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Modi’s Cash Crackdown Failed, Indian Bank Data Shows (nytimes.com)
300 points by walterbell 9 months ago | hide | past | web | favorite | 223 comments



Demonetization as a black money magic wand is a public face. The following is the other side of the coin, the following as narrated by a banker friend

1. Banks were at a historical low in availability of currency in the system due to bad money hoarding and non performing assets. Dangerously near collapse. Demo as the report points out has brought so much money back into the banking system and successfully overturned this.

2. Prior to demo. the capital in the stock market was dominated by FII (foreign institutional investors) almost 70%. This resulted in volatility and the Indian economy being vulnerable to external influence. Now the table has turned, the capital in the market is predominantly from the Indian banking system leading to greater stability.

3. Now that money is inside the system,anyone who has tried to take money out in cash beyond 5000 USD knows how difficult to near impossible it is now. This is the real effect on bad money, generation is now so damn difficult!

4. Anyone honest who has tried to buy a home from big realty developers in India recently would be pleasantly surprised that now you have to purchase it with good money and also pay proper GST tax for it. Before demo this was one major area of bad money generation. It is as good as dead now. Recent reports on the huge huge increase in GST tax revenue increase is a proof.

5. Good and bad currency sweeping back into the system (Gov allowed conversion also) has effectively nullified the funding of militancy and the fact that from demo the country has not seen any terrorist actions is a possible indicator.

6. Whether you like it or not one more area which encouraged bad money circulation was evangelism (convert to christianity for money) and that is one more area that also been severely impacted.

Most US media outlets want to feed the stereotyped view of India and jump at any chance to do that.

Most people who cry against demo are those who do it, just because they dislike Modi as a person (not a very charismatic personality). They would not be able to substantiate how they were personally impacted.


Experts and anyone who understands this disagree.

If demo was any good you would see such exercises all over the world on a regular basis.

IndianBanks are in bad shape because of loans they have made and have to continue to make to politically connected individuals.

This affects state banks mind you - private banks never has that problem.

As Raghuram Rajan pointed out, the reason banks can’t make loans is because many firms have terrible credit. That’s what makes loans unaffordable to them.

And as current reports show - All of that money is back in circulation - so the banks are back to square one.

2 - if someone is telling you this, then they are confusing matters and are misunderstanding trade.

1) Volatility will always exist

2) foreign investments are something we want because trade and more resources makes our economy grow much faster

Additionally: black money is a misnomer - it’s money on which tax has not been paid.

A large portion of India’s economy is informal, and entirely cash based AND also below the taxable slabs - this is OK.

It’s a transition point for an economy as it goes from 1970 to 2030.

What people are upset about are corrupt people who cheat the system and then launder that money.

All black money is therefore not corruption.

But demo has not stopped corruption, and even during demo the corrupt found out ways to launder their money.

Not to mention none of this was free and necessitated a shut down of the entire economy - for nothing.

This move cost us billions in opportunity cost.

The mint wasn’t ready or warned, highlighting how unplanned this entire move was.

People died

And in the end nothing happened

All of those goals could be achieved correctly and more effectively.


> And in the end nothing happened

That's nonsense. Demonetization was a contributing factor in the following:

* Increase in tax-payers

* Increase in E-filling

* Removal of fake currency

* Crushing of Real-estate black market

* Removal of shell companies

* Decrease in funding of Naxalites and Kashmiri separatists

Demo failed because the government didn't have a clear objective in the first place. Later they started shifting goal-posts to prove it as a success. However, saying that it acheived nothing is ignorance at best.

> People died

This is again nonsense. People are still dying in India due to the negligence of hospitals, civic officials etc. Blaming this on Demonetization doesn't make sense.

Demonetization deserves to be criticized but the criticism should be objective and not just a mere reflection of opposition propaganda.

Sources:

https://www.livemint.com/Opinion/sH5FSnXPkuAhknhzuPgH3M/Demo...

https://www.quora.com/99-3-demonetised-notes-came-back-conce...


Have a better source than an opinion post and a quora post ?


Bhakt mental gymnastics are on full swing.


I'm sorry, I said this days after demonitization (you can take a look at my post history) before the opposition got its talking points together.

Since then reality has only conspired to be itself, thus my assessments have been shown to be right.

And furthermore - my argument is gentle with people who support demonitization.

A full argument would be harsh and unforgiving.

The opportunity cost of Demonitization?

The actual execution cost of the whole exercise?

the HARM to the economy?

All that time standing in line? That was time people would have been working and generating tax revenue across the country.

That money to create 2000 RS notes which didn't fit ATM trays? The MANY technicians and over time which had to be paid to get everything working?

The country was brought to a standstill. IF the previous govt had done something like that we would have lynched them (and rightfully so)


>>Crushing of Real-estate black market

What goes on in peoples minds to believe in these things?

Paint, Steel, Cement, Bathroom fittings, Tiles heck every single company that connects the RE market is on the stock exchange.

You can't register a hut in the property registration office since a decade without a PAN number. And builders haven't been taking cash since more than a decade now.

Where is this non-existent black money in the Real Estate market?

Looks like people build fictional theories in their minds and then go enact rogue policies which ruin many other things as side effect.


> What goes on in peoples minds to believe in these things?

Anecdotally, RE is by far one of the largest destinations of black money. A friend is still unable to sell his flat 'coz he doesn't want to accept cash. Another has had to bring down the price from ~2Cr to ~1.7Cr, still no takers for the same reason.

Sure, all those measures (PAN etc.,) exist but so do enough loop holes. One common practice is to register the property at a super low (almost nominal) price compared to actual transaction amount. This is what I as a common person know. I'm sure those involved in daily RE dealings have more tricks up their sleeves.

So yeah, it's clearly not fictional.


The problems you describe aren't black money problems. These are problems related to overall demand and supply situations of the RE market, and in general the every day economic situation in India. They won't go away anytime soon because, urbanization trends have just started and almost everyone wants to come to cities for jobs.

Also don't forget bulk of India is poor with high birth rates, so you will have these problems for several decades may be even till the end of this century.

Bangalore alone gets hundreds if not thousands of people coming in every day. With that sort of demand, you can't run a housing market and supply homes at a cheap price. Nor will you be able to run a pure bank/electronic transaction based market. The reason for that is that the base infrastructure for such an economic ecosystem isn't ready. Even in Bangalore you have several hour long power cuts. And that is Bangalore. The rural centers have it way worse.

In all this your every day people, every one from street vegetable suppliers to cement and paint vendors for RE have to work seamlessly. That means 'cash' will be exchanged. Also merely cash being exchanged doesn't make it black.

Ultimately if you are buying cement, paint, steel, bath fittings etc. You are paying white money only, because it goes to registered and tax accounted compaies. Plus you can't buy a flat in any city from a medium and above builder in cash. No one accepts it. And yes, if you are buying a flat for 2 crores, you need to go in for a loan, which comes from a bank, so there is accountability at another layer. And registrations requires PAN, there you have door for audit open.

Another hard thing to come to terms with regards to Indian RE market is people invest in lands decades in Advance, These are not necessarily rich people, these are your ordinary businessmen, shop keepers, salaried masses. In Bangalore, outskirts lands are bought out like >20 years in advance for chicken feed prices, when the demand grows and people come to settle they are faced with impossible prices because investors have long bought the lands. Or they have to rent at exorbitant rates. Real estate is another of things where people with long term vision and enterprise to spend time physically, have a disproportionate edge over those who don't.

I have seen even top managers with top salaries end up with extremely bitter feelings and deep resentment towards common folks on the streets because the latter had the sense to buy lands some 20 years in advance and are now worth 20x more than the manager, despite the managers having 1000x a better career than them.

These problems are not going to go anytime soon.

And lastly even in the middle of DeMo prices didn't move in Bangalore. People who tossed around opportunities to buy flats at 50L-60L in 2008-2010 thinking they will buy in the crash period, were in for a big shock that prices are 1.2Cr-1.5Cr and the market didn't crash either.

The only way to win the RE game is to enter early and play. Come late or don't play you lose by default.


I appreciate you taking time to describe and I'm in 100% agreement. But none of those arguments substantiate your assertion that black money is non-existent in RE.

The fact is owners (not builders) of built houses are unable to sell them even 2years post DeMo because they don't want to accept cash. This has got literally nothing to do with paying for labourers, bathroom fittings as that payment has already happened.

I was responding to your dismissal of the GP's claim that RE is driven by and large by black-money. Specifically;

>>Crushing of Real-estate black market

> What goes on in peoples minds to believe in these things?

> Where is this non-existent black money in the Real Estate market?

The above statement just doesn't line up with the ground reality. Ask just about anyone who deals in RE on a daily basis. The real-estate-agent-shops are dime a dozen in Bangalore streets. They will straight up tell you that they expect you to pay a certain amount in cash (i.e., unaccounted) because the buyer doesn't want to show that money to tax authorities. This is how vast majority of RE dealings are done in India, the builders (i.e., RMZ etc.,) share of the pie is minuscule compared to untracked dealings.

> Ultimately if you are buying cement, paint, steel, bath fittings etc

A wise man once said RE is all about 3 key aspects;'location', 'location', and 'location'. But for location housing/building prices would be same across the country as cement etc., cost the same everywhere. So no, I'm actually not paying much for cement etc., as much as I'm for the location.

Just last week I visited a sub-registrar office in Mysore. Only couple of hours of observing activities there is sufficient to dispel the myth that black-money is non existent in RE. The number and amount of cash dealings going on there was mind blowing, PAN notwithstanding.

BTW this is just one aspect of RE. Then there's about farmland dealings. Just about every politician and govt employee of high ranking hide their cash in hundreds of acres of farm land by buying them in cash. This is not only black-money but also illegal too. You see the details in news all the time, when ED authorities raid a politician or public servant to unearth ownership documents of huge tracts of land.

tl;dr Indian RE is awash with black and illegal money. You either have to be blind or far away from ground action to deny that.


It is stupefying to hear people argue that real estate in India does not involve black money.

You have to be wilfully blind to say this. In every part of the country, real estate transactions used to have a cash and a cheque component. The value is under-reported to avoid paying stamp duty and registration, as well as in many cases to recycle black money.

The proportion of these transactions has reduced since RERA, GST and demonetization. But it still goes on.


> You can't register a hut in the property registration office since a decade without a PAN number. And builders haven't been taking cash since more than a decade now.

Where I stay(Mumbai suburb), taking some percentage of money as cash was always the norm. For example, for a flat worth 90 lakhs, you were expected to pay 60-75 lakhs in white and the rest in black(cash). This inflated the costs and many folks could not afford a flat due to this. It's mostly gone now thanks to RERA but Demo also played some part.


Shouldn't it deflate the cost? If the seller had to pay 10 lakhs extra in tax, he would sell it for 100 lakhs instead of 90.


Its not about inflated cost. It removes your ability to get a higher loan amount, . And increases the risk in the transaction as the cash component is now not backed by any documentation. And finally, it increases any eventual capital gains you have to pay unless you again perpetuate the cycle by taking black money.


> builders haven't been taking cash since more than a decade now

Why do you think they have accounts in Mauritius?


> What goes on in peoples minds to believe in these things?

Nothing. It's just blind faith in Dear Leader and in everything he says or does.


You quote a Quora answer as a reference and expect your answer on HN to be taken seriously?


> If demo was any good you would see such exercises all over the world on a regular basis.

Most countries of the world don't have the black money problem that India does; and of those that do (many third-world countries) there is no will to crack down on black money.


Russia and China have more than India. I believe they haven't used demonetisation.


>2) foreign investments are something we want because trade and more resources makes our economy grow much faster

and

>A large portion of India’s economy is informal, and entirely cash based AND also below the taxable slabs - this is OK.

50% of India's GDP is from the "informal" sector, and it employs something like 90% of Indians. So it's not just a "large portion". It is the majority. And it is this very informal sector that demonetization targeted so to formalize it. FDI makes a very small portion of GDP growth in India.

>And as current reports show - All of that money is back in circulation - so the banks are back to square one.

The money is back in circulation after people paying at least 50% tax if their cash was unaccounted for, but could range up to 200% penalty if the accounting was particularly shady. Which is why you see such a high deposit rate. People would rather see 50% of their cash than nothing.

So "all" that money going back into the economy makes sense. Now the government has actually account of what is going on.


> The money is back in circulation after people paying at least 50% tax if their cash was unaccounted for, but could range up to 200% penalty if the accounting was particularly shady. Which is why you see such a high deposit rate. People would rather see 50% of their cash than nothing.

You should look at the actual number of prosecution claims and convictions by the Income Tax department and the number of instances wherein compounding was admitted (taxpayers admitted to hiding income and paid a penalty), before you call demonetisation a big success in this regard.

Cases filed: 2225 Convictions: 48 Instances of compounding: 1052

Source: https://timesofindia.indiatimes.com/business/india-business/...

Also the voluntary income disclosure scheme of 2016 ran prior to demonetisation. Not many people signed up for that, but for whomever did so, it had nothing to do with demonetisation.


>If demo was any good you would see such exercises all over the world on a regular basis.

I wonder if it's mostly a logistics reason they don't do it often. To do it smoothly, you've got to produce and safeguard a mountain of currency, with a high degree of secrecy, and deploy it in short order when the demonetization is activated.

It reminds me a lot of the 1962 replacement of the Hwan with the Won in South Korea. I get the impression this was a complete shock change (new Hwan notes were introduced less than a month prior to demonetization, and the replacements were produced abroad).

They pulled it off only with a fair bit of challenge-- old coins got forced back into circulation, and several type of the new notes were replaced almost immediately, and this was in a country which had a tiny population and economy compared to India.


The don't do it because it doesn't work.

What works is vigilance, expenditure on policing, courts and the creation of civilized systems.

Which takes time, sacrifice and independent police forces/strong judiciaries.


Hmm... really surprised at all the responses, chill guys it's just a comment! Ok, for those who are throwing stereotypes around, here is a bit to chew on

1. I am from Tamilnadu, a southern state in India. A proud Tamil Indian from a middle class background. My father was a govt. employee and is a staunch anti Modi :-) oh also I am not a Tam.Bhram.

2. Modi wave is not a fact in Tamilnadu, similar to other southern states. I think it is difficult for any Hindi speaker to truly gain support. Arghh! Hindi! ;-)

3. I studied in a Christian Society of India school, am a Hindu but I know the difference between serving as a Christian and selling Christianity for money

4. I successfully exited my startup with 5x returns for my investors. As a startup founder I first hand experienced the govt. machinery and can vouch that being an entrepreneur in India is still difficult even after many reforms.

5. However 2 yrs back, the IT dept actually refunded me for 15lakhs without any follow up or bribe, the cheque actually came by mail, can you believe! The govt is putting all efforts to make the system non personal and digitized which has a huge effect on bribes. Bribes thrive where there is subjectivity and misinformation, automate it and you have bribe gasping for air.

So that's it, sorry for disappointing your stereotype assumption on me.


Thanks for sharing this and shattering many stereotypes :) Great to see such comments!

Its kinda funny to see that many people, whether they are pro or anti Modi expected overnight results for any actions taken. Many SMB type companies are ecstatic that refunds are automated. Sadly, for those who have no idea or information about such improvements, they'll only see the failures of such moves.


நம்பிட்டோம்


என்ன பாய் டெஸ்ட் பண்றிங்களா? எந்த ஊரு? நாகை தெரியுமா? நாகூர் வந்து இருக்கீங்களா?


> the capital in the market is predominantly from the Indian banking system

Indian banks' foreign currency assets have ballooned since demonetization [1], the principal source of which has been FDI. Long story short, Indian bankers' share of the economy grew by sacrificing the country's balance of payments.

As an American investor who knows many wealthy Indians: (1) demonetization was a boon to the wealthy in India, as it provided them with cover under which to move money and (2) the entire exercise has been destructive to the soundness of India's economy. Fortunately, the world economy is growing, so the country has time to mend. But this was a bone-headed move, albeit an expertly-marketed one.

[1] https://rbi.org.in/Scripts/PublicationsView.aspx?id=18271


Counterproductive economic policy, wrapped in popular rhetoric, but which largely hurts the base of the politician doing it most. Huh. It’ll never catch on.


It's sad to see this as top comment.

Banks have low funds, so you force the public to return their own cash. That doesn't solve the underlying problem of NPAs and public banks not being managed properly.

Also, FYI, RBI recently reported the cash in circulation right now is more than it was before the demo.

Increase in tax collection is great, but it's due to GST, let's not give credit to demo for that.

Yes it did some good, definitely, but have you seen how bad the situation got. I'm not sure if you've lived in a tier 3 city during the demo times but I've seen the plight of people. It was ridiculously stupid to just ban cash in an 80% cash society where majority of the small businesses (who bring in >30% of tax revenue) depend on cash.

People died, lakhs of businesses shut down, multiple factories shut down where they depended on cash to pay daily wages. Lakhs of jobs lost. GDP taking a solid 2% dive. So you're saying all this was worth it? Ground realities are very different from what your comment portrays.


Even in Delhi, cash was extremely difficult to get. I was lucky since a close friend lived in a gated State Bank colony that had its own ATM that few outside knew about. I could withdraw cash easily the day it was filled. Had to lend money to people just so they could buy bread, milk and eggs.

It was a common sight to see people lining up outside ATMs at 2 in the night just to withdraw cash they earned through their hard work.

If this was meant to solve the "black money" issue, it was akin to using a flamethrower to kill an ant. The collateral damage was way, way too high


How did it do good?

If you burnt the house down, and said "look, I killed the rats" would anyone in their right mind tell you "hey you did good?"


Did your banker friend tell you that bank employees were supposed to pay fines for whatever counting mistakes they did while being overworked and underslept?

Did your banker friend tell you that most people in queue were not millionaires but laborers and mostly people who didn't even fall under a tax bracket.

Did he tell you people couldn't withdraw money for months? Their own hard earned money. Not govt money, their own hard earned white money was locked up in banks.

RBI governor wasn't even in support of this decision so he was kicked out. Like how low can all this really get?

Doesn't all this sound like a dictatorship to you?


Actually no, it doesn't sound like dictatorship - an elected prime minister making decisions seems the right thing, generally. You would think this is the first time a government pressured an RBI governor. I should add that he wasn't kicked out - his term was not renewed.

What did look like dictatorship to me was a prince tearing up a government ordinance and the poor PM running around trying to appease him. Or a queen pulling strings from behind with her own unaccountable "cabinet" - the NAC. Or the parcelling out of government departments among partners to loot the country. That is as low as it can get.


It sounds exactly like a dictatorship. A prime minister with little to no economic knowledge (heck he doesn't even have an undergraduate degree) making a far reaching policy decision on the advice of a charlatan economist along with a few cronies, while keeping the MIT educated central bank chief in the dark.


I am a great fan of Raghuram Rajan, and used to be one of Manmohan Singh as well. But Manmohan Singh's reign as PM can only be counted as an unmitigated disaster, his economic credentials notwithstanding.

The huge NPA crisis that you see now happened under his watch. The Air India deal, the 2G scam etc etc. It is conveniently forgotten for example, that under Manmohan Singh in 2010 the congress government declared that more bank licenses will be given out, flatly contradicting the RBI whose job it is to issue these licenses.

By the standards we are holding this government to, almost any government prior to this would be called a dictatorship.


As bad as those scams may have been, the amount of suffering brought on to the general public by demonetization was several orders of magnitude higher.


> Most people who cry against demo are those who do it, just because they dislike Modi as a person

No not really, people are crying because messing with money happens in banana republics, I thought India was better.

> They would not be able to substantiate how they were personally impacted.

I personally lost 10,000 Rs because I dont want to go to India to exchange the notes, who is going to reimburse me when the govt steals my hard earned money?


> Most US media outlets want to feed the stereotyped view of India and jump at any chance to do that.

You have no way to prove this.

> Most people who cry against demo are those who do it, just because they dislike Modi as a person (not a very charismatic personality).

You have no way to prove this. Also see No True Scotsman fallacy.

> They would not be able to substantiate how they were personally impacted.

You are implying nobody was actually impacted. And yet the economy lost a percentage point in GDP growth. The people that were the most impacted were people in blue collar jobs, and they are not on HN.


As i would like to believe all this is true, and initailly supported this movement with my wholeheart ,later it occured to me that the only reason they did this is for UP election. Why i think so ? The then reserve bank governor did not even know about this plan of Modi's nor in agreement to this.So the banker friend told this but not reserve bank governor. That's a boatload of made up story to back otherwise political motive.


Yes, I agree with your observation in part and full :) And probably it may be a net positive considering that UP was ruled by two family-owned extremely corrupt political parties...


Now it is ruled by a firebrand hindu priest who was on stage while one of his associates exhorted the crowd to dig up corpses of Muslim women and rape them.


Is this his statement or view? Is the "associate" part of his government? Maybe a "firebrand Hindu priest" follows the Rajya Dharma! A proper citation would have helped...



BBC has a very biased view: https://en.m.wikipedia.org/wiki/Criticism_of_the_BBC

Rest of the question, I couldn't find the answer in the earlier BBC link though.

I abhor these thoughts and don't justify the association though.



That's a list of accusations though, actual credible reports on BBC bias tend to show its not very biased.

Most people want it be biased in their favor.


Even if you assume your points are true, was shutting down the economy for 3 months (the effects of which are still palpable), letting dozens of people die, and creating widespread distrust in the government really the only way to go about it?


Widespread distrust which resulted in a thumping win for the government?

Shutting down the economy... seriously? I was in the economy, it did not seem shut.

Unfortunately the outrage seems manufactured, like so much outrage nowadays.


Indian here.

All of these arguments are parrot-repeating-cliches kind of arguments made by Modi supporters in India.

Read his last para -

>Most people who cry against demo are those who do it, just because they dislike Modi as a person (not a very charismatic personality). They would not be able to substantiate how they were personally impacted.

This is not how someone makes an argument. This is just a political statement.

Also this para -

>Most US media outlets want to feed the stereotyped view of India and jump at any chance to do that

I'd say this is possibly a valid argument but this argument has been repeated so many times (esp in last 4 years) that it has become more of an excuse to discount/discredit every criticism. Ironically, stereotyping India is on the decrease but accusing western media of stereotyping India is on the increase (esp among right wing section. )

>Whether you like it or not one more area which encouraged bad money circulation was evangelism (convert to christianity for money) and that is one more area that also been severely impacted.

This is how right wing Hindu nationalists (Modi followers) look at everything these days. You talk quantum mechanics to them and they will tell you the knowledge of QM is already there in Vedas. Though religious conversion is a fact but the scale is relatively small and money involved (when comparing to the scale of demo) was also very small. And even after demo, this money was available within few months.

> Good and bad currency sweeping back into the system (Gov allowed conversion also) has effectively nullified the funding of militancy and the fact that from demo the country has not seen any terrorist actions is a possible indicator.

Poor guy. What a big white lie. Anyone can check the stats. The numbers of Indian army personnels casualties are far greater as compared to pre Modi era.

All of his arguments can be easily debunked. The fact is that not a single person from lower middle class/elite clads stood in a queue outside a bank to exchange/deposit money. And no one went bankrupt.

Only people from extremely lower economic class suffered badly. Many even died. And we don't hear their stories.


>> Demonetization as a black money magic wand is a public face.

Pls check out my comment: https://news.ycombinator.com/item?id=17901835

linking this article (which argues, among other things, that "all money back" does not = no black money):

https://indianexpress.com/article/opinion/columns/demonetisa...

Excerpt from the above link:

>> I remember arguing in one of my articles that I wished all the cash was returned to the banks. Why? Because such people will be identified and will have to face the consequences of gaming the system. This is a long litigious process but major hints of the magnitude of black money involved (that was not supposed to be returned) is high. In his February 1, 2017 budget speech, Finance Minister Arun Jaitley stated the following: “After the demonetisation, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture. Deposits of more than Rs 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs 3.31 crores.” (Para 142).

Let us reflect on these data. Just after demonetisation, and even over the last few days, a lot of experts continue to opine that demonetisation was doomed to failure because “No one hordes black money in cash”. Just think about it — Rs 3.31 crore was approximately $5,00,000 (2017 exchange rate) and there are 1,48,000 such individuals. There are not that many Colombian drug lords who individually keep $5,00,000 in cash. In the aggregate, this cash — and it is reported to be cash — is close to Rs 5 trillion. How far is this number from the Rs 2-3 trillion that was supposed to not come back? It maybe the case that most of us made a very conservative estimate of black cash in the Indian economy.


>narrated by a banker friend

BS. This is a right wing fundamentalist template cooked to save the face from pathetic failure of demonetisation.

As other commentators pointed out, it was underprivileged people who were most affected by this preposterous nonsense.

1. Poor people died of starvation, standing in queues at ATM i.e if they had a bank account in first place. [Only 53% had bank accounts as of 2014 & much of it was inactive] & mental agony of loosing their life long savings.

2. Privileged people exchanged their demonetized unaccounted money to new one's by bribing bankers & by forcing under privileged people to do it under their names.

3. Paytm (India's leading payment wallet) grew over 1000% in revenue with demonetisation running full front paged ads featuring the prime minister.


Did you actually just cite point 6 as a defence of Demonetisation?

Shows how desperate the search for a justification of a horrible and rash public policy decision which costed lives, time and money has become.


>evangelism (convert to christianity for money)

Is that ... really common in India?


Asian countries are seen as "soft" targets. It is a multibillion dollar business. The church hides behind the garb of being a minority representing about 3 percent in India, while actual numbers are estimated to be much higher. It is not always money, it can also be career. The church is extremely well organised and way too powerful, no politician is ready to face reality and deal with it. The church is the biggest land owner in India after the government itself. In areas like the north-east with 80% Christians, there is a power struggle amongst the different church factions, with headquarters in different countries. Similar to the Saudi-Iran (Sunni-Shite) proxy war.


  The church hides behind the garb of being a minority 
  representing about 3 percent in India, while actual 
  numbers are estimated to be much higher. It is not always
  money, it can also be career. The church is extremely 
  well organised and way too powerful, no politician is 
  ready to face reality and deal with it. 
It would be helpful to cite sources for the observations you make.



Yes. The target demography is backward cast people and tribal people who are more or less disconnected from a mainstream society. Obviously they are extremely poor but it is more about social acceptance. Once converted, they feel like their social status has become higher or they have become part of better community.

On Christmas and other christian festivals, I personally noticed surprisingly large number of 'poor' people attending church prayers. And I found out they were all converted (though not sure about the extent money played a role).

Depending on the region, such conversion may or may not face any backlash.


Please don't make claims that are backed by your anecdotal experience of noticing people attending churches. I find this ridiculous. Though I don't deny there have been such cases reported in the past, to say some groups attend church because of money is unfounded and adds fuel to the fire by worsening the already tense religious atmosphere [1] the Modi govt. has created and based its campaign on.

I really wish the govt would show more interest in the plight of the 'lower' caste rather than just seeing them as a vote bank.

[1] https://www.theguardian.com/world/2015/feb/24/india-modi-rel...


Evangelicals absolutely do target poorer communities in non-Western countries across the world, this has been the modus operandi of Christianity for the last 3+ centuries. This strategy went hand-in-hand with colonialism, with both being things that were "good" for the uncivilized natives.

As for evidence of conversions for money/material goods, here's a couple of links for you to browse at your own pace:

https://www.dnaindia.com/india/report-meerut-priest-tries-to...

https://amp.theguardian.com/global-development/2017/aug/15/t...

https://m.huffpost.com/us/entry/4470448

https://blogs.economictimes.indiatimes.com/et-commentary/con...


I agree that this is Christianity's modus operandi, but I think the roots go back much further than colonialism. Back in Rome Christianity was first taken up by slaves and peasants because they liked it's ideology of all men being equal under God. "The meek shall inherit the Earth" and all that. In a country where traditional religion includes a rigorous caste system I bet it's very tempting to be converted to Christianity.


"where traditional religion includes a rigorous caste system" - The word caste originates from Portuguese. The Indian "caste" system was established by the British population survey and race scientists who wanted to divide the population into various classes as existed in Europe at the time.

The Indian "Jati"system is similar to English/German family names based on profession like Mason, Smith, Carpenter or Schumacher.

The Indian "Varna" system is similar to the separation of the church and the state but included merchants. It was guidelines rather than a hard and fast rule.

A new population of untouchables/Dalits were created by the "Criminal tribes Act" that outlawed people by birth.

It is true that caste divisions and inequalities are a reality today but the solution lies in free market & economic development/mobility. This isn't something specific to India alone all ex-colonies like Rwanda, Syria .. have a minority ruling elite coopted by the colonist and the "others".

The Indian "Jaati" system itself was much more flexible and mobile compared to the European class system. The church has been so successful with this narrative that today the most prominent caste clashes and segregation is in the Christian population.


There at least four different strands of Christianity in India followed by different linguistic and cultural groups across India. The Syrian Christian Church in south India (Kerala) is over 1000 years old. Roman Catholicism was brought by the Portuguese (Goa) after the 1500's, followed by the Anglican Church by the British in the 1800's. https://en.wikipedia.org/wiki/Christianity_in_India

While older strands of Christianity have long since adapted to the culture of India the recent arrival of Evangelical Christianity from the U.S. since the 1980's is a problem since it is culturally jarring, morally self-righteous, and backed by donations from the U.S.

Christians are just 2% of Indian population (20 million out of 1300 million) After dividing into the various Christians sects you are talking about small groups of people that are linguistically and culturally disconnected. A Goan Konkani has little in common with a Keralite Syrian Christian or a Mizoram Presbyterian.

For Hindu nationalists, these distinctions don't matter and they have been very successful in creating a common Christian bogeyman to rally political support. Sadly, you can find these talking points repeated on HN by educated Indians.


Oh IT cell actually reads tech news?


For me, your answer started picking steam from 4th point onwards.


Most people here won't get it but for Indians, it is very obvious OP is a staunch Modi supporter.


Anything wrong with it?


This clouds your judgment.

If Modi does something wrong, his supporters wouldn't see this wrong. They would defend it.

Recently, Modi told a story about making tea with gas from gutter. His story was pure lie. Every sensible person knew it.

But his supporters nevertheless defended him. This was pathetic.


Blind bhakti is


Please go through community guidelines, especially "In Comments" section.

https://news.ycombinator.com/newsguidelines.html


Planet Money had a great two part episode[1] on this and how it came about, and the guru who advocated it. Particularly fascinating was the gigantic PowerPoint presentation they embedded that formed the pitch deck for the proposal. It's one of my go-to examples now for why sometimes engineering-style systems thinking can be disastrous upon meeting reality, particularly in something as people-driven as an economy.

1: https://www.npr.org/sections/money/2017/05/10/527803742/epis...


I think I listed to this when it came out over a year ago.

The most unbelievable part of it for me was when the host asks about the difficulties endured by a poor farmer unable to exchange his dead wife's life savings (approx $50), the person just dismisses it saying, "he's a poor guy, he is used to difficulties" (paraphrasing here).

India is taking advice from those sort of people who have no care whatsoever for the poor. Just unbelievable! Can't imagine how difficult life must have been for these people.


Reminds me of Richard Garriott's talk about how players destroyed the economic model in Ultima Online on the very first day of live play.

https://www.youtube.com/watch?v=KFNxJVTJleE


Once you hit the point of "well then people will think X and choose to Y" ... all bets are off.


I would say that it's too early to tell. I think a better gage is the increase in tax compliance over the next few years. If the treasury gets an increase in money then I would think it was worth it for the government and society. People hate to pay taxes but if you go to a country where people avoid taxes you'll see an infrastructure that's just awful. I rather live in a country where people are willing to pay their share.

I would also look at the increase of money other than cash. People love cash but a good banking system is vital to start small businesses to help people out of poverty.


It is inherently immoral and indefensible to deprive poor people - a majority of India - the right to money they worked hard to earn. You can't defend it on any moral grounds whatsoever.

The RBI still has to take out public interest advertisements featuring top cricketers to convince people to open bank accounts. Because if you were poor, you kept your money in cash, and after DeMo, your trust in the government is even lower than it was before.


In my opinion deMo succeeded in all but the claimed main objective, which was removal of black money.


Well that’s also hard to quantify- as you recall demo had so many as how reasons tacked on every other day.

Day 1- This is to remove black money!

Day x - removal of counterfeits! Please bear with us.

Day y - cashless economy !

And I vaguely remember there being some other reason(s) which were added later.

This was a farce.

But it does show how deeply Indians feel about corruption and wealth inequality.


Most people who had "black money" deposited their cash with albeit with a heavy penalty.

The government allowed people to deposit their cash, but taxed it something like 50-70% if it had NO accounting at all.


This is false. According to the Income Tax department's own admission, it could only get ~1100 people to pay such a penalty between April and November 2017. I've cited a source for this in another reply to you above.

Most people with black money exchanged their currency notes at a 10% to 20% cost via services that laundered via corrupt employees at banks or routing through newly opened accounts of poor people.


Yes it did succeed in rigging the UP elections in favour of the BJP.


> I would say that it's too early to tell

Except it's really not. It's been two years and 100+ lives have been lost. Not to mention the countless man hours and productivity wasted. The decision was condemned from the get go - even discouraged by the then Indian central bank chief.


The increase in the tax base in 2016-17 was 14% which is exactly the same as from 2013-14. That is to say that the tax base did not increase dramatically after demonitisation.


What angered me the most was the suddenness of the announcement, I thought it was authoritarian to have the executive capable of issueing such orders with immediate effect. There wasn't time for courts or citizens or even legilature to look into the legality of such a move before it was effected, and constitutionally challenge it.

Such measures should have been pursued through legislative means rather than executive. The way it was done indicated the Indian Governments lack of faith in democracy.


I think that was the point: if done quickly, it makes it impossible to find places to launder your illegally acquired income. Whether that was actually achieved was debatable.


But implementating such arbitrary measures with immediate effect is tenable in a democracy or not is my question. I think not, because ends do not justify means.


Doesn't seem like there's much left to debate. All demonetisation did was serve to legitimise a lot of illegal cash that made it back into the system.


True. A friend of my relative who is a Sales-tax officer had tons of cash(most of it illegal) in his home. His entire night was spent calling his friends and requesting them to take a part of his cash for some time.


Perhaps, but on the bright side, I see an increase in digital transactions, particularly wallets. Almost every nook and corner shop in India now accepts payment by Paytm or an equivalent wallet. It'll be interesting to see the uptick in digital payments since the crackdown on cash.

I don't necessarily think wallets are a better way to pay but they are a hell lot convenient than carrying petty cash and having to hit the ATM every now and then.


Yeah, that makes it all worth it. The endless queues, the needless suffering, the lost productivity all made up for by the fact that the urban middle class now has the convenience of e-wallets!


Not to mention, the 100+ deaths directly attributed to demonetization.


Do you feel govt intervention was needed at such massive scale, causing widespread inconvenience to the people that didn't ask for it, so that everyone could move to digital wallets? Or is it that convince of digital wallets is simply not that great that people would have moved to it anyway?


I absolutely detest government intervention in any aspect of the society. In fact, I suffered personally like a billion others because of this crap that the government unleashed on us. I am just seeing the brighter side of things.

I can't comment on the convenience of digital wallets for all sections of the society. For the urban middle class I can say with conviction, that digital wallets trump cash. The biggest obstacle for digital wallet adoption were the mom and pop shops. Now even a juice vendor accepts PayTM. I don't think the wallets are as harsh as the credit card guys on the merchants. So I see the adoption as a win-win, at least for the urban middle class.

All of this doesn't negate the endless suffering ulneashed by the cash crackdown though.


This is the half narrative that needs to be made completed for us Indians to have an actual discussion.

How about this scenario - the govt one days makes every Indian pay a fine for holding cash, instead of using one of the many private e-cash wallets out there.

This would be a massive state subsidy given to digital players- but would it be fair or correct workings of the market economy?

Instead if the market was left to itsel the wallets would have invested in ways to convince people and improve services, all the while paying taxes and adding to govt coffers.

One model is wealth creation and the other is regulatory waste paid by us at astronomical costs (1% gdp growth for better metro city use of e wallets??)

No one who talks about this seems to mention the opportunity cost and massive wastage for effectively a one off payment to advertise private entities.


> To some degree, the banking sector did benefit. In the wake of demonetization, millions of Indians opened their first bank accounts.

> But not all of that is attributable to Mr. Modi’s efforts.

I think you give him too much credit in saying that.


From last two-three months, all small time shops in my city are charging extra if paid via PayTM, citing that they get charged when they take money out of PayTM to Bank. Because their wholesale supplier wants bank transfers.


Yeah, bankrolled by PayTM which has been proven to spread propoganda for the ruling BJP government.

https://www.youtube.com/watch?v=lvj8hRD1GY4


Great! Try telling this to the families of one of the people who had the good fortune of sacrificing their lives for the motherland. /s


Well, I’ll playing the devils advocate here. In case you are thinking it was a complete failure, I would like to cite one example where one unscrupulous builder went out of business. His name is DS Kulkarni and he ran a shadow bank of his own. Collected money from people promising huge returns on FD’s. Post demonetization, he couldn’t return their money, and now, he and his entire family is in prison.


It's an anecdotal silver lining thats far outweighed by the negatives.


I happened to take my first (and, so far, only) trip to India in January 2017. The aftereffects of this stunt were still being felt; as a tourist, I sometimes had trouble getting ahold of banknotes (you would still go from ATM to ATM hoping one would dispense some cash), and people were reluctant to take the "large" 2000 rupee notes, because they couldn't make change! It must have been even worse for locals, and when the process had started months earlier.


BJP leaders actually bought land worth crores, just a week before demonetization. They knew it beforehand.

http://www.financialexpress.com/india-news/demonetisation-bj...


Although demonetization might have spurred digital transactions, it wasn't able to get rid of black money for the simple reason that black money owners weren't foolish enough to store large sums of cash. The average corrupt Joe who has a few millions in black money, invests in businesses, real estate, gold, sending kids abroad and so on.


Not entirely true, but I am amazed at just how creative people can get when it comes to money. “Everybody” got their whole lot in, one way or another. The biggest failure was the complete absence of any kind of centralised checks in the banks for any deposits. Although many poor have gotten rich as they are refusing to give back what was transferred in their account :)


I find it between puzzling and concerning that the mention of cash being used in real estate deals doesn't mention why. They mention that a table will be sold for a cash price, but miss the bigger picture - 2 million dollar homes were being sold the same way, with only the banked fraction being reported.

Saying that demonetization is disrupting black money real estate deals is... Not evidence of pain or failure.


> I find it between puzzling and concerning that the mention of cash being used in real estate deals doesn't mention why.

Can you not imagine legitimate reasons for doing this?

A small business owner makes a deal with a property owner to operate the business out of the property on a payment plan where the profits from the business buy out the property owner over time. The customers of the business pay cash so the business pays cash.

The buyer or seller doesn't trust the local banking system (e.g. because they have seen recent evidence of not being able to withdraw their money from it).

The banks charge some fees that can be avoided by cutting them out of the transaction. Even small percentage-based fees add up to a lot of money on real estate sized transactions.

The seller is also the buyer of a different property and they or the other seller wants to transact in cash for one of the above reasons, so they would prefer to have cash from this transaction to use for the other one.

In theory the transaction could be made to involve the banks by everyone doing extra work for no reason, but at the margin that scuttles the transaction and even when it doesn't it still generates overhead that dampens the local economy makes peoples lives harder unnecessarily.


My point was not that there's no reason for cash in real estate. You being up a real scenario, but my point is that the scenario I describe is so common and well known that anyone with some contact with the system would know to bring it up. That the journalist didn't brings the rest of the article into question.

Imagine someone writing that anti-virus brings pain with it, because it has a negative side effect on programs that need to shim and redirect system calls. Yes, it does, because the vast majority of the time that use case is a virus. If that's all they wrote on that front you'd wonder if they really understood computers.


But that's always the argument people who want to ban things present. Bad people are using it. It's implied by the context.

The article's point is that good people are using it too and getting rid of it hurts them as well -- or hurts them worse, because criminals have alternatives that are only available if you break the law (or have the margins that come from black market trading).

And people do make that argument against antivirus. It detects things that aren't viruses and not things that are. Half the non-tech people with Windows PCs have antivirus and twelve pieces of malware installed at the same time. So if it has high cost and low effectiveness then why have it?


> buyer or seller doesn't trust the local banking system

I've had to open and maintain bank accounts in India. (No more.) The only way I got anywhere was by threatening lawsuit, under force of a lawyer and New York State's financial regulator, in an American court.


One missing part of this puzzle is tax evasion. Cash transactions allow people to avoid tax . On paper sale price can be lower thus lower tax for registration and transfer charges to govt and then pay the difference directly to the seller. Thus evade some tax.


That is the argument made by banks. It's gibberish. If you got rid of cash, people could still trade in arbitrary commodities (gold/silver/gemstones), favors, quid pro quo, hard currency of other countries, drugs, etc. Meanwhile the government can catch you evading taxes regardless because you're claiming $10,000/year in income while living in a five million dollar house and driving a $70,000 car.


Selling real estate for half in cash and half in bank deposits (wire transfer or whatever) is just a lot more convenient than half in bank deposits and half in commodities that aren't nearly as liquid.

You can then take that cash with you to your next real estate purchase, or maybe break it up over time -- maybe take less cash out when you deposit your paychecks, maybe buy larger small items with cash, maybe pay for part of your car with cash, etc.


You're saying bullion (exchangeable for the spot price at any pawn shop), or US dollars or Euros, are materially less liquid than the local currency? There are many countries where the vendors prefer USD to the local currency.

And the only reason the local currency is so liquid is because there is one. If you got rid of it, people would start using something else and it would have the same liquidity because then it's the thing that people accept.


I believe otherwise for following aftereffects. 1. Literally Every nook & corner shop now accepts digital payments. 2. I have seen cash-distribution by candidates during elections to influence votes! They were mostly absent in the immediate subsequent state elections. 3. Many "Poor" people made extra money by queuing in the line for "Rick" people. The commission went as high as 20% at some places. 4. Terrorist activity immediately stopped all over the place because they are mostly cash sponsored. 5. Situation normalized within 3 month. 6. Many of counterfeit presses in neighboring countries stopped working for some time at least.

I also stood in line 4 or 5 times, but than every "Line" in India is average 10m long for any kind of services. We are used to it !!!!


Every single point that you have said has been debunked many times over. DeMo was a stupid thing to even try accomplishing what you are trying to say it accomplished.

For the want of killing crocodiles, we drained the whole pond and only ended up killing the fish instead. Crocodiles were back after a month.


A simple Google search shows you are wrong.

> Overall, however, our study strongly suggests that India’s 2016 demonetization, the largest the world has ever seen, effectively stimulated the transition from a cash-based to digitally enabled economy.

https://www.forbes.com/sites/nusbusinessschool/2018/09/01/in...


You are only addressing 1/6 points mentioned by the OP, most of which is a load of BS. As for the gain in digital transactions, was there no other way to boost them? If the supreme leader comes up with another rule that anyone who uses cash will be shot, the cash-based transactions will reduce to nearly 0. But will it make any sense?


are you saying that terrorists and their sympathisers were not affected by demonetization? Would be great to see some sources for your "debunked many times over" statement.


Terrorist and their sympathizers will be affected if demonetization happens again, like anyone else who has cash. The bigger question is whether it has helped in curtailing the menace.


There was a large number of fake new bills in circulation within 3 months. So the answer is, no, it had almost no impact in curtailing the menace. But hey look, the fruit vendor is accepting PayTM wallet (a large chunk of which is owned by China) so it must have been a huge success.


Huge success for PayTM indeed.


The number of terrorist attacks has only increased after demonitisation. There is no evidence whatsoever for even a single point made in support of demonitisation. The use of cash has increased, counterfeiting of notes is still high, terrorists are not out of cash etc.

https://www.ndtv.com/india-news/less-cash-less-terrorism-mor...


Sure they were. As were prostitution rings and other such things. They were affected because everything was. I remember at the time, people hailed this as a "surgical strike". Given the collateral damage, it was more like indiscriminate carpet bombing.

India's economy is hugely cash driven and to suck out 80% of that in a single night was an economic shock. The aims were changed repeatedly. Black money, digital transactions, recapitalising idle assets etc. I don't really buy any of that but I'm willing to give the government the benefit of the doubt. Now that it's, for all practical purposes, proven to be a failure, they should accept responsibility for it.


My skeptical question is, "Wouldn't the (I assume cell phone based) digital payments platform have happened, anyways?"

The telecom companies in the Philippines (as one example) had phone-based digital payments in 2007 or so. It was just a matter of time and critical mass of cell phone ownership, until such payments happened.


Digital payments had a small spike, but I think it sort of died down after 2-3 months. Now I do not find many small vendors/businesses taking digital payments.


On the contrary, I find almost every small vendor accepting digital payments. This is from personal experience.

axiom92 9 months ago [flagged]

> 1. Literally Every nook & corner shop now accepts digital payments

At what cost? Was it worth the lives that were lost?

> 2. I have seen cash-distribution by candidates during elections to influence votes! They were mostly absent in the immediate subsequent state elections.

Because you diligently monitored every single election personally after this fiasco? And you also have certain guarantees on why this won't happen again?

>3. Many "Poor" people made extra money by queuing in the line for "Rick" people.

Oh nice. Should we add this to the tally of 10 million jobs that were to be generated by the present government?

>4. Terrorist activity immediately stopped all over the place because they are mostly cash sponsored.

Just look at what has happened in Kashmir since, and whether the situation is better or worse. How has immediately stopping the terrorist operations helped?

> 5. Situation normalized within 3 month.

Get out of your bubble. http://knnindia.co.in/news/newsdetails/msme/small-businesses...

> 6. Many of counterfeit presses in neighboring countries stopped working for some time at least. Irrelevant AND wrong. From [1], "9254 Fake Indian Currency Notes (FICN) of newly introduced Rs 2000 were seized between November 9, 2016 and July 14, 2017, "

I'll leave the cringeworthy remark you made towards the end alone. I'm sure you are used to losing your loved ones [2], [3] to the nonsense of power hungry idiots, others are not.

[1] http://www.zeebiz.com/india/news-govt-seizes-rs-255-crore-in...

[2] http://naradanews.com/2016/12/here-are-the-97-people-who-die...

[3] https://indianexpress.com/article/india/india-news-india/dem...


Arguing uncivilly like this will get you banned on Hacker News, regardless of how right your argument is (or you feel it is). If you'd please review https://news.ycombinator.com/newsguidelines.html and follow the rules from now on, we'd appreciate it.


Can you please point out the "uncivility" in my reply?

Edit: I did read https://news.ycombinator.com/newsguidelines.html.


You used personally acerbic language all the way through that comment, getting more abusive as you went along ("because you diligently?", "and also you have?", "Oh nice", "get out of your bubble", "your cringeworthy remark", "I'm sure you are used to losing your loved ones"). You cross into bannable offence when you do that, so please don't do it again.


Thanks, I see your point. I see how I could have been less caustic and personal in the choice of words and phrases. I don't think it ever got to the point of getting the label of being abusive.

Again, I appreciate you taking out the time to point out your concerns with the comment. I've taken a note and will be more mindful of the policy.


Pointing out the uncivility in your reply is exactly what dang just did.

You should not expect a sentence-by-sentence accounting of where you lost civility points. That's not how it works.


That's true in general, but sometimes it's easier than others.


A friend of my relative who is a Sales-tax officer had tons of cash(most of it illegal) in his home. His entire night was spent calling his friends and requesting them to take a part of his cash for some time.

There are many such cases across India. Personally, I do think Demonetization was a failure but that's because shifting of goal-posts and not because it achieved nothing.


So we should believe it wasn't useless because of an anecdote you have?


Demonetization was a disaster in many ways. The government was not at all prepared for the change and kept playing it by ear everyday, changing the policies on cash withdrawals. Those who had a lot of cash used the boon of the government — Jan Dhan accounts of the poor — to deposit their cash in smaller sums and got it out later.

Talk about this move's ill effects and you'll find the other side changing the topic from black money to digital transactions to tax base and so on. None of those claims have been validated. Cash use is back to how it was before. Digital transactions saw a temporary increase, but have gone out of favor among those who didn't really use them often before. Tax increases have other reasons to credit.

What's even worse is that the government made it easier to hoard large amounts of cash by invalidating the Rs.1000 note and by introducing a Rs.2000 note. The main use of the Rs.2000 note could be to hoard cash since it's not something that's useful on a day-to-day basis for most people (can't easily get the change when the spend is much smaller).

Tax evasion is primarily done through real estate, gold, etc. Cash bills form a minuscule percentage. The government could've focused on bigger things than attempt to flush badly run banks with cash by this move.

Hopefully this or any future government won't dare to try this kind of a gimmick again.


We should not call it demonetization, if you ask me.They didn't even demonetize 500 notes.


Just my 2 cents: I have an Indian friend whose dad owns a college. When Demonetization happened, his dad asked all of his students to take cash and deposit into their account, and afterwards transfer into his account. To incentivise them he told them they would get a discount on college fees(off the books, ofc) for each cash deposit. Students were lining up all day for weeks to make deposits, many even got a lot of family members as well.

Another friend's family opened a luxury car dealership overnight, buying cars wholesale from legitimate car dealers who could then pass off any income as legitimate.

I'm very skeptical when anyone says black money was affected significantly by Demonetization.


This sounds suspicious. All these transactions are traceable now and it should be much easier for the income tax department to find out. No one in hier right mind would have so many people send money to their bank accounts like this.


> be much easier for the income tax department

Question is did they.

This entire thing was a stage managed farce to inconvenience political opponents. Citizens were collateral damage.


Just asked my friend: apparently they used the college fees account. They were getting a lot of money transfers anyway so it's not such a bit deal at face value And since no one really raised any alarms during DeMo, no one really investigated further.


NYTimes, like most media inside and outside of India, are looking at this from the wrong angle. The actual intent of Demonetization was not the removal of Black Money. It was just a cover. Anything else like digital transactions were side effects.

The real reason for this was political chest thumping. The previous government was seen as incapable of taking decisions and getting work done. This was mostly a signal from Modi that he was willing to get work done, take hard decisions and see them through. That he and his government had the willpower to work and act, unlike his political opponents.

The results of the UP elections that happened after this validate it. UP is a state with a lot of farmers and low income people, who were supposedly the worst hit segments of the population. Yet they voted for him.

Just some food for thought.


Another point to note is that Indian elections are funded by a massive corpus of cash, and when you suddenly make all existing cash illegal days before the elections, you cause complete disarray in your own political opponents' camps.

This was as much a poll winning strategy as it was, purportedly, about demonetization.

To me, regardless of whatever good this government does, it will remain one of the worst decisions economic decisions taken by any Indian government to date


> Another point to note is that Indian elections are funded by a massive corpus of cash, and when you suddenly make all existing cash illegal days before the elections, you cause complete disarray in your own political opponents' camps.

As well in your own camp. Your cash is not different from your opponent's cash. Unless the cash you are using is unaccounted.


That is assuming your camp didn't already know about what was going to happen.

https://www.huffingtonpost.in/2018/06/22/amit-shahs-director...


All parties have to file Income Tax returns which also includes sources of income. Had BJP been the only party with enormous cash, they would've been flagged by the IT department.


That's because how cash gets rotated among the Indian masses. Your Pendalwalla and Micwalla accept cash. Your party workers, campaign workers, alcohol suppliers, biryani suppliers etc etc .. Take cash.

So please drop this 'Income tax return' bogey. Most of the political donations and spending is unaccounted. You don't pay taxes on things that don't exist on your books.


Everyone knew that no one had cash. Your Pendalwalla and Micwalla had to earn money. They would have readily accepted checks or other forms of payment. The real trouble is that a lot of political parties fund their campaigns off the books. They can pay only in cash because it is untraceable to them. Your Pendalwalla, alcohol suppliers and Micwalla got cash before so they took cash. You pay them in checks and they take it.

> You don't pay taxes on things that don't exist on your books.

Its not others fault that you keep your party funding off the books. No one asked you to. You can keep it on the books, pay the tax, and pay you vendors legally without issue. The restrictions were on cash, not on any of the other payment systems.


1. BJP income rose after demonetisation. Parties don't pay taxes but file return for exemptions, expenses, etc. You don't even have to reveal the sources. https://www.dailyo.in/politics/demonetisation-noteban-party-...

2. If a party already knew that demonetisation is coming, it could have acted accordingly. https://www.financialexpress.com/india-news/demonetisation-b...

3. Ruling party had an advantage on getting money, organisational structure, advertisement, etc, etc. Many vendors don't accept checks but real currency.


I agree generally but this assumes all those Pendalwalla, Micwalla, liquor suppliers are okay with doing their sales in black. That's not always the case. Especially just after a massive government exercise that fell hard on cash, these guys are less likely to accept tons of cash. So, considering all this I don't see how one party clearly benefitted.


Even the US government is accused of weaponizing the IRS to target political opponents. Do you really think the IT department in India would operate without interference?


Or you had priority access to the newly issued notes.


When Modi announced it, he used Black Money under the garb of Black Money. Later on goal keep shifting. From damaging terrorist/Naxal money to digital transactions.

https://www.thehindu.com/opinion/editorial/shifting-goal-pos...

https://indianexpress.com/article/india/demonetisation-rbi-a...

https://economictimes.indiatimes.com/news/politics-and-natio...


Amit Shah, right hand man of Indian PM Modi, was the director of the bank who got significant cash deposits after this ill thought out demonetization move. And worse, the news articles highlighting this have disappeared or have edited out Amit Shah’s name from all the major English newspapers. So much for media partiality in today’s India. Co-op banks were exempted, quite conveniently.

https://m.huffingtonpost.in/2018/06/22/amit-shahs-directorsh...


I could not get this logic. Can you explain more? problem would have been, if he got that money before demonetization, or he would have bought lands/gold, even then , if money comes in bank, "blackness" goes away, no?


Just few days before demo, huge huge amounts of cash was deposited in his managed loxal bank, & when demo was declared, as that money was already in bank's vault, it was safe. Also, the bank was type of Co-operative, kind of local credit union, these types of banks does not need to be interconnected between branches or with a central place, neither do they need to keep digitally timestamped records, manual book keeping on paper is allowed.


Well this is what the headline says.

Ahmedabad District Cooperative Bank received deposits worth Rs 745.59 cr soon "after" the policy was announced, according to an RTI reply.

Please check it is "after" the policy and not Just few days before demo as you claim


That's exactly what has happened, black money got converted to white with help of politicians like Amit Shah. This FT article touches on this aspect.

https://www.ft.com/content/7dbe0e14-8d8a-11e7-a352-e46f43c58...


Even if you remove Amit Shah from equation, you can say black money converted to white, by paying 30% tax.


Also BJP campaign in UP was less affected by demonetization than opponents’


>>The actual intent of Demonetization was not the removal of Black Money.

This is one of those 80's era misconceptions that continues to exist today.

No one, not even beggars on Indian streets keep their cash beneath their mattress these days. Money is invested in businesses, where the unorganized sectors works. In short if you pull the plug on this kind of economy you ruin the livelihood of people working in unorganized sector. Which is basically most of the Indian economy.

The remainder of your post is basically the hilarity I have to deal with day-in-and-out from people and their round-corner-barber-shop level discussions on how their random hacks and their political heroes will go around fixing everything. Urban centers are full of these idiots. Who think their barely held together theories, which won't survive 5 why questions in a stretch, should be forced implemented and others be made to suffer through it as a test of patriotism.

Demonetization was a devastating failure for one simple reason. Tax accountability is one thing. Capital is a totally different concept. Capital has always been invested in productive businesses. If you destroy that you destroy the economy. In essence the question is how to fix tax accountability without destroying the economy along the way.

Nobody gets applauded for burning down a city to eradicate rats.


> No one, not even beggars on Indian streets keep their cash beneath their mattress these days.

That was my point. A point that I think went over your head. Maybe I need to dumb down my language more?

> people and their round-corner-barber-shop level discussions on how their random hacks and their political heroes will go around fixing everything.

The success of a democracy depends on these barber-shop level discussions. Any working democracy should be proud of the fact that normal people discuss and have their own political views. Democracy is born from the bottom, not handed down from the top by the ever changing and confusing whims of a failed dynast.

> Who think their barely held together theories, which won't survive 5 why questions in a stretch, should be forced implemented and others be made to suffer through it as a test of patriotism.

Where did I make any of these points? Please stay on topic. If you don't have anything relevant to the topic then please stop.

> Demonetization was a devastating failure for one simple reason. Tax accountability is one thing. Capital is a totally different concept.

What is difficult to understand? Demonetization cannot be a failure on tax accountability or capital because it was never intended for this. It was to make a purely political point and it made that very clear to the people. The GST reforms are the reforms for the tax system. Not demonetization.


Crossing into incivility like this will get you banned on HN regardless of how good your points are or you feel they are. Please review https://news.ycombinator.com/newsguidelines.html and follow the rules from now on.


Isn't it scarier if the government has ulterior motives as a political party?

What you are essentially saying is that the government is not beyond passing policies that result in disruption, death, drop in GDP, and more just to push their political party to win state and other elections


Total BS. The announcement of the demonisation by Modi repeatedly mentioned removing black money from the system. There wasn't a single mention of moving to a digital economy. When the blackmoney angle failed, the BJP govt started talking about digital India etc.


Yes, basically he kept shifting the goals, from black money, digital economy, etc etc


>> The real reason for this was political chest thumping.

As in many things in politics, things are not 100% this way or that way. Every political and Economical action has a "signalling" component, which in itself does not mean that "signalling" is the only component.

One needs to look at below for a counter viewpoint, if willing to hear both sides of the debate:

https://indianexpress.com/article/opinion/columns/demonetisa...

Excerpts from the above:

>> The return of cash:

Many of us felt (including the government) that of the Rs 15.8 lakh crore (or trillion) rupee notes that were demonetised, about Rs 2-3 trillion would not be returned. The assumption was that this was the minimum of black cash in the system, and since those hoarding cash would be afraid of getting caught by the tax official, they would burn the cash, rather than return it to the authorities.

What happened was that all the cash got returned, and those expecting that this would not happen, were naïve. Let me speak for myself — I am surprised, and at the same time I am impressed by the ingenuity of Indians, especially those with black money. If the only objective of demonetisation was to not get all the money back, then clearly the policy failed.

>> cash to GDP ratio

cash in fiscal year 2017/18 is 10 per cent below what it was in 2015/16 (the GDP has gone up for those wondering).

>> Tax Compliance:

I remember arguing in one of my articles that I wished all the cash was returned to the banks. Why? Because such people will be identified and will have to face the consequences of gaming the system. This is a long litigious process but major hints of the magnitude of black money involved (that was not supposed to be returned) is high. In his February 1, 2017 budget speech, Finance Minister Arun Jaitley stated the following: “After the demonetisation, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture. Deposits of more than Rs 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs 3.31 crores.” (Para 142).

Let us reflect on these data. Just after demonetisation, and even over the last few days, a lot of experts continue to opine that demonetisation was doomed to failure because “No one hordes black money in cash”. Just think about it — Rs 3.31 crore was approximately $5,00,000 (2017 exchange rate) and there are 1,48,000 such individuals. There are not that many Colombian drug lords who individually keep $5,00,000 in cash. In the aggregate, this cash — and it is reported to be cash — is close to Rs 5 trillion. How far is this number from the Rs 2-3 trillion that was supposed to not come back? It maybe the case that most of us made a very conservative estimate of black cash in the Indian economy.

>> tax buoyancy, that is, the ratio of growth in tax revenues and growth in nominal GDP

The fact remains that an improvement in tax compliance has been a major success story of demonetisation.

>> Withdrawal of cash from ATMs (plus paper clearing) as a proportion of all transactions (for example, RTGS, POS, IMPS) has declined by 30 per cent in volume and 17 per cent in value. The two periods are Jan-June 2016 (pre-demonetisation) and Jan-June 2018 (post-demonetisation).


Having the will to take hard decisions is not a bad thing in general and getting work done is almost never discouraged.


I don't think they miss the point - the role of journalism in things like this is to detail in depth the failure of the ruse, thereby exposing the real motive.


Might it failed, but there lots of advantages. All cash, directly or indirectly is countable now before was considered as Black Money. Transaction started to grow online. People started to become aware more about the payments. And people really give second thought when doing big deal with cash


It failed at the cover story but succeeded in moving a large amount of people way from cash and so increasing government control and surveillance of transactions.


It didn't even succeed at that. The same data shows that households are keeping more of their savings as cash, rather than less.

Much of the impact of demonetization was experienced as an acute cash shortage, with restrictions on accessing money in bank accounts and difficulty withdrawing cash from ATMs, whereas actual cash could be exchanged relatively easily on the black market. The lesson learned was, quite correctly, not "keep your money in banks where it'll be safe from future demonetization attempts", but "keep your money out of banks where it'll be safe from future demonetization attempts".

It was a failure on every level.


People received text messages claiming their bank accounts will be frozen if they don't connect them with Aadhaar, anecdotally this has also increased distrust in banks.


I don't know. If people learned that banks are not a safe place to keep money, I'd say it was a win on at least some levels.


You don't want people distrusting banks. Banks provide essential financial services and access to credit that's extremely expensive and risky to obtain elsewhere.

A big part of what drives the shady payday loan industry in America is the poor's lack of access to the regular banking system.


Coincidentally I just woke up today to find that my own bank account has been locked. The customer service number just hangs up within the first minute.

Tell me again why I should trust banks?


I didn't say that you should trust banks. I'm saying it's not good for society if people don't. You're painting the lack of trust as a win. It's not. It's a net loss for society.


I don't see how that is internally-consistent.

If (?) you agree that it's a bad idea to trust banks, why do you think it's a good idea for everyone to trust banks?

If banks are not trustworthy, everyone who distrusts banks is making the right call. More people making the right call is a net win for society. After all, all society is is a bunch of people.


I don't know how this isn't being communicated. It's not a bad idea for you if you don't trust your bank. It's bad for society if you don't trust your bank. I don't think you have an obligation to fix banks or trust banks that shouldn't be trusted. Banks should act in a way that engenders trust from their customers.

Banks are not ordinary businesses, this is why they're regulated so heavily. Society needs more bank regulation so that people can trust them more. That is what I am arguing that is good for society.


Got it, thanks.


I agree with this statement. I'm in the US. I'm just waiting for the moment that my Venmo and Zelle transactions are sent to the IRS and they want to start asking me about my "income", aka splitting bills with friends.


This is already the case with 1099-K and even though the link at https://www.paypal.com/us/smarthelp/article/how-does-paypal-... refers to sales, the catch all mechanism is entirely driven by number of transactions and amounts which are easily attainable with an active social circle.


Link to Hacker News post when Demonetization was announced - https://news.ycombinator.com/item?id=12900965


I find it interesting that the top three highest voted comments, and their top sibling comments don't mention any potential concerns about unintended consequences or the effects on the average and poorest people (the NYT article cites evidence such negative effects happened, including suicide).

The first sibling comment of the third highest voted comment throws out a worry, and it was downvoted.

I don't know what this means exactly, but I think it's worth the average HNer to ponder.


I think it's human nature to desire action NOW.

In practice, however, immediate action in complex systems is likely to have negative side-effects.

We this desire for action in Trump and Brexit too.. Or when a young naive junior developer sets out to rewrite a system from scratch :)


Only an insensitive/ignorant clown will go for demonetization where 97% are poor by global standards http://idronline.org/addressing-inequality-in-india/ and 1% own 73% wealth https://economictimes.indiatimes.com/news/politics-and-natio...


Politicians hate to accept mistakes / policy errors. It's no surprise that Modi doesn't want to say out loud that the note ban did not go as he had hoped; some positives, but not worth all the trouble, and he'd probably have abandoned the exercise had he known the outcome, but he isn't going to say that. Perhaps a lot of people expected him to be a better statesman and feel let down. Anyway, time to move on and clean up the balance sheets of banks before the next recession that many are predicting hits.


Modi is India's greatest politician in recent years.

If anyone thinks that he didn't get exactly what he wanted, they are absolutely incorrect.

For the record, my meager guesses of Modi's moves once he became PM were correct, so I have faith in my assessment of him.

Modi didn't give a rats ass about the stated reasons for this exercise.

Thats why the target moved so many times. Cashless/Terror/ counterfeit etc. etc.

Contrast that with ACTUAL projects he works on - those get targets, goals, and media communication which is spot on.

Modi would never abandon the exercise, because in one move he crippled opponent political infrastructure.

Every day, Modi fights a scorched earth political battle to destroy the Congress.


Dissing congress is all he has done with full efficiency and in the most ugliest manner.

I mean, there was people like Vajpayee, Adavani and many others who have actually known Nehru/Indira/Rajiv more than Modi and even they didn't fall so far down to criticize Congress. They criticized but with dignity.

Dignity is foreign word for Modi. And that is why, since his rise, stories like Nehru was sexually pervert and had STD, Mahatama Gandhi was homosexual, ancestors of Nehrus were Muslims and so on are on the rise.


> It is also the way he did what he did that ruffled many feathers. He did not consult Parliament. He did not solicit advice from many learned advisers. He did not give the public any warning.

Anyone who makes such statements is a complete moron. Sorry about the inflammatory language, but that's the truth.

Can you imagine what would have happened if the Parliament was "consulted" ? All of the money hoarders would have immediately converted their cash, negating the move.

When you want to set a trap to catch something, the last thing you want to do is announce your intentions loudly and put big blinking signs there.


>All of the money hoarders would have immediately converted their cash, negating the move.

Unless you disagree with the figures RBI has reported, this (precisely this) has happened anyways; the move has been negated. I am baffled at the number of people on HN who still believe that this chicanery really made the rich throw their hoarded cash somewhere.

I mean, come on folks! That's the whole point of the article we are talking about here! 99.7% of the demonetized currency is back. The rest of it could be in Bhutan or Nepal, with the NRIs or could be hiding under the pillows of those who were too poor to get it changed; we don't know.


> All of the money hoarders would have immediately converted their cash, negating the move.

You mean those holding 0.7% of the currency?


Seems like the data shows the cash crackdown was a great success, but there are some powerful people with a financial interest in presenting it as a failure so that other countries don't get any bright ideas.


Any idea how black money hoarders were able to exchange their bills? I have heard stories like recruiting poor people to exchange cash with max allowed but still given the amount of such money in India this doesn’t sound scalable. I also think govt actually had pretty good set of rules to avoid this. Were there any other loophole they found out?


I wasn't in India when it happened, but from what I've heard, bank employees were bribed directly (my dad is a retired bank employee). They took a 30% share for converting illegal money to new currency and kept it off the records. That's also one of the reasons why the supply of new bills didn't actually reach the common man.

As always, humans are the weakest link and can be exploited quite easily.


Has there been any studies of Modi’s allies’ cash flows. It would be interesting to see if there was an uptick in connected people converting rupees to real estate, foreign currency, right before the cash crackdown was announced.


It wouldn't be surprising, but since nobody rich seemed to have the slightest trouble converting cash after the crackdown either, it hardly matters.

Central bank data shows 99.3% of the demonetized notes were exchanged; there was effectively zero "dirty" money destroyed via demonetization.


There was dirty money created by demonetizion. We have not yet accounted for

1. Cash in Bhutan and Nepal where indian currency was widely used. 2. NRIs who legally held INRs but the cost of exchange was too high 3. Residents who have loose cash lying around - under mattresses, long forgotten jeans and missed the deadline for exchange.




There is a surprising amount of government supporters on HN.


Presumably that explains why they were elected, and are now the government :-)

Why is that surprising?


Because the ruling party is riding the anti-intellectual wave. It's about as surprising as waking up to find HN flooded by Trump supporters or Brexit Leavers, for example.


It was certainly a heated discussion at HN, when it happened...


RBI: Loan defaults by small businesses double in a year.

Here's another example of stress in the economy.This is what Demonetization did to small businesses

https://t.co/PTRqqTgYR8


Will the EU do the same analysis for its withdrawal of the 500 EUR notes?

Sincerely, someone on another continent that has one of these and needs to beg a friend to go to a central bank while on holiday to “break” this legal banknote.


Yaay I told everyone that night how it's a nonsense move for the reason cited, lol those who mocked me then now don't have a face but I rub it into them everytime this comes up ^^


I have listened to both the planet money episodes (I love Planet Money podcasts). I'm from India, living in US for more than 10 yrs. So I kind of have enough perspective of how Demonetization is seen within India and from outside India, including based on knowing personally who benefited or got screwed by demonetization, and who were left unscathed.

Must say, with what I have known about the medium and long term after affects of demonetization, I found NPR / Planet Money's research / info in the podcast terribly biased. This bias is sort of ironic since it is from a radio station that is very pro-democrat from a country that keeps harping about "Trump won because Russia" even though the process was as democratic as it could be.

Like NPR, NYT is also extremely biased against the current Indian administration, while simultaneously being subtly (sometimes overtly) anti-Hindu / anti India.

I sincerely listened to the Planet money episodes hoping to find some genuine shortcomings of the demonetization process, but was totally disappointed at the kind of propaganda based content they came up with! Sadly, NYT does the same with this piece of writeup.

There are many, many +ve effects (short, medium term) that I can talk about. But the main -ve point of this whole process is that one round of demonetization is not enough. A few more rounds of demo, and crooks will have enough fear in even accepting cash for bribes and probably will need to resort to barter system.

I personally know many who stashed illegal unaccounted money in gunny bags, and have suffered a blow to their wealth (as I wished) and I know a few who have had their black money stash replenished partially after a year of demo.

In either case, it was very heartening to see those who slept on mattresses made of cash suffer and struggle.


I don't think the news articles are biased, in fact it properly reflects the current state in India.

I was a strong supporter of Modi during the elections and through the demonetization process. But as I see the rich who had tonnes of cash were able to exchange most of the cash without lot of issues. I am sure there were long lines, it was inconvenient, it was stressful - but most of the cash got exchanged. I heard about a lot of people who used the 2 lakh tax-free income limit to deposit the cash and get it back (basically if I have 1 crore in black money, all I have to do is find 50 poor people and deposit 2 lakhs each into their accounts. Once deposited the rich person can get the money back in new bills and they pay the poor guy some cash for his trouble - trust me it's not hard to find poor people who are willing to take this trouble). The government can't question the poor guy because he's within his 2 lakh limit and need to have to show any proof where it came from. The rich is happy and the poor guy is also happy.

Now, people lost trust in the banking system, there are limits on withdrawals, ATMs out of cash, no one wants to deposit the money back - everyone wants to hold on to their cash. If people don't deposit cash, banks can't lend (btw, banks are writing off crores of money as NPAs already, that's another problem) and ultimately the economy will stagnate.

Personally I think this experiment was done with good intention to curb all black money and move over everyone into banking system - but not thoroughly thought out and it's a failure.


Not denying your or anyone’s right to opine about whether NYT , NPR are biased or propaganda based not. You are certainly entitled to your opinion about their biases (so am I). I was just giving more perspective about how I view the issue and the reporting related to the issue in the international media, specifically liberal / pro democrats media in the US.

“Most people lost trust in banking after demonetization” seems to be widely reported, but hardly supported by reliable data. Though I believed such reports during the initial days of demo, anecdotal evidence (based on friends, relatives, ex colleagues and contractors I have worked with) seems to be that the trust seems to be strong enough for those who never evaded taxes or those who wanted to pay taxes honestly, but never bothered to deposit cash in account.

If anyone says demo was a success in solving the black money problem I’d say that’s not true. But demo, combined with GST, RERA and a bunch of other initiatives have really pushed India towards a less tax evading future, which can only mean lesser taxes in the near future since the tax net cast is much wider.


> But the main -ve point of this whole process is that one round of demonetization is not enough.

1.5 million jobs were lost during the first four months after demonetisation. And you'd like to see it repeated a few times for the sadistic pleasure of seeing a few rich people suffer. But even that will not happen because the rich people I know have converted their cash to gold bars and more real estate.

https://www.livemint.com/Opinion/GWagxJq3AzHyM0w8RnUC0O/Demo...

> A few more rounds of demo, and crooks will have enough fear in even accepting cash for bribes and probably will need to resort to barter system.

A few more rounds of demo may also lead to a run on banks and destroy the nation's banking system and currency.


I know a few construction contractors who were paid up for all the dues of previous years and were paid for the next few years projects in advance. Now, these are the kind of stories that won’t come up in the news, but in this case specifically many many jobs were saved because people with cash were clearing past dues and paying up for future.

Number of jobs lost is always a debatable number, so I’d prefer not to argue on the specifics.

Converting to gold bars and real estate is good. Makes sleazy transactions painful and inefficient. Easier to track.


That demonetisation was a huge negative for the Indian economy is not up for debate anymore.

Your anecdotal accounts of people getting paid in advance count for nothing against the millions of people who didn't get paid for past work and the millions of people who didn't get work that was scheduled to happen because nobody could pay. Markets were deserted, no goods were selling. This shit went on for months. Everybody who actually lived in India during the time saw this happen.


My anecdotal evidence is not acceptable but your generalized statements (without even an anecdotal evidence) is acceptable?

I agree it was a shock to the system in the short term, and that it wasn’t as effective as everyone expected it to be. But it has certainly brought many many people into the tax fold. This means better tax compliance and more money available for infra.


I don't know if you know what constitutes 'evidence'. Saying you know a few people to whom it happened does not make it evidence of any sort. I also know people who stopped getting construction work, and shopkeepers who had dismal sales for months. Now is what I said backed by evidence?

Bringing people into the tax fold means nothing if most people are added to the bottom tier where they pay nothing or very little tax. The IT department does not have the resources to audit and pursue everyone who filed nominal taxes in the financial year following demonetisation and is now reporting income below the taxable threshold.

And growth in actual direct tax collection this year up to July 31 has been dismal.

https://www.business-standard.com/article/economy-policy/dir...

We'll soon see what the extension up to August 31 netted. Unless there is a miraculous jump in collections in August, the entire 'we ended up collecting more income tax because of demonetisation' shtick will have fallen flat.


>I personally know many who stashed illegal unaccounted money in gunny bags, and have suffered a blow to their wealth (as I wished)

I'm sorry, but the RBI data counters precisely this point.

As you know, 99.3% of the cash has returned. Almost no one suffered any blow to their wealth in terms of "losing cash stuffed in gunny bags" as per the RBI; it's all back.


I believe the current govt and RBI are being dishonest (probably for the good of the country) and are lying about the 99.3%, because there are enough strong rumors that the earlier regime resulted in unaccounted duplicate numbered currency notes. Which means, even if banks received more than 100% of genuine notes back, they cannot report it saying so.

And if that rumor is not true, then there is enough data to track how many in India became overnight lakhpatis (those with more than 100,000 in their account). Now if RBI has enough tech chops to crunch that data and keep an eye on it, they can easily find the top 1K or 10K evaders and go after them. Are they doing it? I'm not sure. But they have enough evidence in hand.


Do you have evidence of this kind of bias? This is a rather serious claim to throw around, given that you want us to not take these sources seriously.


As the data shows 99.3% of the cash returned. This doesn't include Grameen banks. So the number maybe more. Percentage of black money has increased. The amount of cash transactions with respect to digital transactions has also increased. Demonetization is a total disaster and I can't forgive Modi for making the country suffer like this and taking 100 lives for nothing.


Also does not include cash still in countries like Bhutan and Nepal.


Man, I don’t know about the damn thing itself, but all the Indian comments on the Internet have been close to conspiracy theory. Everyone is biased and telling lies, if we only listened to X y Z. Etc etc


The blind bhakti and zero empathy in your comment is astonishing.


Why say bhakti and not, for example, devotion (which is what bhakti means in Hindi).

Because bhakti is not an English word. And one of the things which congress followers mock is the use of local language, which is what the BJP leaders tend to use. After all, their own leaders usually struggle to speak any local language at all, being more comfortable in English, being mostly Cambridge and Oxford educated, or out of Doon school. Another St Stephen's alumnus, Mani Shankar Aiyar, famously called Modi a chaiwala. Modi of course, had very little education and is mostly self taught, not having been born with a silver spoon in his mouth.

So by using Hindi words in a mocking manner, the intention is to mock those leaders who use Hindi or other vernacular languages for communication. Whether this is a way to win hearts and minds remains to be seen.




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