500,1000 Rs Note no longer legal tender!!

[jackprince]

Congrats on wasting that money on stupid shit like a fucking pilgrimage!!

Keep your shit to you only. Your parents should have invested some money in rubbers to prevent birth of a baboon. or did they invest in cocain? Assholes like you are like embodiment of shit. wherever you go, your stink pollute that place. Fucking zombified asswipe with a black hole for a brain.

 

[Sakal Gharelu Ustad]

As usual trying to throw a monkey ranch.

Lending rates where 8.5% in 2012 since than it is downward spiral as current is less than 6.5%

1. Everyone knows which liquidity we are talking about. High liquidity that is not banked.

2. There are many factors that decides lending rates. Liquidity is just one factors and if you do not know Indian banks are already going through liquidity crunch for which they are asking RBI to lower percentage of LCR & CRR.

3. Bank credit growth is down for current fiscal year and before even when lending rates outside banking systems are up to 24%.

Liquidity crisis with banks and use of government bonds to fund infrastructure projects to push GPD high when 23 to 26% is domestic black money (unbanked) of our total GDP is a sign of sick economy.

This whole exercise has only one after effect to make people start using banks. There are already stats available of last 48 hours that banks are flooded with money.

It will not only bring the liquidity crisis of Banks down but will make banks start lending more to pump the economy which is so far being pushed on government money. Not to mention interest rates will go down further.

Adding late: Industry is calling for low intreast rates for ages. With liquidity crunch banks were not lending. The cardinal feature of last year's budget was focus on goverment spending by Modi for which many were skeptive about next steps to encourgae banks start lending. Here we go, within first 24 hours analysts started predicting more lending by banks on its way.

Regards

And 6.5% is too much liquidity? Your 3rd point only bolsters my point that there was not too much liquidity.

People are forced to go to banks to change, so obviously the amount of money with banks will increase for time being. But unles RBI specifically passes on money to the banks, their NPAs would not go down just by currency exchange. Currency exchange is not equal to increase in liquidity with banks.

 

[Ancient Indian]

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[Ancient Indian]

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[Sakal Gharelu Ustad]

Are you really serious ?

1. Dead stock of capital is being replenished as we speak. 2K note is issued to make it happen fast.

2. Investment will happen because that will be decided by market and demand. It is not halt of economic activity forever.

3. The capital gain was mainly due to rise of property price that was soon going to burst, this intervention has averted that free fall. Not to mention no lesson would have been learnt in that case.

4. That money never made to pump GDP in real sense but micro economic activity which no doubt worked like a buffer but to keep it as mainstream way of running market economy is a non-pragmatic, outdated and timid way of looking at it.

You do not understand basics here. So let me try once again.

There is 10 lakh black money with me which I would have used to set up a paper factory, but suddenly no one wants to take the cash I had as I have to exchange it. And since I do not have a way of showing how I earned it, I cannot go to the bank to get new 2k notes.

There are many businesses out there with this problem and who will go down under because all the cash they were sitting on and could have been invested is dead capital.

 

[Sakal Gharelu Ustad]

Which is why I was careful to qualify that the problem was not with the person who does not know modern tech, but with the person who does. I was careful to speak in retrospect - that the teaching should have happened long ago, since it cannot and should not be done overnight.



Black money feeds into the real economy - possibly. But usually it has a very bad kind of "feeding". Investment priorities get distorted. Inflationary pressures on essentials, especially middle-class housing, that most primal of needs.

The question that needs to be answered is, WHERE is this "investment" going? Land, gold, super-luxury goods (to some extent), and so on. Not to mention, criminality and the underworld, election "funding" (read "distribution"), etc.

If you agree that bank deposits will increase as a result of all this, there's your answer. Investment and lending will find its way to the right sectors and projects, through the right channels. Ergo, GDP increase.

Speaking of bank NPAs which you referred to in your other post. It is no coincidence that the largest NPAs are with the PSBs. That's where political and other extraneous pressure comes into play. Why do PSBs show highest NPAs consistently? Sub-optimal decision making occurs only due to external pressures. Banks know pretty well what to do and what not to. So yes, lending does happen to the most productive, in the absence of external influencing factors.

And why is it a problem even in retrospect?

She was fine without learning new tech and would be fine for the rest of her life as well.

 

[Sakal Gharelu Ustad]

Sir it is only for unaccounted money , if you have declared it then there is no problem

I know bhai.

All I am saying there is big amount of money(black) which people would have invested in viable businesses which they cannot now, because their stocks dried up over night. So, get ready to be hit by the repercussions there.

 

[Bangalorean]

And why is it a problem even in retrospect?

She was fine without learning new tech and would be fine for the rest of her life as well.

Unrelated to the original post and the individual in question here, just replying to your point in general.

The reason I recommend everyone to learn basic functions is for independence in times of emergency and such. It is one's own choice whether to teach/learn things like basic banking and stuff. This is what I told my own family, including my 83-year old grandmother. The 83-year old knows basic ATM usage. She also knows not to entertain calls from Delhi-NCR region pretending to be from "Visa Master service department" or "ATM service department" or "SBI head branch" or "RBI", asking for her card details and such.

This knowledge has helped on more than one occasion. I do not like elderly people keeping large amounts of cash at home. Mouth-watering target for the unscrupulous elements.

 

[Razor]

You do not understand basics here. So let me try once again.

There is 10 lakh black money with me which I would have used to set up a paper factory, but suddenly no one wants to take the cash I had as I have to exchange it. And since I do not have a way of showing how I earned it, I cannot go to the bank to get new 2k notes.

There are many businesses out there with this problem and who will go down under because all the cash they were sitting on and could have been invested is dead capital.

So the govt. knows that there are plenty of businesses which will find a part of their capital vanish and therefore that industry might take a hit.
So why did they go ahead with this? To stop terrorists? Will it work?
Please explain, thanks.

 

[Bangalorean]

Congrats on wasting that money on stupid shit like a fucking pilgrimage!!

Their choice, no? I would go so far as to say that it is better for the nation if they go on the "fucking pilgrimage" rather than to Paris or Singapore or Dubai for vacation. In the former case the money at least stays within the Indian economy.

 

[Bahamut]

I know bhai.

All I am saying there is big amount of money(black) which people would have invested in viable businesses which they cannot now, because their stocks dried up over night. So, get ready to be hit by the repercussions there.

Sir majority of the black money is not used in economical productive activity.They will used it ro buy property abroad and expensive item from abroad or may be trafficking.This will also bring a cashless economy which employs more people then cash economy

 

[Sakal Gharelu Ustad]

Unrelated to the original post and the individual in question here, just replying to your point in general.

The reason I recommend everyone to learn basic functions is for independence in times of emergency and such. It is one's own choice whether to teach/learn things like basic banking and stuff. This is what I told my own family, including my 83-year old grandmother. The 83-year old knows basic ATM usage. She also knows not to entertain calls from Delhi-NCR region pretending to be from "Visa Master service department" or "ATM service department" or "SBI head branch" or "RBI", asking for her card details and such.

This knowledge has helped on more than one occasion. I do not like elderly people keeping large amounts of cash at home. Mouth-watering target for the unscrupulous elements.

I get your points dude. I just wanted to make the point, don't be so harsh. It shows elitist side and increase blame game. Just like how western SJWs look down on everyone who does not agree with anyone.

 

[Sakal Gharelu Ustad]

Sir majority of the black money is not used in economical productive activity.They will used it ro buy property abroad and expensive item from abroad or may be trafficking.This will also bring a cashless economy which employs more people then cash economy

Who gives you these ideas man? Go out and look at any f**ing businessmen. No one gives a receipt, most use cash and do not use banks. I seriously don't know where you guys live and shop!!

 

[Razor]

This will also bring a cashless economy which employs more people then cash economy

What does this mean?..................

Also @Sakal Gharelu Ustad

 

[Sakal Gharelu Ustad]

So the govt. knows that there are plenty of businesses which will find a part of their capital vanish and therefore that industry might take a hit.
So why did they go ahead with this? To stop terrorists? Will it work?
Please explain, thanks.

I don't want Modi to turn into Mugabe, but that is where he seems to be going right now.

There are many ways to stop terrorists and taking out fake currency although appreciable but is not the only way, so I will leave it under debatable column. Yes, it will hit terror networks for 6-10 months but not too long unless you take out the nodes i.e. people.

Now coming to why Modi did it- upcoming elections is a big reason for it. They have dried up campaign finance of every other party in UP/Punjab. So, it is political master stroke in some way.

The whole hoopla on black money can be summarized here.

- If it is really big part of economy, then get ready to be hit by consequences.
- If it does not hit economy, then black money issue was not even big to start with.

read here: http://yugaparivartan.com/2016/11/10/currency-demonetization-is-a-bad-or-at-best-no-impact-idea/

Now given track record of governments for past 7 decades, you should not expect that they know magic and can carefully predict outcome of every policy. Remember, a lot of policies are decided by babus, who might/might not be the best people to frame policy. Also, they have their own agenda to run. Attack on black money is good for political optics.

Not going into unchartered territories, the big linchpins and underworld don't just operate in cash if the morons here think that will get hit by this move. The big political world and the dark alleys transact in gold, drugs, and human booties. So, their channels won't be impacted too much by this move. How BJP replaces the mid-level political financiers with its own is needed to be seen. The world is a big dark place and I do not want to spell all out. Rest you are smart.

 

[Bangalorean]

Who gives you these ideas man? Go out and look at any f**ing businessmen. No one gives a receipt, most use cash and do not use banks. I seriously don't know where you guys live and shop!!

Which brings me to an important question. Is this "correct" and should it be encouraged? Tax avoidance is the usual reason.

Which then leads me to an additional question about tax rates. Would you agree that India's current tax rates are more or less at par with most of the Western world and are not atrocious, unlike back in the 1980s?

 

[Sakal Gharelu Ustad]

Sir majority of the black money is not used in economical productive activity.They will used it ro buy property abroad and expensive item from abroad or may be trafficking.This will also bring a cashless economy which employs more people then cash economy

Who sold you this idea that cashless is utopia?

While notes are printed once and last 5-7 yrs without any problem, you need to pay 1-2% charge at each credit card point. It is efficiency loss for most small businesses who are better off transacting in cash.

Yes, cashless generates black money, but so what. It reflects the business is not viable given current rules. If for example a dhaba owner pays 5k while minimum wage is 10k, he can only do so with cash. So, cash economy is here to stay and it is efficient. If we go by your logic, half the businesses will shut down in India.

 

[Bangalorean]

- If it is really big part of economy, then get ready to be hit by consequences.

Yes it is, there there will be consequences.

I anticipate the consequences to be short-term, and the greater good will be served. That is my opinion. It will pay to be a "white business" transacting through formal banking etc. channels henceforth. There will be a big shift towards that direction.

 

[Sakal Gharelu Ustad]

Which brings me to an important question. Is this "correct" and should it be encouraged? Tax avoidance is the usual reason.

Which then leads me to an additional question about tax rates. Would you agree that India's current tax rates are more or less at par with most of the Western world and are not atrocious, unlike back in the 1980s?

We have lowest tax rates but there are additional costs which more than compensate.

In the ideal world, people should be allowed to pay whatever they want to the labor and employ at their own wish. Making economy formal and writing down rules is super inefficient. You need to give people 10k for 8hrs of work. Now in an informal world, you can get away with it. But not in formal world.

Look at half the problems in western world. Yes, they are nice people and follow rules, but a large part of their population is unemployed. You cannot pay less than 10$/hr and if you get caught your business is shut. Now the babus there do not take bribe but they shut down your business. Now such unseen and myriad forms of laws force people to shut down fairly legal businesses which they would have otherwise operated. Taxation is just one part of it.

This is how Indians survived the license raj because we bend the rules. If you formalize too much, we will be doomed. And unlike western nations who are productive and have rich businesses to pay for social security, our people will be stuck without jobs and without any govt assistance.

For at least next 2-3 decades we should not even think of forming any policy which forces formalization. If formal business helps someone, the businessmen will make it formal. Anyway above 10 employees you do not have option but to adhere to govt laws. I would even raise that number to 40-50 and let the economy boom. Yes, some people will be exploited as an end result, but I see it as lesser enemy because I prefer people to be employed and working 12hrs/day rather than being unemployed and waiting for MNREGA.

 

[Sakal Gharelu Ustad]

Yes it is, there there will be consequences.

I anticipate the consequences to be short-term, and the greater good will be served. That is my opinion. It will pay to be a "white business" transacting through formal banking etc. channels henceforth. There will be a big shift towards that direction.

White means going out of lot of business. It increases overhead cost and that is why a lot of businesses do not become formal in the first place because it is not worth the effort.

Consequences can be long term if Modi loses and we end up with next Congress Raj, only much more efficient at handing out doles through JanDhan. Congress will rejoice next time if it could just wire money efficiently to everyone thanks to Modi's effort.

And just about consequences of this move. Economy is interconnected and a bust of few months can prolong. You are smart enough, so let me ask you- why did US bail out so many banks post Lehmann and did not want its housing market to crash post 2008? Because it had industry wide consequences.

I am not saying it will be as big(I dont know actually), but given how I have seen businesses operate, you have sucked out liquidity. People will be without cash to spend and it will be deflationary, thus bringing down host of businesses along with it.

Ofcourse, the only way out will be either black money issue is small. Or trust the local bania to find a way around this demonetization exercise!!