
Why India wiped out 86% of its cash overnight - happy-go-lucky
http://www.bbc.com/news/world-asia-india-37974423
======
superasn
A lot of news site are completely missing the fact that one of the biggest
reasons it was announced right now was to give BJP (modi's party) an upper
hand in upcoming Uttar pradesh elections.

Not many people know this but it quite common for political parties to
distribute huge amounts of cash to voters beforehand elections to buy their
votes (think trucks literally filled with 500 rs notes). Last time before UP
elections there was a huge drive and a lot of cash was seized while crossing
the Delhi-UP border just before the elections. This time it was a masterstroke
by Modi and now wonder both the biggest parties in UP are worst hit and
complaining the most about it (i.e.Mayawati and Mulayam singh).

------
akshayB
I am really happy that Prime Minister Narendra Modi is taking action and
trying to Black Money out of India's economy. I hope this will bring more tax
revenue to the country and hopefully the entire nation will move forward. This
not only help is stopping lot of illegal activities which go on the in country
but also is a great way to fight corruption as well where you have to bride
folks to get small things done. This makes money more traceable and easy to
account.

------
crayon765
I don't understand it. If they introduce a 2000 rupee note, isn't that exactly
the same thing?

~~~
svachalek
Yes, but they just pushed the reset button. Years and years worth of 1000 and
500 notes will have to come out of hiding.

------
omouse
> _Because so much business is done in cash, very few people pay tax on the
> money they earn._

>... _The size of this shadow economy is reckoned to be as much as 20% of
India 's entire GDP._

What's been the effect on the economy, positive or negative? What problem is
it trying to solve here?

> _Curbing tax evasion is part of the agenda for the "aadhaar" scheme, a giant
> digital database designed to give hundreds of millions of Indians a unique
> ID, and of the new Goods and Services tax._

Wow, wtf India is getting worse. A unique ID, easier government tracking.
Goods and Services Taxes punish everyone who buys things, especially the poor.

~~~
akshayB
This does not punish poor, they still have time to open bank accounts and swap
the money. This is primarily designed to go after big businessmen who avoid
paying taxes and also lot of bad activities like terrorism.

~~~
pyre
Well, all of the money that moves into the bank accounts will be taxed. Won't
the hit on that tax affect the poor more than the rich? Sure the rich might
take a larger hit in absolute terms or even relative to the size of the money
taxed, but the poor take a larger hit in that the money being taxed may be a
life's savings pool (i.e. relative to their overall wealth / net worth).

