
Rs 500, Rs 1,000 cash ban: Indian government failed those without bank accounts - walterbell
http://www.firstpost.com/india/rs-500-rs-1000-ban-modi-govts-intention-was-fair-but-failed-those-who-dont-have-bank-accounts-3102384.html
======
appreneur
There will be or it's already happening

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.

~~~
kamaal
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.

~~~
appreneur
Precisely... It's lot lot worse

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.

~~~
kamaal
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.

~~~
appreneur
I just don't think India is ready for collapse. It was thriving economy
sustaining life of 70 crore Indians.

Now they created this panic n confusion n artificial scarcity. Artificial
scarcity helps create black funding.

------
plinkplonk
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.

[1] From the same source as the OP
[http://www.firstpost.com/india/rs-500-rs-1000-ban-it-is-
the-...](http://www.firstpost.com/india/rs-500-rs-1000-ban-it-is-the-common-
man-who-is-affected-and-his-anger-is-showing-3101862.html)

[2] a mainstream newspaper discussing how police is being deployed to protect
bankers from the public [http://indianexpress.com/article/india/india-news-
india/delh...](http://indianexpress.com/article/india/india-news-india/delhi-
police-deploys-more-forces-outside-banks-to-control-crowds-4371829/)

~~~
mandeepj
> getting it 'washed'/converted into legal money through a mind boggling array
> of creative schemes.

care to share these creative schemes ?

~~~
kamaal
1\. Go to your jeweler and ask them to sell gold with a predated receipt.

2\. Pay loans to small time farmers at a discount and have change that at the
bank.

3\. Buy cars at pre dated receipts for your relatives etc.

4\. Invest in innovative chit fund schemes/pygmies.

etc etc.

White wash jugaad's are plenty.

~~~
mandeepj
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.

~~~
kamaal
Its already happening full scale in Tier 2 towns with the help of Police and
Income tax officials(who themselves have black cash).

Indian Jugaad knows no bounds. For every lock there are keys.

------
korginator
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.

------
alexhutcheson
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.

~~~
alexhutcheson
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.

------
walterbell
From
[http://www.forbes.com/sites/timworstall/2016/11/12/allegatio...](http://www.forbes.com/sites/timworstall/2016/11/12/allegations-
of-indias-great-bank-note-switch-scam/)

 _" 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._

~~~
mandeepj
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?

You can see public reaction to Kejriwal's statements at following link.
Whatever he is saying does not make any sense.
[http://timesofindia.indiatimes.com/india/Demonetisation-a-
ma...](http://timesofindia.indiatimes.com/india/Demonetisation-a-major-scam-
PM-informed-his-friends-beforehand-Arvind-Kejriwal/articleshow/55383370.cms)

------
denzil_correa
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].

[0] [http://indianexpress.com/article/india/india-news-
india/demo...](http://indianexpress.com/article/india/india-news-
india/demonetisation-rbi-currency-ban-rs-500-1000-ban-4370896/)

[1]
[https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?p...](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38560)

[2] [http://www.thehindu.com/news/national/demonetisation-of-
rupe...](http://www.thehindu.com/news/national/demonetisation-of-rupee-notes-
no-time-to-add-new-security-features-in-notes-says-
official/article9335159.ece?homepage=true)

[3] [http://timesofindia.indiatimes.com/india/Call-back-of-
notes-...](http://timesofindia.indiatimes.com/india/Call-back-of-notes-will-
hit-poor-BJP/articleshow/29271583.cms)?

~~~
webtechgal
> 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.

------
pksadiq
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.

I fear I couldn't continue the same.

------
appreneur
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.

------
dragonsh
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.

~~~
petre
> 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.

~~~
hga
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.

------
webtechgal
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.

------
tinco
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.

~~~
pksadiq
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.

~~~
brianwawok
So words for 5 zeros and 7 zeros. Nothing for 6 zeros? I guess you would just
call it 20 lakh for 2 million?

~~~
pksadiq
> I guess you would just call it 20 lakh for 2 million?

Yeah.

------
akshayB
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.

~~~
webtechgal
> Modi started with a very small policy when he came into office...

I'm sure a LOT of people who helped put him there are regretting their
decision right now.

> What he did here is to build on top of this framework.

A horrible, preposterous way to build!!!

------
yread
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.

~~~
abrbhat
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.

------
ww520
The people buying the large bills at discount now are making a killing. This
law won't last when the backlash roaring in.

------
fgpwd
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.

------
knocte
For me the most astonishing thing about this is that Rs1,000 is only 14 USD
o_O

~~~
pksadiq
About ₹10,000-20,000 would be enough for a middle class family (say, about 5
members) to live for a month. How about USD required when in US?

~~~
erroneousfunk
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.

So, ₹250,000 - 400,000 a month.

I'm beginning to think I should move to India!

~~~
naveen99
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.

------
nitinreddy88
The article fails to mention few points.

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.

~~~
knocte
Why make a service mandatory through law? By doing this, the government is
effectively securing the banks' business.

~~~
gaara87
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

