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India is not getting rid of cash transactions. India is achieving two objectives with this move. Getting rid of unaccounted money and fake currency in circulati

by kc10 10y ago

India is not getting rid of cash transactions. India is achieving two objectives with this move. Getting rid of unaccounted money and fake currency in circulation. People can deposit as much money they have into their accounts if the cash was legally obtained. They can transact as much as they want in card/check transactions. Only constraints are in place for withdrawing cash in large amounts. Sure, there are long queues at banks and causes inconvenience but Rs.25000 cash limit per week is a lot for a regular family. Mostly people who have cash and who can't prove the source (black money) are choked as they can't deposit the money and that cash becomes worthless soon. Banks with tons of NPAs will have more deposits and they can decrease the interest rates, lend more and spur growth in the economy. Artificially inflated real-estate prices will come down as there is reduced black money in circulation. So a regular family will be able to afford purchase of land/house. Before this, for example, if someone is selling a property they would want more than 60% of property value in cash so the seller can avoid paying taxes on the 60% amount. No regular person will be able to pay 60% in cash, so they can't afford buying real-estate. Overall, I think it's a good move.

kranner 10y ago
> Sure, there are long queues at banks and causes inconvenience but Rs.25000 cash limit per week is a lot for a regular family. Here is a list of ATMs and bank branches in Panaji, Goa: http://tinyurl.com/atmgoa http://tinyurl.com/atmgoa 12 days after cash was supposed to be available in ATMs and bank branches. In effect cash is not available across smaller towns and villages across India. Yesterday there was a stampede at a bank in a small UP town (http://www.hindustantimes.com/cities/up-senior-citizen-dies-after-being-trampled-on-in-stampede-outside-bank/story-oaNJfy1ndpLImfc0ApNrrI.html http://www.hindustantimes.com/cities/up-senior-citizen-dies-...) These are not minor inconveniences. 25000 is enough for families, agreed, but nowhere near enough for small/informal businesses who must pay workers who don't have bank accounts. (That's if we don't count the amount of bribes that have to be paid in cash for everything from an uninterrupted power supply to letting your commercial goods past a police checkpost.) In a country where at least half the population is unbanked (http://www.bankofindia.co.in/FI-BOI/images/FI%20presentation.pdf http://www.bankofindia.co.in/FI-BOI/images/FI%20presentation...) this is a very substantial number of businesses that have ground to a halt. > Mostly people who have cash and who can't prove the source (black money) What about people who have been saving cash from tax-paid or non-taxable income at home over years and decades? Is there any sort of plan to distinguish such savings from black money? Or should we just agree to throw a certain percentage of people under the bus once in a while? Edit: I'd like to explain how a stampede happens at a bank for those who are not familiar with this. Bank branches are supposed to receive a new batch of freshly-printed currency notes every morning. These notes are very limited in number, so it's first come first served. So people collect outside the locked gates of the bank from early in the morning (and have in some cases slept on the pavement outside all night). There is no queue, just a bunch of people pushing against each other. After cash arrives at the bank, the gates are opened and people run to form the actual queues for the bank counters. The branch will run out of currency notes before the entire queue is served, therefore it's every man for himself from the gate to the end of the queue.
- eklavya 10y ago
  For a family of 4 you will get 2.5 * 4 lacs exemption (from scrutiny). You only have to justify the source, right? Like if you are a farmer, you do not pay taxes and you can have cash or if you are a big businessperson you can justify the cash (if it matches your declared turnover) as the prerequisite to do your daily work. If you are none of the above and chose to expose this big cash (more than Rs. 1000000 for a family of 4) to theft, decomposition, natural disasters, you would still be declaring your assets in your income tax, right?
  - kranner 10y ago
    Yearly income is declared, not assets, unless you're running for political office or something. People do have lakhs in cash stored in houses from legit income because they don't have banks where they live. They've never kept records of sources because they've never been asked to by the government. All of a sudden we're telling them anything above one year's taxable income is suspect, and they may be thrown in jail for seven years if deposits exceed that amount.
    - eklavya 10y ago
      I find it hard to believe that people with more than 1000000 in cash won't be bothered to deposit it in banks because they live somewhere where no banks and post offices exist. Government would be least of my worries with that much liability (theft).
      - kranner 10y ago
        This is an oversimplified view of things. One counterexample is house wives with alcoholic/abusive husbands who have been saving cash secretly. Another is people who are illiterate or otherwise too intimidated to walk into a bank. It's a sixth of the world's population; there are a million such stories.
        eklavya 10y ago
gnipgnip 10y ago
> Artificially inflated real-estate prices will come down as there is reduced black money in circulation. So a regular family will be able to afford purchase of land/house. Before this, for example, if someone is selling a property they would want more than 60% of property value in cash so the seller can avoid paying taxes on the 60% amount. No regular person will be able to pay 60% in cash, so they can't afford buying real-estate. You're being naive. Giving bureaucracies unhindered power to create a magical wonderland has never worked, much less so in a anarchic society like India (it's also deeply against personal freedoms). If you study history, everyone and their mother was egging on Indira Gandhi at the outset of the Emergency, using very similar arguments (Indian Express uses them now in nostalgia, but that's a different affair). What did it lead to ? The License Raj that's what. There is nothing stopping people from switching to BTC or other crypto-currencies (XAU and BTC can be exchanged pseudo-anonymously).
- wav-part 10y ago
  Looks like noone is noticing government is in progress to make prosecuting public officials more difficult and bribe-giving a criminal offence [1][2]. [1] http://www.prsindia.org/billtrack/the-prevention-of-corruption-amendment-bill-2013-2865/ http://www.prsindia.org/billtrack/the-prevention-of-corrupti... [2] http://timesofindia.indiatimes.com/india/Govt-servants-may-get-shield-from-prosecution-agencies-will-need-approval-to-probe/articleshow/55356435.cms http://timesofindia.indiatimes.com/india/Govt-servants-may-g...
  - gnipgnip 10y ago
    This is a terrible move, considering how abusive Govt. officials tend to be; bribe giving often stems from helplessness rather than for illegitimate gain.

by kc10 10y ago

kranner 10y ago

> Sure, there are long queues at banks and causes inconvenience but Rs.25000 cash limit per week is a lot for a regular family. Here is a list of ATMs and bank branches in Panaji, Goa: http://tinyurl.com/atmgoa http://tinyurl.com/atmgoa 12 days after cash was supposed to be available in ATMs and bank branches. In effect cash is not available across smaller towns and villages across India. Yesterday there was a stampede at a bank in a small UP town (http://www.hindustantimes.com/cities/up-senior-citizen-dies-after-being-trampled-on-in-stampede-outside-bank/story-oaNJfy1ndpLImfc0ApNrrI.html http://www.hindustantimes.com/cities/up-senior-citizen-dies-...) These are not minor inconveniences. 25000 is enough for families, agreed, but nowhere near enough for small/informal businesses who must pay workers who don't have bank accounts. (That's if we don't count the amount of bribes that have to be paid in cash for everything from an uninterrupted power supply to letting your commercial goods past a police checkpost.) In a country where at least half the population is unbanked (http://www.bankofindia.co.in/FI-BOI/images/FI%20presentation.pdf http://www.bankofindia.co.in/FI-BOI/images/FI%20presentation...) this is a very substantial number of businesses that have ground to a halt. > Mostly people who have cash and who can't prove the source (black money) What about people who have been saving cash from tax-paid or non-taxable income at home over years and decades? Is there any sort of plan to distinguish such savings from black money? Or should we just agree to throw a certain percentage of people under the bus once in a while? Edit: I'd like to explain how a stampede happens at a bank for those who are not familiar with this. Bank branches are supposed to receive a new batch of freshly-printed currency notes every morning. These notes are very limited in number, so it's first come first served. So people collect outside the locked gates of the bank from early in the morning (and have in some cases slept on the pavement outside all night). There is no queue, just a bunch of people pushing against each other. After cash arrives at the bank, the gates are opened and people run to form the actual queues for the bank counters. The branch will run out of currency notes before the entire queue is served, therefore it's every man for himself from the gate to the end of the queue.

eklavya 10y ago
For a family of 4 you will get 2.5 * 4 lacs exemption (from scrutiny). You only have to justify the source, right? Like if you are a farmer, you do not pay taxes and you can have cash or if you are a big businessperson you can justify the cash (if it matches your declared turnover) as the prerequisite to do your daily work. If you are none of the above and chose to expose this big cash (more than Rs. 1000000 for a family of 4) to theft, decomposition, natural disasters, you would still be declaring your assets in your income tax, right?
- kranner 10y ago
  Yearly income is declared, not assets, unless you're running for political office or something. People do have lakhs in cash stored in houses from legit income because they don't have banks where they live. They've never kept records of sources because they've never been asked to by the government. All of a sudden we're telling them anything above one year's taxable income is suspect, and they may be thrown in jail for seven years if deposits exceed that amount.
  - eklavya 10y ago
    I find it hard to believe that people with more than 1000000 in cash won't be bothered to deposit it in banks because they live somewhere where no banks and post offices exist. Government would be least of my worries with that much liability (theft).
    - kranner 10y ago
      This is an oversimplified view of things. One counterexample is house wives with alcoholic/abusive husbands who have been saving cash secretly. Another is people who are illiterate or otherwise too intimidated to walk into a bank. It's a sixth of the world's population; there are a million such stories.
      - eklavya 10y ago

gnipgnip 10y ago

> Artificially inflated real-estate prices will come down as there is reduced black money in circulation. So a regular family will be able to afford purchase of land/house. Before this, for example, if someone is selling a property they would want more than 60% of property value in cash so the seller can avoid paying taxes on the 60% amount. No regular person will be able to pay 60% in cash, so they can't afford buying real-estate. You're being naive. Giving bureaucracies unhindered power to create a magical wonderland has never worked, much less so in a anarchic society like India (it's also deeply against personal freedoms). If you study history, everyone and their mother was egging on Indira Gandhi at the outset of the Emergency, using very similar arguments (Indian Express uses them now in nostalgia, but that's a different affair). What did it lead to ? The License Raj that's what. There is nothing stopping people from switching to BTC or other crypto-currencies (XAU and BTC can be exchanged pseudo-anonymously).

wav-part 10y ago
Looks like noone is noticing government is in progress to make prosecuting public officials more difficult and bribe-giving a criminal offence [1][2]. [1] http://www.prsindia.org/billtrack/the-prevention-of-corruption-amendment-bill-2013-2865/ http://www.prsindia.org/billtrack/the-prevention-of-corrupti... [2] http://timesofindia.indiatimes.com/india/Govt-servants-may-get-shield-from-prosecution-agencies-will-need-approval-to-probe/articleshow/55356435.cms http://timesofindia.indiatimes.com/india/Govt-servants-may-g...
- gnipgnip 10y ago
  This is a terrible move, considering how abusive Govt. officials tend to be; bribe giving often stems from helplessness rather than for illegitimate gain.