500,1000 Rs Note no longer legal tender!!

[IndianHawk]

Are we forgetting some basic points.
We had to replace the notes anyway. So that we can introduce new notes which are more secure, less prone to counterfeit, less likely to be torn .

This was to be done anyway. Modi did it suddenly and caught hoarders of currency off guard .

Now regarding cashless economy the idea is to limit the supply of bigger denominations. Right now it was around 85% govt will aim to bring that down .
So that bigger transaction take place digitally .
That is a sensible step.

 

[Razor]

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!!

Are you a businessman or some kind of economist type guy??

 

[Sakal Gharelu Ustad]

@Bangalorean- here is your formal economy. See the dip in number of firms immediately around 10.

This is where govt rules kick in and this is a big reason why a large number of firms just do not expand or keep it black and informal!!

http://yugaparivartan.com/2016/02/21/make-in-india-myth-vs-reality/

 

[indiatester]

Lots of ATM's now dispensing cash. I have withdrawn 6k (3 cards ofcourse).
I hope things are improving at other places too.

 

[Sakal Gharelu Ustad]

Are you a businessman or some kind of economist type guy??

I am bubble busting guy!

I have read on these issues for very long now.

 

[Razor]

I am bubble busting guy!

I have read on these issues for very long now.

I meant to ask what you do; as in your profession?

 

[ezsasa]

How is liquidity sign of sick economy?

Btw, lending rates of RBI have been consistently above 8% for last 5-7 years, so how exactly is it high liquidity economy?

Maybe he meant liquidity in cash. .........

 

[Sakal Gharelu Ustad]

I meant to ask what you do; as in your profession?

Your regular coding guy with interest in economics.........................

 

[Sakal Gharelu Ustad]

Maybe he meant liquidity in cash. .........

There is no concept like that. Banks do not care whether you transact in cash or through wire. Either there is liquidity in economy or it is not.

 

[Razor]

Your regular coding guy with interest in economics.........................

You are a coder, wow.

I thought you were an MBA or some phd type guy.

 

[raheel besharam]

This is sad,....people like him are suffering by this decision. There are long queues in every bank & ATM where will people like him go?

 

[Bahamut]

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

Also @Sakal Gharelu Ustad

In a cashless economy one need to maintain the server and expert for cyber security .Also you need more data scientist to analyze the data and calculate tax.

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!!

Sir they use cash because it is difficult to trace , making it difficult for government to get a accurate accurate view of your income and then calculate Tax.This lead to less taxes on rich and more tax on poor reducing their buying power .The government gives tax breaks to rich people if they invest in infrastructure,economical or social work but instead they chose a illegal means and under report their income .The government cannot balance their budget and allocate money for development .If use a illegal mean to avoid pay taxes be ready for the consequences.

 

[Akshay_Fenix]

This is sad,....people like him are suffering by this decision. There are long queues in every bank & ATM where will people like him go?

Looks fake, even my local kirana store is accepting old cash.

 

[TheSeeker]

All the local shopkeepers in my area are accepting old cash.

 

[Sakal Gharelu Ustad]

In a cashless economy one need to maintain the server and expert for cyber security .Also you need more data scientist to analyze the data and calculate tax.

Sir they use cash because it is difficult to trace , making it difficult for government to get a accurate accurate view of your income and then calculate Tax.This lead to less taxes on rich and more tax on poor reducing their buying power .The government gives tax breaks to rich people if they invest in infrastructure,economical or social work but instead they chose a illegal means and under report their income .The government cannot balance their budget and allocate money for development .If use a illegal mean to avoid pay taxes be ready for the consequences.

Is your neighbourhood kirana guy Ambani?

 

[Bharat Ek Khoj]

This is sad,....people like him are suffering by this decision. There are long queues in every bank & ATM where will people like him go?

The account is a big g@ndu. While having license of making fun of everyone, itself can't stand a little pun.

 

[angeldude13]

All the local shopkeepers in my area are accepting old cash.

Where do you live? Nobody in delhi accepting old cash accept petrol pumps. I can't comment on hospitals since I haven't gone there. Even the medical store isn't accepting old cash.

 

[Bharat Ek Khoj]

Asked who are you? They said INDIANS

 

[Bahamut]

Is your neighbourhood kirana guy Ambani?

Sir both you and I know that India tax base is very small.We can replace our present progressive tax policy with a flat tax with a option of business to pay either on the net value or on the profit they have.We can also have tax reduce on the no of people being employed by the business with formal contract.It will encourage formal employment . The present government is reforming our economic policy we must change how we do business also.We have to reform our public bank and labor law but all if it will be useless if we do not expand our tax base .

 

[ezsasa]

There is no concept like that. Banks do not care whether you transact in cash or through wire. Either there is liquidity in economy or it is not.

Among many other definitions, Liquidity also defined as monetary means to buy what ever you need. There are two primary means now a days to buy things. Digital and cash. Digital economy is performing well limited by it's penetration, it the cash part which is getting effected.

This is my understanding of things, i don't mind being wrong.