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India's demonetisation of Rs. 500 and Rs. 1000 notes
- elango 10y agoThough it sounds like a bold move, it will not be a Richs to Rags story, most of undeclared wealth is already invested in Gold and Property (in proxy names). A lot of people having undeclared wealth are going to lose 1% to 5% their wealth (which had held as cash for liquidity), no big deal.
- MallikharjunP 10y agoHow many days other countries given their people for exchanging currency??
- Nanigirl 10y agoThis has nothing to do with paying taxes. I paid all my taxes and I bought Indian Rupee to take a trip to India and now my trip is a waste. I cannot go because my Rupee is no good and I cannot exchange it at Chase Bank where I bought the currency.
- gshakir 10y agoThis is interesting that is coming off following a tax evasion amnesty.
- joosters 10y agoCould someone fix the title, please? The notes aren't being made illegal, they are just ceasing to be legal tender. There's a big difference! Right now, the title is clickbait.
- calvinbhai 10y agoI thought the same too. But in layman's terms, both are same.
- ghostly_s 10y agoNo. You're not going to go to jail or be fined for possession of these notes. They're just going to be valueless.
- dingo_bat 10y agoBut they are illegal to use for any monetary transaction. I read it like that.
- pritambaral 10y agoNo. Using an arbitrary piece of paper for a transaction isn't illegal, is it? If two individuals in India agree to an exchange of goods, but with USD instead of INR, that isn't illegal, is it? It's just that whoever received that amount in USD can't deposit it in an Indian bank; not without converting it into INR in the first place, at which point they're effectively depositing INR. Replace USD above with any paper currency, or non-currency paper for that matter. If you have someone willing to take a piece of paper from you in return for something, there, you have a transaction. It's just that, the other person would be unwise to accept a piece of paper they can't put to use. A ₹1000 note being "not legal tender" simply means that no Indian bank will accept it being worth one thousand INR. If someone wants to accept such notes in return for anything, they can; they just can't deposit it in an Indian bank (after December 30). A ₹1000 note being "illegal" would mean that it would be a crime to possess, offer, exchange, display, disperse, aerosolize, or apply some other action or combination of actions to it that isn't otherwise illegal already. And that, is not the case.
- supersan 10y agoThis is a great move. Though I only hope that depositing whatever money you have is easy because all I can imagine now is kilometer long lines at every bank
- hyperion2010 10y agoStrange part about this is that they are going to issue new 500 and 2000 notes as per > 8:32 pm: A new series of Rs. 500 currency notes and Rs. 2000 currency notes will be brought into circulation. Pulling current notes I can understand, but the problem is that the denomination allows people to move lots of money in a minimal amount of space, so replacing them isn't really solving the problem.
- h43k3r 10y agoIt is. To get new notes, you will have to submit the old notes to the bank. In that case, you will have to declare the money to the Income Tax department. And if the sum is huge, a criminal enquiry will be started by IT department. Also this will at once curb all the fake note issues.
- puddintane 10y agoI wonder how long till the new format is duplicated?
- aub3bhat 10y agoThe duplication is a minor concern the major concern is lost income tax revenue due to an underground cash economy. By restricting numbet of 500 and 2000 notes and forcing owner declare assets it put massive pressure on the black money.
- taherchhabra 10y agoThe big ticket black money is in swiss accounts,real estate and gold.
- pharke 10y agoIsn't this exactly the issue addressed by money laundering? Would this not simply force a large number of people into dealing with organisations or individuals who can convert their existing stockpile of (no longer valuable) cash into a smaller pile of cash that still has buying power? A naive approach would be to 'hire' a large number of people to cash in amounts of notes that would be just under the level considered suspect by promising them a cut of the exchanged money. I'm sure there are existing criminal networks that could achieve such schemes (or better thought out ones) within the window of Nov 10 to Dec 30.
- h43k3r 10y agoFor international readers: Rs 500 and Rs 1000 are the highest denominations notes in India. Other available denominations are Rs 100, 50, 20, 10. This is such a major move to curb black money in the history of Indian Politics and Economy
- uiri 10y ago1 USD is ~Rs 66. That is a staggering difference in purchasing power! I would guess that the only note in the US with a similar reputation which is still issued would be the $100. Notes larger than this ($500, $1000, $5000, and $10 000) have been discontinued since 1946 and actively destroyed by the Federal Reserve since 1969. Isn't there a concern that those who were using these high denomination notes just switching to other currencies? Bhutan has a currency that is pegged 1:1 with the Indian Rupee and will (presumably) still issue Rs 500 and Rs 1000 notes. Sri Lanka is another possible candidate; and of course there are the standard global reserve currencies - the US dollar and the Euro - whose notes worth over Rs 1000 are relatively common place.
- drl42 10y agoThey are introducing new Rs 500 and Rs 2000 notes and they are going to control the circulation of these new notes
- somethingsright 10y agoThe circulation of new notes will have to be controlled because there will be a limited notes in circulation for some time. The distribution problem has to be solved to ensure everybody have enough notes for daily activities. It would be interesting to see how the notes make it to all the bank branches and ATMs in the next two days and beyond. ATMs are unavailable for 2 days, bank branches for 1 day.
- sandGorgon 10y agoThe consumption market is India. The terrorism target and hawala money laundering targets are India. You destroy the market...the support structure will fall in line.
- neximo64 10y agoWhat about people not in India with a few 1000 rupee notes lying around, those are valueless for good? I have 2 notes. Wont the funds be effectively destroyed and removed from circulation, for those who don't put their cash in the bank by the end of next month. Wont this have deflationary consequences?
- CydeWeys 10y ago2,000 rupees is 30 USD at today's exchange rate. I don't see why you wouldn't be able to exchange them at a money changer wherever you happen to be now, but for that amount it may well not be worth it.
- sjf 10y agoThe rupee is a closed currency, the OP was never permitted to take the notes of the country in the first place, so there is no way to change them.
- jstanley 10y agoYou effectively removed the money from circulation as soon as you took them out of India anyway. It won't make a lot of difference.
- deleted 10y ago[deleted]
- manojlds 10y agoSome programmer humour - https://twitter.com/manojlds/status/796012773373161472 https://twitter.com/manojlds/status/796012773373161472
- ben010783 10y agoHa! Took me a minute to get that.
- ing33k 10y agogood one :D
- ableal 10y agoI get the impression that naming things is also going well ;-)
- stillworks 10y agoOk, clever... but I think it's effectively more like "Reclaiming leaked cash" than plain "cash invalidation".
- ramshanker 10y agoI just love Modi Ji's deadlines. Always do it NOW mode. :)
- callahad 10y agoDoh! I was in India earlier this year and forgot to change currencies on the way out. Any ideas for a US national holding 9 of the Rs500 notes?
- manojlds 10y agoMay be they will arrange something at an embassy.
- ncallaway 10y agoFind a large currency exchange in the US and trade them for USD?
- th0br0 10y agoNo can do. You're officially not allowed to remove rupees from India as far as I know: http://timesofindia.indiatimes.com/business/india-business/NRIs-foreigners-cant-leave-with-rupee/articleshow/22679752.cms http://timesofindia.indiatimes.com/business/india-business/N...
- callmeal 10y agoThat article is from 2013. They changed the law in 2014 - you're allowed to carry up to Rs 25000 out of the country.
- phhlho 10y agoSame problem! I always hold some rupee notes so I have some cash on hand until I get to my hotel. My plan is to find a co-worker travelling there over the holidays and give them a good exchange rate to cash them in.
- kc10 10y agoYou should be able to exchange it at currency exchange places like travelex.
- callmeal 10y agoIf you can make a visit by Dec 31, you can get them exchanged at a bank or post office. You may need an account. Details of exchange are not clear.
- sidcool 10y agoIndia has faced menace of fake money and black money hoarders. Good move. I will bear the inconvenience for better governance.
- nish1500 10y agoI grew up in a tier-2 city in India, and the amount of black money rich people hoard around here is of ginormous proportions. Easily > 50% of the income for most rich folks. Can't wait to see how this unfolds.
- umeshunni 10y agoHow do they hoard this money? As cash?
- shas3 10y agoCash, money-laundering, sketchy real estate transactions (Benami- transactions under fake names), informal banking (hawala), the same as in most places in the world. Think early mafiosi in the US. The most significant legislative actions for curbing these are: Benami and Hawala legislations, computerization of land records in the late 90s and early 2000s, PAN numbers in the 90s and Aadhar in the last few years (a bit like SSN in the US), and the OP.
- ramshanker 10y agoTonight, Americans counting Votes. Indian counting Notes.
- pksadiq 10y agoWhat a nice trick! This news shall get dominated at several countries over the US election news.
- leafee 10y ago(I'm watching the news live in New Delhi right now). The move is being pitched as an attack against 'black money' and terrorist/criminal activities and counterfeit . The idea is if you have very large sums of money stashed away in cash, you're now forced to deposit it into a bank and reveal it. If you're not comfortable doing that, you're basically going to lose your money.
- hash-set 10y agoThere is always some rationale that involves bad actors. Then you peel back the layers of the onion and find out the government just wants to screw regular people out of whatever.
- TallGuyShort 10y agoI don't disagree with your premise, but in this case, how can this screw regular people? If someone has chosen to store a lot of their money as cash instead of in a bank and doesn't know about this, I can see that. Am I missing something else?
- witty_username 10y agoRegular people will have to exchange/deposit the notes, which will cause some inconvenience. But I think it's well worth the benefits to society as a whole.
- gautamdivgi 10y agoNot sure if they will do this during the exchange, but technically you can attach your Aadhaar ID to the exchanged sums. That means in one swoop they know who has how much money...
- babyrainbow 10y agoI am not an expert. But may be, it is only the small time tax evaders that store black money in local currency...So if someone has stashed away his lives savings in a stack of 1000 Rupee notes, this move will force them to pay taxes. Nothing is still being done to deal with really big fishes. The ones who can really make a difference. So as usual, it is the middle class and lower that are being forced to pay, while the upper and elite classes still given a pass and the government earns good name in the process.. Rich and powerful still wins. It is business as usual..
- billy8988 10y agoIt is hardly going to fix the black money problem. Rich people have so many employees to do the bank run for them. Within the next month, you will see a huge spike in real estate market. People with black money will dump it in the real estate market. (If you are not an Indian, this is how it works. You buy an apartment/home/building for the amount X. But you declare it to the government that you bought it for X/10. The guy who sold it now has the black money which he can reinvest or based on his income level, can deposit in the bank. If he is a farmer, he can pretty much claim it as agricultural income and pay no taxes). So, basically, black money will trickle down rapidly in the next month or so.
- shubhamjain 10y agoI am not sure how that will work out if the denomination itself has been declared illegitimate. Why would anyone accept 'black money' of any kind if he can't spend it elsewhere?
- hypothesist 10y agoYes, but unless you are finishing the deal tonight, all those note will become useless. Nobody is going to accept the notes in a transaction except the bank - and if you go there with your undisclosed income, the income tax department will be right on your tails.
- aub3bhat 10y ago"Dumping in real estate" will require the seller to "convert" that money which isn't trivial, keep in mind the seller himself would be trying his best to get it converted. Will it completely solve the black money, probably not, but at least it is the biggest step towards any kind of a solution in future.
- gnipgnip 10y agoLet me throw some Zerohedge-like news into the mix. i) Indian Banks are being setup for a collapse. ii) India is being setup as a prototype cashless big-brother-esque society (what with UIDAI and all). Paranoia, yes, but well-worth it to keep in the back of the head.
- aub3bhat 10y agoThis is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged), however for anyone holding large number of notes, the value has been significantly lowered by approximately ~10 to 20% consider when the money gets deposited, there would be an income tax due on it. Modi received a lot of flak not doing anything about black money and corruption after getting elected in spite of promises before the election. Bust as this move shows, he has taken the bold step, and can go for an election in 2019 without worrying. To make it even simpler: Assume that people in USA used 100$ notes (hard to hoard 20$ notes) to skip paying income tax (but mostly real estate transaction tax) and dealt in cash, by declaring 100$ notes as illegal tender and forcing them to be exchanged for new 50$ and 200$ notes. The government can ensure that this money is deposited or converted in banks. Ensuring that all "fake" 100$ notes are caught / lose value and people hoarding cash to skip paying income tax are forced to put the money in circulation. Otherwise come December 31st the value of the notes is same as piece of paper they are printed on.
- parennoob 10y agoI agree, this is a good first move to get black money that is stored as cash out and taxed. Some forms that still remain are: * Gold * Money funneled into "agricultural income" (which is tax free) * Large properties in metros that are bought and left empty (which raises rates sky-high for ordinary middle class people trying to buy a house there) However, this move is brilliant in that it removes cash as an intermediary for these transactions, i.e. if a builder is demanding Rs. 50,00,000 for a house "above the table" + Rs. 30,00,000 cash (which he won't declare), then that extra 30,00,000 becomes useless as of 31 Dec.
- mohanmcgeek 10y agoThe extra becomes useless starting tonight.
- NikhilVerma 10y agoI am personally not sure about the impact of this. I am hoping it will bring some positive change, Indians do have a habit of hoarding huge amounts of cash. It's not something specific to "black money hoarders". Anyway I pity the bank employees for the coming few weeks!
- guruparan18 10y agoInteresting no mention about gold, land or other valuables. This hits hard on the middle class who were holding money. Then there are ultra rich, for whom may be they are holding anywhere between 0%~30% of their black money in cash, others in other investments. For them, this is not a big issue.
- lazyant 10y agohttp://www.nytimes.com/2016/05/05/business/international/ecb-to-remove-500-bill-the-bin-laden-bank-note-criminals.html http://www.nytimes.com/2016/05/05/business/international/ecb...
- sidcool 10y agoAll black money and hoarders will cry to sleep today.
- dx034 10y agoOr quickly buy real estate/gold/farm land above market value. The seller declares the money and pays the tax, the buyer successfully legalized it.
- Scirra_Tom 10y agoA lot of that will probably be subject to corporation tax. Government still gets a nice boost.
- dx034 10y agoDefinitely! I don't doubt that and like the move. But I don't think anyone will be charged with corruption or tax evasion because of it. But I'm not from India, so pure speculation.
- leafee 10y agoNot so easy. If I buy something for $1 million, I'm going to have to account for the source of that money.
- sudhirj 10y agoNope. When the seller deposits the money, they'll have to declare sources, including the PAN number of the buyer.
- puva 10y agoI don't think There will be any positive change but the businessmen will suffer as think how will they run thier shop as some shops are costly ones
- blackoil 10y agoYou have to deposit all these notes in your bank account, from which you can get new notes. Anyone hoarding huge amount of black money in cash can't go to bank with it, and his money will turn worthless. Diluting such money will easily erode 20-40% value. So definitely a bold move.
- dx034 10y agoThey'll probably buy houses above market value. The seller can declare the money and pay taxes on it. The houses can be sold again one by one over the next years and the money legalized. Basically an easy way of laundering it. Still good for the state as the money is taxed.
- deleted 10y ago[deleted]
- ohyes 10y agoHe can still go to the bank with it, assuming it is legally obtained, would have to pay income tax, however.
- dump121 10y agoif it is accrued over years, they'll have to pay some percentage as penalty over the regular tax rate.
- dragonsh 10y agoThis is a strategy copied from China. They did same in 1970-80's. Funny part is this is trying to get money from within Indian economy and wasting on govt and pet projects. The promise to re-patriate black money stashed outside India nowhere in sight. China bring in fugitives and money back even from official who took US citizenship. Modi can just dream of it and take money from hardworking Indians living in India. Populist measure to increase vote bank and divert attention from original promise to bring back black money from abroad to India.
- leafee 10y ago> This is a strategy copied from China. They did same in 1970-80's. Citation needed.
- guard-of-terra 10y agoUSSR did that quite a few times. They'll invalidate existing bills and you would only be able to exchange a few of those. Do this enough times and people will rightfully call the local currency "wooden", and switch to USD for any large transactions. https://en.wikipedia.org/wiki/Monetary_reform_in_the_Soviet_Union,_1991 https://en.wikipedia.org/wiki/Monetary_reform_in_the_Soviet_... Rouble also became worthless in the following years, Venezuela-style. Accompanied by Venezuela-like poverty.
- atxcrab 10y agoIndia did this once already . 1978 - all denominations gt than 100 INR were demonetised
- solutionyogi 10y agoI am originally from India, living in NYC for last 10 years. Black money is a major problem in India, it's directly fueling This is an ingenious way to handle the problem at its root. I don't know how Government is going to handle this transition in a country as big and diverse as India. Personally, I prefer the rip-off-the-band-aid approach. The only thing I disagree with is the ATM daily/weekly withdrawal limit (10,000Rs/20,000Rs). I think this withdrawal limit is too low and would inconvenience lot of folks. I am not even sure what these low withdrawal limits are supposed to achieve.
- activatedgeek 10y agoYou always have the option of cheques, plastic cards and electronic transfers. Anybody who wants larger amount of cash I am sure they have a bank account and can accept payments via that mode as well for the time being. If they can't, then well boy, they were already defaulters.
- mkagenius 10y ago> I think this withdrawal limit is too low and would inconvenience lot of folks Yup. If someone needs to pay for medical emergencies, they will suddenly have to ask for help from lot of people.
- yummyfajitas 10y agoOr use a credit card. When I had my back surgery a few years back, I just swiped for 1.2 lac. Of course, most people don't have a CC with that high a limit...
- mkagenius 10y ago> Of course, most people don't have a CC with that high a limit In India, no body has a CC, even debit card is only 22%
- KumarAseem 10y ago
- unethical_ban 10y agoWhat if people just keep accepting it, just not through formal banks? Paper money is worth what people think it's worth. If some money/object moves outside the banks anyway, perhaps it won't be completely worthless.
- solutionyogi 10y agoThe deadline to exchange the current currency is through March 2017. I am sure there will be folks who would accept the old currencies at discount if they think they can get it exchanged at the bank without getting Government scrutiny. However, this will only work if you have small amount of black money. There are rich folks in India who have millions of Rupees in black currency and there is no way they will be able convert all that cash without declaring it and paying tax on it.
- activatedgeek 10y agoWell, people won't be stupid enough to keep accepting it. They need to pay tax at the end of the day. They need to move along with the economy. Unless you can mobilize 1.2 billion people to not accept this, which probably breaks down the whole economy itself.
- jogjayr 10y agoThat's a reasonable question. It's possible the 500 and 1000 notes will be relegated to large, all-cash transactions where the goal is to avoid taxes. But I imagine that some amount of osmosis will _have_ to take place. You can't buy food or pay for gas with a 500 note after all; probably any businesses found accepting them would face charges. And if you can't use them for anything except real-estate purchases and the like then their value is going to decrease over time. The number of 500/1000 notes will asymptotically approach zero over time as they get converted through official or unofficial channels.
- pattisapu 10y agoSome American economists have proposed doing something similar for large dollar bills: http://www.wsj.com/articles/the-sinister-side-of-cash-1472137692 http://www.wsj.com/articles/the-sinister-side-of-cash-147213...
- wyager 10y agoRegardless of how this might help with "black money" (which seems to be a bit of an overhyped political bogeyman), any attempt to decrease the value or purview of cash is bad news for human rights. When all legal money is in government-controlled banks, you open up the door to all sorts of nastiness including political account freezes, government theft of funds, forced negative interest rates, etc. I personally have had my account frozen and had money taken by lien due to a paperwork mistake at the state comptroller's office. It took a few days for them to fix, and Wells Fargo charged me "legal fees" I never got back, so I have a dim view of any government action that makes the use of cash less convenient, less liquid, or less legal. In light of this news, I imagine many Indians will stop trusting Rupees as much and might just start preferring to transact in USD or something.
- witty_username 10y ago> Regardless of how this might help with "black money" (which seems to be a bit of an overhyped political bogeyman) Why is it a bogeyman? Have you researched the situation in India? It's very different from the U.S. > I have a dim view of any government action that makes the use of cash less convenient, less liquid, or less legal. The government will introduce new 500 and 2000 Rs notes. > forced negative interest rates How is it forced? You can still keep cash under your matress. > In light of this news, I imagine many Indians will stop trusting Rupees as much and might just start preferring to transact in USD or something. What? This is way too far fetched.
- wyager 10y agoYes, I've done some (admittedly shallow) research on the prevalence and effect of black money, and the impression I got was that it's like "money laundering" in America; actually not that significant or deleterious, but a convenient political talking point. > The government will introduce new 500 and 2000 Rs notes. Arbitrarily downgrading existing notes makes the currency both less convenient and less liquid (and, I forgot, less fungible). > How is it forced? You can still keep cash under your matress. For now, yes. I was referring to the war on cash in general. > What? This is way too far fetched. We now have reason to believe they might pull this trick again in the future with the new notes. A rational person would therefore assign a lower value to the new notes than their nominal "face value" before the government devalued the old notes.
- hash-set 10y agoI am not at all comfortable with the elimination of paper currency no matter what the rationale proffered by politicians and government hacks. Control of people from the top down is an ever present risk and cash money has a strong offsetting influence to the nefarious plans of would-be dictators. Put another way: Government is not benevolent and never can be. We should all be very careful.
- activatedgeek 10y agoWho's eliminating paper currency?
- hash-set 10y agoOh, I don't know, in the past 12 months I have read numerous articles floated as trial balloons for the Euro, the USD, and others. India is creating a specie exchange in order to gain a tax foothold.
- fmihaila 10y ago> I am not at all comfortable with the elimination of paper currency Then it's a good thing that paper currency is not being eliminated. Cash continues to be legal. Some banknotes are eliminated, and new ones are introduced.
- hash-set 10y agoI came back to rub it in your face--they are in fact eliminating the higher denomination bank notes. It is a global ploy to support an agenda that has not yet been revealed.
- ronzensci 10y agoThere are 16.5 billion notes of Rs. 500 denomination & 6.7 billion notes of Rs. 1000. This is going to be a humongous recall exercise.
- ak39 10y agoGood. Now get rid of the crore and lakh "decimal" craziness.
- atxcrab 10y agonot sure about economics , but is NGC proposed ( Nano GPS Chips) a privacy concern?
- pritambaral 10y ago> NGC proposed ( Nano GPS Chips) Such a thing is neither possible nor wise, and thus, doesn't exist. Where did you get something like this from? Check your sources.
- atxcrab 10y agoah thanks - turns out to be a hoax - http://trak.in/tags/business/2016/11/08/rupees-2000-currency-note-circulation-hoax/ http://trak.in/tags/business/2016/11/08/rupees-2000-currency... shouldve thought abt that first :)
- sudhirj 10y agoAs luck would have it, I've recently started work on https://tillbill.in https://tillbill.in - kept thinking it would be great to have an easy way for individuals and small businesses to run the work cashless.
- sandeshd 10y agoI never thought any politician can make such decision. Modi just made something really big announcement for making India much better than we guys can imagine. I love this move.
- sn41 10y agoThis is quite big. An expert says that 87 percent of all of India's cash reserve is in 500 and 1000 Rupee notes. It might reduce black money. In any case, the next few weeks are going to be interesting. Almost an emergency atmosphere right now in front of ATMs at 11 pm in the night.
- naveen99 10y agocash has always been a hot potato, particularly in india, due to high inflation. the elephant in the room remains real property registration / valuation / tax reform. only a matter of time. This is one of the silver lining's of the modern surveillance state.
- Ar-Curunir 10y agoEh? What does this have to do with surveillance?
- codeisawesome 10y agoSeriously? Tracking every transaction gives a complete illumination of every individual's life to any government.
- Ar-Curunir 10y agoThis is not tracking any transactions, though? What the cash does once it's out in the wild is not known to the govt.
- naveen99 10y agoYes, but now government is calling back all the cash in the wild. I think they are planning to write down who has how much when they bring it in, I believe in a ledger called a bank account.
- captn3m0 10y agoTo throw the startup scene into the mix: FinTech companies are celebrating this right now: >Keep the money digital. Superb step by our dear PM @narendramodi From a bit inconvenience to incredible bold step ! #win # - Vijay Shekhar, founder paytm. Being seen as a strong move towards cashless India.
- pksadiq 10y agoHN seems to push this link down the first page. The link above[0] this was posted 5 (2hours for this) hours back, and have 146 (197 for this) points and 60 (108 for this) comments. How can that be? How does HN actually work? [0] https://news.ycombinator.com/item?id=12894192 https://news.ycombinator.com/item?id=12894192
- deleted 10y ago[deleted]
- ramshanker 10y agoThe fun has began. Suddenly there are more vehicles roaming around late night than usual. Big Bazars are open even past 11:00 PM which used to close at 9:00 PM daily. Tried withdrawing Rs 100 Notes from all the ATMs in the neighborhood but other people got there first. Now ATMs are left with only Rs 500 and Rs 1000 denominations. :D
- ijafri 10y agoStrange, in Pakistan it's the opposite Govt issued Rs. 5000 note which is equal to INR 3171 because otherwise people were using USD 100 bills .... and only making USD stronger locally.. I still don't get how they are going to keep big guys from keeping USD $100 ... I would keep an eye on USD vs INR in coming weeks
- dingo_bat 10y agoIn India USD is worthless. I don't know why people would use other country's money unless their own economy is under heavy stress like Zimbabwe or Colombia.
- yummyfajitas 10y agoThis isn't true at all. You can't buy an auto ride, but USD and Euro are used as reserve currencies. If nothing else, inflation is significantly lower than for rs. A surprising number of people have asked me if they could change their black money with me for dollars at favorable rates.
- dingo_bat 10y agoCan you use USD as currency in India? I haven't seen a single place that would accept that.
- yummyfajitas 10y agoYou can't buy regular items (e.g. a dosa) with USD except maybe at the airport. From what I'm told, USD is sometimes on the table as currency in black money transactions. I don't know the specific mechanics of it - I'm a firang with no black money.
- 0xmohit 10y agoYes, they do accept USD at the airports. I've even seen a restaurant at a local airport where they refused to accept INR.
- titomc 10y agoAll the black money is in gold, dollars & euro ! or at the swiss banks. This is not going to smoke out the big players in this game.
- calvinbhai 10y agoyou are thoroughly underestimating how many notes are stashed in homes, under the beds, in the walls, in the water tanks and attics.
- alimbada 10y agoYour comment reminds me of this: https://media.giphy.com/media/3o7ZeC2C6WBLzdwAQE/giphy.gif https://media.giphy.com/media/3o7ZeC2C6WBLzdwAQE/giphy.gif
- abraham_s 10y ago500 and 1000 Ruppee note cease to be legal tender as of today midnight. Everyone who has them can get it exchanged for 100 ruppee notes in banks,post offices etc until Dec 31. You need to provide a valid id to do an exchange, which means that the transaction will be traceable and Income Tax department (Indian version of IRS) will be matching them to declared income. ATM and banks are closed for the next couple of days. Essentially people hoarding black money in 500 and 1000 ruppee denomination will be stuck with this money as they can't exchange them. (money obtained via undeclared/not-taxed transactions. One common method is show a lower amount in the legal documents. For example show that land/house is being purchased for 100K$ on documents while paying say 300K $ thereby evading tax on 200K $, but with the side effect making 200K$ black money). This is also slow down spread of fake currency in the country. (Only temporarily until fake of the new notes are created). Having lived in India for most of my life makes me take a slightly pessimistic view of this measure + Small scale hoarders of black money will be affected by this move. + Once you cross a certain wealth, hoarding cash is impractical, so you start investing in land,gold etc. Those people will not be affected by this measure. + Average citizen will be inconvenienced. I can see the long lines forming at the banks for the new few days as people scramble to get the notes changed. Not to mention people who are travelling etc, who might be having no money except for the discontinued notes and no way to get more money for the next two days. + There will be attempts to circumvent this. I guess there will offers of "exchange x amount and get y % of it" given to middle to low income people in the coming days. But it is hard to scale this, so it wont affect the efficacy of the measure. + I have a hard time believing that the people close to the current Prime Minister / Government didn't know this was going to happen. (If this measure wasn't carefully planned not to affect "friends" of the current administration(look up Adani Group), I would be greatly surprised and will change my opinion about the current Prime Minister) edit: added one bullet point
- rm2889 10y agoAll those trees. Sniff.
- yomritoyj 10y agoMy sense is that this is mostly a gimmick as far as curbing the illegal economy is concerned. (1) Illegal cash is a fraction of illegal income which is a fraction of illegal wealth. Destroying a further fraction of that cash will not be a huge setback to the illegal economy. (2) Some (and perhaps a lot) of the illegal cash will get laundered through family and friends and deposits by businesses which operate in cash and do not have to keep detailed accounts (3) This is a game that you can play only once. Once people know that such currency 'reforms' are possible, illegal transactions will move to alternatives to domestic currency. Dollarisation of the Indian illegal economy is one possibility.
- ChuckMcM 10y agoI hope this move is successful, it is one of the few ways in which a government can force cash out from under the mattress[1] and back into the system. It is also why the US government gets really twitchy around systems of currency that it can't easily monitor, whether it is bitcoin or detergent[2]. It is a temporary fix of course, the question of why the market forces allow the black market trade to exist are the real questions that need to be answered. [1] "Under the mattress" being the euphemism for holding on to your cash instead of putting it into a bank. [2] http://www.theatlantic.com/business/archive/2012/03/why-are-criminals-stealing-tide-detergent-and-using-it-for-money/254631/ http://www.theatlantic.com/business/archive/2012/03/why-are-...
- rm2889 10y agoWhile this sounds great on face value, I doubt this'll solve the root of the problem. Why did we have so much black money in India? Coz people didn't want to pay taxes. Why didn't people want to pay taxes? Because they got nothing in return. Governments (esp Indian) have been historically self serving and power hungry. Tax money is usually either lost by PSUs loaning to the Mallyas of the world or other corrupt bullshit (overpaying for public infra, raw materials - contracts going to the highest briber etc.) So unless that changes (more difficult than logistically declaring pieces of paper illegal), maybe people will start hoarding other stores of value in the future and figure out other ways to evade taxes. Am I being too cynical?
- deleted 10y ago[deleted]
- intended 10y agoHey it's you! there's quite a bit that has been achieved by successive Indian govts on shoe string budgets. We've had the green and white revolutions, the IITs and other edu programs, large medical programs, ISRO (and the sensing tech that comes with it). This is from a once impoverished country which later had to deal with the fallout of weaker institutions, brain drain and corruption/dacoity/booth capturing and a whole host of problems that include terrorism and war. Post 1991, once the economy improved there's been significant improvement in out fortunes/tax kitty allowing for many other improvements (not to mention economic freedom). This argument comes up very often, even in other countries and its spurious on the facts (Indian facts above), and on the logic - taxation is not a choice. Don't forget it's a chicken and egg issue as well - without funding you don't get services, which makes you blame the govt and not want to give them more funding.
- rm2889 10y agoHmm as much as I'd like to agree with you, don't think its necessarily spurious on the facts. https://en.wikipedia.org/wiki/Corruption_in_India https://en.wikipedia.org/wiki/Corruption_in_India From another perspective, the Rs 1000 note was demonetized in 1978 as well to curb unaccounted money. More than 30 years later, we've had to do it again because the underlying problem wasn't solved. https://en.wikipedia.org/wiki/Indian_1000-rupee_note https://en.wikipedia.org/wiki/Indian_1000-rupee_note Maybe this time it'll work. Time will tell.
- Nano2rad 10y agoFighting illegal black economy is fine, but withdrawal of notes is not for that. There are other hidden agenda to this. RBI cannot go back from its promise of providing the value of the currency. This is psychological experimentation. Today Rs. 500 is withdrawn, tomorrow all currency could be withdrawn. This trying to deploy state power but without bearing any fair cost
- aanchal_ 10y agoNo, to whoever thinks that one will be able to buy gold or property with their black money because the seller will have declare where the money came from even if he pays taxes and will lead to the guy with the stash who won't be able to explain it.
- aanchal_ 10y agoUmmm, no, you can't buy gold or property either with the money now because even if the seller pays taxes he had to declare where the money came from and how would that get explained
- aanchal_ 10y agoUmmm, no, you can't buy gold or property either with the money now because even if the seller pays taxes he had to declare where the money came from and how would that get explained
- overcast 10y agoAww man, I just lost $15 USD worth!
- owaislone 10y agoMaster stroke by the government by introducing 2000 Rupee note without even talking about the inflation and an economy that is in ruins. Good one time move against a subset of corruption and counterfeiting while getting away with not having to answer any questions about bad economic conditions. I for one hope this leads more people paying taxes even if in the short term so the Government can consider lowering taxes for the middle class.
- anuraj 10y agoOne of the most idiotic decisions ever - just wait and watch the anger on the streets in the coming days. India is not ready to be a cashless economy - it is eons away with its illiterate masses.
- dvndvn 10y agoWho said India will become cashless? Illiterate and poor masses don't have to worry about how to transact in electronic money. They can happily have cash, whatever little amount they have and enjoy just like they are doing today. Its just the elite goons that will have trouble.
- anuraj 10y agoYou clearly don't understand the implication - wait and watch
- nileshtrivedi 10y agoIt's not about going cashless at all. New notes for 500 Rs and 2000 Rs are coming soon. Read: http://capitalmind.in/2016/11/black-money-is-dead-long-live-black-money-the-5001000-rs-note-ban/ http://capitalmind.in/2016/11/black-money-is-dead-long-live-...
- anupshinde 10y agoBlack money and such a large parallel economy had become a big problem. And like it or not, we were being forced to stay a part of it while trying to get out of it. This sudden demonetisation has not curbed the problem, but it has hit a RESET switch on the parallel economy (black money). That is great news. First, people will not want to lose their money and this will result in huge tax-inflows. Second, some people will get prosecuted for tax evasion - sending a strong signal. High tax rates will still drive a small percentage of people to evade taxes. But upgraded technology will delay recurrence of large scale black money problem, probably for decades to come. Long queues at ATMs and petrol(gas)-stations. I thought it could turn into an anarchy kind of situation. But most people feel happy about this inconvenient but necessary decision.
- jpatokal 10y agoBurma (Myanmar) has done this several times for the same declared reason, but with a batshit insane dictator with a predilection for numerology, so their demonetisations went like this: 1985: 50 and 100 kyat notes demonetized, replaced by 15, 35 and 75 kyat notes. 1987: 25, 35 and 75 kyat noted demonetized, replaced by 45 and 90 kyat notes. https://en.wikipedia.org/wiki/Burmese_kyat#1972-1988 https://en.wikipedia.org/wiki/Burmese_kyat#1972-1988
- lprasath007 10y agoI guess Indian Economy is going to grow and will be controlled well...
- lprasath007 10y agoIndian Economy is going to be Increased well
- gshakir 10y agoThis has downstream implications on: 1) Voting and democracy. No one can easily buy off votes for Rs.500 or Rs.1000. 2) Real estate transactions. 3) Gold transactions. Now I bet you cannot sell off gold that easily as you would not be given cash in return.
- LoudTechie 10y agoThis action can boost-up bitcoins in Indian market now.
- ambalal 10y agoCan somebody help me here? I am outside India with some cash in 500 and 1000 notes which I keep for immediate use when I arrive in India. What should I do in this case?
- shashi20008 10y agoUnless you can reach a bank, or postoffice in India, it would be difficult to exchange your cash at full value. If you have a debit card with you, you can simply withdraw from ATM upon your arrival in India. In this case you can forget your cash for now, you can exchange it once you are in India. You can do so after Dec 31st too. If you do not have a debit card with you, I guess you could call a friend to pick you up at Airport. You could also try your luck with a local Currency Exchanger where ever you are, and ask for a change into 100 rupee notes. It will be costly, but it might work.
- jaggudada 10y agoI feel this just taxes the common man, who maybe through a sale of land or house does hold some money that hasn't been taxed. The Ambanis and Birlas and Adanis have front companies that definitely will be used to launder money. And they hold shares as well, which aids to money launder using their foreign companies...anyways..the Govt didn't bring a Paisa back from the big fish holding lacs of crores in Swiss accounts..now this!!! Property prices and all asset values will now how down like crazy!!!
- 0xmohit 10y agoIndia is a country where property transactions are rare without a significant portion in hard cash. If this move has to be any good as advertised, then property prices should take a hard hit.
- trhway 10y agoreminded about demonetization in 1991 of the 2 top bank notes of USSR - 50 and 100 rubles notes. Similar purpose - supposedly only dishonest corrupted officials, thieves and black market people had significant amount of money stored using those notes. Also USSR government claimed that a lot of those banknotes were brought into the country from outside(!) - supposedly as economic operation against USSR (sounded back then like propaganda crap, so i never even tried to research into it). USSR was already on its way out and that shock (in particular causing significant ruble inflation acceleration) to the already dying economy, was basically the last - half year later USSR de-facto disappeared :) (hi! to everybody who remembers those "exchange money" guys hanging near subway stations back then)
- kevindong 10y agoFor reference (assuming 1 US Dollar = 66.205 Indian Rupee): Rs. 1000 = $15.10 Rs. 500 = $7.55
- soniagupta 10y agoI am not sure if it takes care of corruption completely to be true. Most of ministers and big business people, they have Swiss bank accounts. Though with UP elections coming, it may affect the heat. But again, the ministers are most corrupt and not sure how things will play there. At common man level, I am wondering how much will it help with inflation. Already in last year, the taxes are raised to such a high level that the investments there are already looking waste. With this move, when property prices will be high on paper, but lower in actual, it will also effect the property prices that were paid in full and I am including most of properties purchased by service class people or NRIs, with no black money. Not sure, but just going with words I am trying to draw a full picture here. My investments in India were devalued in last year because of taxes, properties prices are also highly affected. At least as one of one year, this will affect the property prices further. Will it even help common people to a large extent or is it uprooting old Indians while making foundation for lower classes.
- soniagupta 10y agoI am not sure if it takes care of corruption completely to be true. Most of ministers and big business people, they have Swiss bank accounts. Though with UP elections coming, it may affect the heat. But again, the ministers are most corrupt and not sure how things will play there. At common man level, I am wondering how much will it help with inflation. Already in last year, the taxes are raised to such a high level that the investments there are already looking waste. With this move, when property prices will be high on paper, but lower in actual, it will also effect the property prices that were paid in full and I am including most of properties purchased by service class people or NRIs, with no black money. Not sure, but just going with words I am trying to draw a full picture here. My investments in India were devalued in last year because of taxes, properties prices are also highly affected. At least as one of one year, this will affect the property prices further. Will it even help common people to a large extent or is it uprooting old Indians while making foundation for lower classes.
- pksadiq 10y agoNote for every Indian: never accept Rs 500/1000 even from known people anymore (there will be too much fake notes circulating these days).
- asenna 10y agoI'm not sure why people are not focusing as much on the other major issue this step was taken for - Terrorism funding and economic destabilization attempts from across the border. It is known that massive amounts of fake currency is circulating in the economy that have been brought in from Pakistan (kind of like a silent proxy war). Even though the current currency had measures to be distinguished from the fake ones, it was difficult to do so by the common person on the street. The RBI chief has mentioned that the new notes would make it much more difficult to replicate and should be easier to distinguish by a layman. The above, along with the other massive benefits of addressing the black money issue, this move is definitely a winner. The introduction of UPI (Unified Payments Interface) [1] earlier this year and the heavier black money scrutiny will definitely help India move to a relatively more cashless economy. [1] https://www.quora.com/How-will-the-UPI-interface-of-NPCI-change-the-payments-landscape-in-India https://www.quora.com/How-will-the-UPI-interface-of-NPCI-cha...
- sfifs 10y agoThe timing is also appears to be aimed at significantly reducing cash availability for elections in the big states of Uttar Pradesh and Punjab which should come in Jan-Feb. During elections, there is massive voter etc bribery with currency that tends to happen and political party workers tend to intimidate merchants into funding them. Undoubtedly the key political parties have already stashed cash for the elections and all of a sudden, the cash is useless.
- an0nym0us2256 10y agoI think Znews misunderstood the GPS thing. I think the notes have some sort of unique digital ID.unique ID's are not new(we had serial numbers before),but they were difficult to keep track of(bankers can't keep noting serial number of every big note they take or give).but the bank counting machines can now track these numbers in real time,and catch if they find a unique ID is not unique anymore(duplicate). This will mainly help with the counterfeit notes problem. The black money problem will be helped because they will have to declare or lose their black money during the exchange. 2 birds with 1 stone.. well played modi
- prabhuabi 10y ago500 and 1000 rupees case is very welcome and in this most of them will get caught particularly 1)corruption 2)cricket players & bookies 3)celebrities & politicians 4)Black money & Fake moneys not only this in every office they should stick the phone number of vigilance if any one is asks for the bribe immediate action should be taken only then in next couple of years we can proudly say that India is a developed country. Finally I appreciate that Prime Minister of India Narendra Modi for a great job.
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- prabhuabi 10y ago500 and 1000 rupees case is very welcome and in this most of them will get caught particularly 1)corruption 2)cricket players & bookies 3)celebrities & politicians 4)Black money & Fake moneys & 7) jewelry shop Not only this in every government office they should stick the phone number of vigilance ,if any one is asks for the bribe immediate action should be taken. Only then in next couple of years we can proudly say that India is a developed country. Finally I appreciate that Prime Minister of India Narendra Modi for the great job and brilliant move.(Jai Hind)
- known 10y agoWhy not just adopt US dollar? America will promote FDI for you; America will print currency for you; America will prevent hawala for you; America will fight terrorism for you; America will prevent inflation for you; America will prevent black money for you; America will prevent fake currency for you; http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/ http://qz.com/260980/meet-the-countries-that-dont-use-their-...
- qptopm 10y ago2000 Rupees Notes will be issued. https://www.youtube.com/watch?v=H3qrs-znWcU https://www.youtube.com/watch?v=H3qrs-znWcU
- WTW 10y agoI presume this will not be the right forum to ask. But I'm a foreigner and I exchanged euros to INR for about 50K INR (cash to cash). I didn't keep the receipt for this. How could I get my money exchanged or transferred back to my (Irish) bank account.
- WTW 10y agoMaybe not the right forum to ask, but given the expertise on India here it's worth a shot. I exchanged euro to INR (cash to cash) about 50K INR. I did not keep the receipt. What would be the easiest way to get the money exchanged or transferred to my (Irish) bank account?
- Nanigirl 10y agoIndia gave no warning on Rs. 500 and Rs. 1000 notes. How are we suppose to cash in the ones we have?
- known 10y agoGo to a nearby bank with your ID
- known 10y ago80% India's economy is running on black money; Without black money people will kill each other; Futile attempt; http://www.dailymail.co.uk/indiahome/indianews/article-3917994/Modi-drop-bomb-BLACK-MONEY-Billions-illicit-cash-fake-currency-turn-trash-Centre-abolishes-Rs-500-Rs-1000-notes.html http://www.dailymail.co.uk/indiahome/indianews/article-39179...
- xcoding 10y agoHas somebody better idea than this to curb black money and counterfeit? If not, shut up and watch next.