if a farmer declares 10 crore income from farming and enjoys total tax free.

and if I make 4 lakhs for a year and need to pay 20% as TAX [approx.80,000 which is huge amount to my standards] :questionmark::questionmark::questionmark:

There must be tax on farm income with slabs which exempt poor and innocent small farmers from paying tax.

ramK
 
#17
I think the amount of blackmoney accumulated with corrupt government employees at all levels and businesses like hotels, cloth stores, illegal chit companies across India will be more than all the money stashed by benamis or hawala. Business people might put the money in bank even with penalty but govt employees can't as it may lead to cases against them. I feel some sections of corrupt people will be cured, also most of the money would have been accumulated over decade where tax dept and govt infrastructure was not strong enough. It might not be that easy to get back so huge amounts in same time.
 
#18
Excuses ,,,Negative Attitute..

Most people criticizing the move just don't want the old corrupt systems to go.

Excuses small traders/rural folks have to do cash transactions...BIG EXCUSE

- Penetration of mobiles in rural is more that 70%..
- Anyone can open Jan dhan account
- so what you need is paytm that's it.

In Mumbai ..a paanipuri wala also accepts paytm..:) (20/30 rupees) and many of them transfer their money home everday/week through it or mobile banking...

The negative attitude folks in rural area watch "porn" but don't have bank account...in many villages the number of homes having mobiles is more than those having toilets...

After GST the hardware/bookstores/grocery shops etc will have to change mandatory....

Already buying Gold more than 2L is not possible..(Jaitley has started inventory accounting for jewellery shops)..Also PAN mandatory...(smuggled gold will be traced) ....

P-notes is the next target...

Nationalisation of tainted/properties/wealth etc abroad

Congress gave lot of exemptions to the people they need...journalists,lawyers and govt servants etc.

Journalists in all developed countries including US...still unearth scams, tip informers or get expensive prostitutes...so why not in india...

India switched fast to mobile technology ....I wish and hope it will switch to white economy...

Avenues of making black money are being squeezed slowly ...

Modi in latest speech said.."Expect more steps in future"...again a warning of things to come.
 

Alchemist

Administrator
Staff member
#19
Excuses small traders/rural folks have to do cash transactions...BIG EXCUSE

- Penetration of mobiles in rural is more that 70%..
Forget about rural India, even in urban India, there are crores of people who have never done an e-payment in their entire life.

We have two maids working at our home. Neither of them has a mobile or a bank account. One is illiterate. They are totally dependent on cash.

Not just the poor, even among the middle class and rich, there is a sizeable portion of senior citizens who don't know how to use a smartphone/debit card.

In Mumbai ..a paanipuri wala also accepts paytm..
Rural India is very different from urban India.

The TV channels are covering urban areas, but they still haven't tapped the rural areas, where the pain is more severe.

Nobody accepts any debit or credit card in most rural areas. Words like PayTM and Ecash are French and German.

There are many places in India where the nearest bank is 10-20 km away. There are some places where the nearest bank is 100 km away.

Nearly a sixth of India is illiterate or barely literate (just able to read basic words or sign their name. Using an electronic mode of payment is not even thinkable for them.

Most people do not argue about the need of this demonetization move, but many are not happy with the planning and handling of this entire process.

It is all turning out to be a big mess. If the currency notes are not fast replaced, we may even end up with an economic crisis.

If transport isn't revived, everything will freeze:

Currency crisis: shops in Kerala to down shutters from Tuesday - The Hindu
Salt rumours raise consumers BP
Vegetable & fruit supplies to APMC halve, previous stocks rot - Times of India

The reintroduction of 500 and 2000 notes will bring everything back to square one.

Political parties will remain beyond the taxman's reach, farmers will remain beyond the taxman's reach, religious trusts will remain beyond the taxman's reach... cash will keep getting laundered.

In the end, the question everyone will ask is what really got better?
 
#20
More Excuses.....

Most people want to continue handling cash solely to avoid "taxes"......

Maids are illeterate...even with thumb impressions you can open the account....
,,,most maids in urban area are on whatsapp

Senior Citizens dont know how to use debit cards or dont have them or dont use them...well they do have HD tvs, 3G/4G phones ? and learn how to use them..right so whats the problem with debit cards? (They swiched from landline to mobile right?)

Now coming to RURAL folks...most are literate enough to open bank accounts...MNERGA workers get money directly into their bank accounts...and these workers are all over india and in the remote locations...

The rural folks want ready cash to spend..on the vices. If the local liquor vendor and brothel owners stop taking cash all these rural folks will suddently become "literate" and queue outside banks to open account or will download e-wallets.....lololol

The "black money" and "cash" society is created from top...the big vegetable vendors/wholesalers etc take cash and pay cash which is then percolated down,,,,,

The new tech impact is seen by many small traders in cities with people flocking malls and buying from big retailers who take "all" forms of payments...
so slowly now the small retailers have started accepting cards/paytm..

It is only when "business" or "vices" of people are affected that people in india change...so "carrot and stick" policy will work effectively..
 
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