10 ms·

Cash Ban the Best Thing to Happen to Indian Digital Payments

49 points by smaddali 10y ago

fiatjaf 10y ago
I bet some people will think this is good news. Of course it is good news for digital payments providers. For all the other 99,99999999% of the population, including the users of digital payments, it is horrible news.
- statictype 10y ago
  Why is it horrible news? The whole thing seems like a clear win to me.
  - notahacker 10y ago
    When most of a country doesn't have access to digital payments, lack of cash is a problem. Although to be fair, the poor aren't the ones trying to buy things with large denomination notes anyway.
  - 234dd57d2c8db 10y ago
    More than 50% of the population of India doesn't have a bank account. A large percentage of Indians use an open field as a bathroom and have trouble getting access to clean water. How does this help them in _any_ way? Hold on, let me spend time walking 10 miles to a bank and sign up for electronic payments instead of tending my field and barely making enough to survive on. Yeah, while this is great for India's banking industry to get some growth, I hardly see the benefit for the significant rural population that does not have easy access to a bank nor any of the supporting infrastructure that is required to support electronic payments.
- DesiLurker 10y ago
  you mean most of them who are required to be provided bank accounts under various govt scheme prior to demonetization. or perhaps you mean all 1 Billion mobile subscribers who dont have access to an electronic payment platform, Right? /s Is it good for them tomorrow, likely not but what about six months from now? you get side benefit of being able to track transactions and tax avoidance.
  - MichaelGG 10y ago
    >you get side benefit of being able to track transactions and tax avoidance A lot of good people would consider that to be the opposite of a benefit.
    - MyNameIsFred 10y ago
      By what reasoning? On the surface I would assume that to be false. Please elaborate?
      - gruez 10y ago
        privacy?
- parthdesai 10y ago
  Anecdotal experience, but all my relatives and many of my friends are happy with this ban as it is a step against corruption. My parents got income tax notice after this ban which shows they are even monitoring bank accounts now, and this is when my parents didn't have a single penny in black money. A lot of people are willing to stand in queues. Modi promised to take steps against black money/corruption and he did take a step against it, so alot of people are happy with him. Modi being a polarising figure will always have people discrediting each and every single move taken by him.
  - myowncrapulence 10y ago
    it is a step against corruption Corruption by whom? This is a consolidation of power into payment services and government surveillance. Make no mistake the corruption is simply moving up.
    - swatkat 10y ago
      Cash hasn't been banned in India. Only ₹500 and ₹1000 denomination currency notes have been scrapped. Replacement currency notes (₹₹500 and ₹2000) with new design are being disbursed at banks and ATMs. I don't think there's any consolidation of power into payment systems have been happening. And, government surveillance for online transactions should be similar what is being done in western countries ;)
      - manquer 10y ago
        1: ₹500 , ₹1000 consists of 86 % of cash in circulation by value, that in effect almost a full ban. 2: Try getting that ₹2000 changed with any shop on street. 3. I have yet to see any of the ₹500 in any ATM in Bangalore, it still not well circulated 4. If anyone thinks ppl keep bulk of their ill gotten wealth in cash they are idiots, sure this affect few % of the wealth of rich corrupt people that was in cash, however it impacts the poor 100x more. I can't pay my maid's salary because I don't have the any kind of notes, while I can manage fine using cards, she doesn't even have a bank account, remember > 50% of India is not banked.
- thenewwazoo 10y ago
  Now, to be fair, 99.99999999% of the population is everyone except about an eighth of a person, so even that last person would be getting a pretty raw deal.
  - fiatjaf 10y ago
    I typed it without checking, but I actually wanted to leave a number smaller than 100 out. I guess I almost did it.
- photonwins 10y ago
  Can you provide some reasons as to why you think this is a horrible news?
t3soro 10y ago
"Hemp Ban the Best Thing to Happen to American Paper Industry"
- duskwuff 10y ago
  "Cooking Ban the Best Thing to Happen to American Fast Food Industry"
stuart78 10y ago
There was a great introduction to this story on yesterday's The World [1]. Sounds like a pretty massive disaster all around. [1] http://www.pri.org/stories/2016-11-23/indias-crisis-over-bank-notes-hits-women-especially-hard http://www.pri.org/stories/2016-11-23/indias-crisis-over-ban...
freddyc 10y ago
This is certainly a promising sign. A few years back I consulted for a company trying to make a push into the Indian market and the payments piece pretty much killed us. Dealing with HDFC became a daily nightmare and the amount of bureaucracy and red tape involved was soul-destroying. Based on my (very) limited knowledge of Indian payments, my guess is HDFC probably still sits behind these new solutions but if they can somehow streamline the process and shield customers from most of the BS I really hope they flourish.
- Ar-Curunir 10y ago
  HDFC is just one Indian bank... Not sure why they would be a obstacle to a payment system.
- rajeshp1986 10y ago
  This is true. I worked briefly on a startup idea to disrupt the payment services in India but gave up after the amount of red tape involved. In India banks want to control everything that is related to/about money. Banking is full of red-tape controlled by big banking houses in India. Company like Airtel & Vodafone couldn't push their mobile based payment systems for larger adoption. It is amazing to see how paytm got wider adoption and lobbied the bureaucracy and government to pave way for payment banks. But still the amount of investment that is required to get into payment services in India even as a payment bank is enormous. Startups in no way can compete with this without having VC's backing them right from the beginning.
notahacker 10y ago
tbh I'm reading the opening anecdote about soda hawkers and roadside egg vendors accepting PayTm and thinking last time I was in India and R500 and R1000 notes were legal tender, I wouldn't have expected those guys to have accepted the large denomination notes (no change), never mind digital payments...
jtchang 10y ago
This is a huge move and in the end will benefit India in a big way. Basically by banning cash you are making transactions much easier to track. In turn this kills a lot of black market activity and stamps out corruption. By doing this India is making a move toward creating stronger protections toward businesses in the way of contract law and and intellectual property. This makes it much more favorable to innovation (your IP is more protected because the government is stronger)
- jaypaulynice 10y ago
  But what happens when there is a major disaster? How will people pay if there is no internet/electricity etc.? At least with cash you can plan ahead...also what are the poor people to do?
  - photonwins 10y ago
    People can still use lower denomination notes you know.
  - swatkat 10y ago
    I guess the linked Bloomberg article doesn't make it clear? Cash hasn't been banned in India. Only ₹500 and ₹1000 denomination currency notes have been scrapped. Replacement currency notes (₹₹500 and ₹2000) with new design are being disbursed at banks and ATMs. It would take few more days to stabilize, that's all.
    - jaypaulynice 10y ago
      Thanks! I was responding to the comment by saying that banning all cash wouldn't be necessarily good...but yeah the article does make it sound like all cash would be banned...
- Ar-Curunir 10y ago
  They aren't banning cash...
deleted 10y ago
[deleted]
matt_wulfeck 10y ago
I pray that this never happens in the United States. Money is the most powerful thing in any modern society. When transactions are controlled and surveilled then what can stop total control by a determined government? The black market is a bogeyman. I hope others see this as well.
- swatkat 10y ago
  No offense, but do you think your transactions are not surveilled by your government or any of those three lettered agencies? ;)
  - nothrabannosir 10y ago
    That's his point. Yes they are, when they can be. You can't track cash transactions.
    - swatkat 10y ago
      So is the case in India. Cash transactions aren't banned. The linked article title is misleading. Existing ₹500 and ₹1000 currency notes are being replaced with new ₹500 and ₹2000 ones.
      - matt_wulfeck 10y ago
        I didn't know that. Was the motivation simply to get everyone to turn around their cash?
- pavanky 10y ago
  When transactions are controlled and surveilled then what can stop total control by a determined government? Where do you get the impression that this is happening in India ?
- greglindahl 10y ago
  The US did this after WWII, that's why you can't get a bill bigger than $100 anymore. It was done over 20 years. The rule that any cash transaction over $10k must be reported goes back to 1970.
wnevets 10y ago
misleading title, cash hasn't been banned just ₹500 and ₹1000 denominations.
- swatkat 10y ago
  True. Even ₹500 and ₹1000 aren't banned per se. They are being replaced with new currency notes (of 500 and 2000 denomination).
pavanky 10y ago
I am assuming a lot of people are coming into the thread reading the title and not the article. All cash is not banned in India. Only a couple of denominations have been demonetized and are being replaced by their newer counterparts. This has happened in India before without issues. The current problems exist because of the scale at which it is being done and the short period of notice given. Digital payments are taking off because there is a shortage of currency for the amount of money being demonetized. This is not a move made by the Indian government to push surveillance or other nefarious purposes.
- gruez 10y ago
  >This is not a move made by the Indian government to push surveillance or other nefarious purposes. what makes you think that?
  - pavanky 10y ago
    Unlike some people, I prefer to take the current state of facts at face value until further proof has been provided. Without proof, this is speculation at best and conspiracy chasing at worst.
  - Ar-Curunir 10y ago
    Because they are not banning cash? Only replacing certain variants with newer denominations.
    - 234dd57d2c8db 10y ago
      You mean less useful and smaller denominations, not "newer". They are trying to make cash unappealing to use by requiring more bills to carry out a transaction. If the government came and said "Because terrorists drive cars between the hours of 1pm-3pm, we are banning all car use between those times." You wouldn't say they replaced the current driving rules with newer ones, you'd be upset you couldn't drive between 1pm-3pm and instead had to use a less efficient means to carry out your business. The government is unjustly punishing the whole class because some individuals made the decision to break the rules, and as punishment, it is now harder to maintain financial privacy. Yay. Just what I wanted, less privacy in the age of everything is in a database and everyone is on a list.
megous 10y ago
> This is not a move made by the Indian government to push surveillance or other nefarious purposes. So why do you need ID when changing the notes? It looks like move to approximately sum up who had how much money in cash.
- Ar-Curunir 10y ago
  It's for income tax purposes; people attempt to bypass paying taxes by making transactions with "black money", i.e. cash. By forcing people to exchange cash, they're forcing people to declare untaxed income, which will be taxed at a higher rate.
- swatkat 10y ago
  Then how do you catch people who deposit hoards of black money and get away without paying taxes? If banks don't ask for ID, then this whole exercise becomes pointless.
- pavanky 10y ago
  I assume you were trying to reply to me. Yes that is the case because India does have a huge problem with people not paying taxes, taking bribes and other illegal activities. So this may be a necessary step taken to acheive that. There are more clear cut cases of the Indian government trying to create a surveillance state. Trying to group this under the same category just creates unnecessary noise.
sirius87 10y ago
Just to set the stage: India is highly polarized on this issue. A lot of discussions around govt policies right now end up in heated debates. Loosely speaking, liberals aren't very much in favour of the right-wing govt in power and often criticize every major policy announcement, not always based on merit. The majority of working-class people in India are going through a phase of love and adulation for the ruling party and the Prime Minister, so any public opinion on social media against the establishment is met with intense opposition. The news media aren't helping decipher the actual state of reality. Much like the US elections, Indian media fuels the polarized population with provocative news stories, and "alt-media" outlets publish opinions and fake news as facts. Many accuse major media houses of unfairly favouring the right-wing govt (much like Fox News in the US) due to connections of the govt with business houses that run them. The demonetization move comes at a time when political parties are gearing up for elections in major states. From extravagant political rallies to feasts, a lot of aspects are funded by cash. Politicians have a history of hoarding cash for elections and "buying" votes from the poor. The demonetization issue was also promoted as a way to deal with a fake-currency printing industry allegedly being run in arch-rival Pakistan. This bodes well with the "Nationalism Wave" promoted in recent years.
- Ar-Curunir 10y ago
  > The news media aren't helping decipher the actual state of reality. Much like the US elections, Indian media fuels the polarized population with provocative news stories, and "alt-media" outlets publish opinions and fake news as facts. Many accuse major media houses of unfairly favouring the right-wing govt (much like Fox News in the US) due to connections of the govt with business houses that run them. Is this really true? The mainstream media houses are all helmed by pseudo-liberals that have in the past been very biased towards the Congress Party.
  - sirius87 10y ago
    Shall we say we have left-leaning and right-leaning news channels, and depending on your personal inclination (read: echochamber), you could be accusing the liberals on left-wing newsmedia as "pseudo-liberals" (often accused of being anti-national too!), and disagreeable newsmedia as favouring the govt?
ppurka 10y ago
This may have been a good idea, but it is terribly implemented. Especially, notes of denomination 500 should not have been banned with immediate effect. In general many poor people, even in cities, do not have bank accounts and face lot of issues when opening such accounts. Sometimes bank require a "reference" from an existing customer to open an account. Sometimes many such poor families (say 20 families - think of it as a big landed area with 20 small houses) live together at a single address, paying rent for a single room, and the banks will refuse to open so many accounts under a single address. Their are several such smaller issues that crop up when trying to open an account that are not well known and that only the people in a particular city or locality face. These people cannot deposit their savings since they don't have a bank account to begin with. And they definitely have savings in Rs 500 denomination since 500 is nowadays often used in the markets. Essentially, this ban has hit hard the common people. The very rich are hiring others to do the transactions and exchange of money. The lower middle class and poorer sections are left wanting for cash. Hence, good idea, but bad implementation.
- abhishivsaxena 10y ago
  In general many poor people, even in cities, do not have bank accounts and face lot of issues when opening such accounts. Sorry, but I absolutely can't stand when I see these kinds of arguments, because everyone reading this would believe this to be true apriori. Check this article from Feb 2015. Only 23k families were without a bank account. In a country of 250m families! In the last two years I think they opened 200m - or something like that - accounts. http://www.business-standard.com/article/current-affairs/nearly-every-indian-household-has-a-bank-account-115021101677_1.html http://www.business-standard.com/article/current-affairs/nea... Agree about it not being very well managed, specially the ATM calibration issue. But I have no doubt, it would massively help in making digital payments mainstream. Already since 9 Nov, digital payments have overtaken credit/debit cards as stated in this article. Possibly it would even make India an even bigger market than China. It would also fight tax evasion - right now India borrows 60b$-70b$ every year - when coupled with tax reforms like GST which is set to kickoff next year. Btw, since last few years you need to supply an Tax Id whenever making transactions of more than 1k$ in cash, so this step fits in perfectly with that as well. There's some short term pain, but the medium/long term gains massively outweigh it.
kylebenzle 10y ago
Is this going to be today's "bitcoin" article?
whowalrus 10y ago
I see a lot of commenters bring up privacy viz. tracking transactions and tax avoidance. Now I'm all for respecting people's privacy; but I also don't see why the govt. shouldn't be able to detect and extract what is legally owed to them. Raghuram Rajan, the ex-RBI governor was in favor of tracking transaction data too (and wasn't in favor of demonetization), especially since he felt that the tax rate in India is already reasonable compared to other Industrial nations. [1] So instead of ending the discussion at "It invades people's privacy, full stop", can we talk about ways of ensuring greater chance of collecting taxes? Maybe examples of how other countries have successfully tackled it? [1] http://www.newindianexpress.com/business/2016/nov/10/the-clever-find-ways-around-demonetisation-raghuram-rajan-said-two-years-ago-1537108.html http://www.newindianexpress.com/business/2016/nov/10/the-cle...

49 points by smaddali 10y ago

I bet some people will think this is good news. Of course it is good news for digital payments providers. For all the other 99,99999999% of the population, including the users of digital payments, it is horrible news.

statictype 10y ago
Why is it horrible news? The whole thing seems like a clear win to me.
- notahacker 10y ago
  When most of a country doesn't have access to digital payments, lack of cash is a problem. Although to be fair, the poor aren't the ones trying to buy things with large denomination notes anyway.
- 234dd57d2c8db 10y ago
  More than 50% of the population of India doesn't have a bank account. A large percentage of Indians use an open field as a bathroom and have trouble getting access to clean water. How does this help them in _any_ way? Hold on, let me spend time walking 10 miles to a bank and sign up for electronic payments instead of tending my field and barely making enough to survive on. Yeah, while this is great for India's banking industry to get some growth, I hardly see the benefit for the significant rural population that does not have easy access to a bank nor any of the supporting infrastructure that is required to support electronic payments.
DesiLurker 10y ago
you mean most of them who are required to be provided bank accounts under various govt scheme prior to demonetization. or perhaps you mean all 1 Billion mobile subscribers who dont have access to an electronic payment platform, Right? /s Is it good for them tomorrow, likely not but what about six months from now? you get side benefit of being able to track transactions and tax avoidance.
- MichaelGG 10y ago
  >you get side benefit of being able to track transactions and tax avoidance A lot of good people would consider that to be the opposite of a benefit.
  - MyNameIsFred 10y ago
    By what reasoning? On the surface I would assume that to be false. Please elaborate?
    - gruez 10y ago
      privacy?
parthdesai 10y ago
Anecdotal experience, but all my relatives and many of my friends are happy with this ban as it is a step against corruption. My parents got income tax notice after this ban which shows they are even monitoring bank accounts now, and this is when my parents didn't have a single penny in black money. A lot of people are willing to stand in queues. Modi promised to take steps against black money/corruption and he did take a step against it, so alot of people are happy with him. Modi being a polarising figure will always have people discrediting each and every single move taken by him.
- myowncrapulence 10y ago
  it is a step against corruption Corruption by whom? This is a consolidation of power into payment services and government surveillance. Make no mistake the corruption is simply moving up.
  - swatkat 10y ago
    Cash hasn't been banned in India. Only ₹500 and ₹1000 denomination currency notes have been scrapped. Replacement currency notes (₹₹500 and ₹2000) with new design are being disbursed at banks and ATMs. I don't think there's any consolidation of power into payment systems have been happening. And, government surveillance for online transactions should be similar what is being done in western countries ;)
    - manquer 10y ago
      1: ₹500 , ₹1000 consists of 86 % of cash in circulation by value, that in effect almost a full ban. 2: Try getting that ₹2000 changed with any shop on street. 3. I have yet to see any of the ₹500 in any ATM in Bangalore, it still not well circulated 4. If anyone thinks ppl keep bulk of their ill gotten wealth in cash they are idiots, sure this affect few % of the wealth of rich corrupt people that was in cash, however it impacts the poor 100x more. I can't pay my maid's salary because I don't have the any kind of notes, while I can manage fine using cards, she doesn't even have a bank account, remember > 50% of India is not banked.
thenewwazoo 10y ago
Now, to be fair, 99.99999999% of the population is everyone except about an eighth of a person, so even that last person would be getting a pretty raw deal.
- fiatjaf 10y ago
  I typed it without checking, but I actually wanted to leave a number smaller than 100 out. I guess I almost did it.
photonwins 10y ago
Can you provide some reasons as to why you think this is a horrible news?

t3soro 10y ago

"Hemp Ban the Best Thing to Happen to American Paper Industry"

duskwuff 10y ago
"Cooking Ban the Best Thing to Happen to American Fast Food Industry"

stuart78 10y ago

There was a great introduction to this story on yesterday's The World [1]. Sounds like a pretty massive disaster all around. [1] http://www.pri.org/stories/2016-11-23/indias-crisis-over-bank-notes-hits-women-especially-hard http://www.pri.org/stories/2016-11-23/indias-crisis-over-ban...

freddyc 10y ago

This is certainly a promising sign. A few years back I consulted for a company trying to make a push into the Indian market and the payments piece pretty much killed us. Dealing with HDFC became a daily nightmare and the amount of bureaucracy and red tape involved was soul-destroying. Based on my (very) limited knowledge of Indian payments, my guess is HDFC probably still sits behind these new solutions but if they can somehow streamline the process and shield customers from most of the BS I really hope they flourish.

Ar-Curunir 10y ago
HDFC is just one Indian bank... Not sure why they would be a obstacle to a payment system.
rajeshp1986 10y ago
This is true. I worked briefly on a startup idea to disrupt the payment services in India but gave up after the amount of red tape involved. In India banks want to control everything that is related to/about money. Banking is full of red-tape controlled by big banking houses in India. Company like Airtel & Vodafone couldn't push their mobile based payment systems for larger adoption. It is amazing to see how paytm got wider adoption and lobbied the bureaucracy and government to pave way for payment banks. But still the amount of investment that is required to get into payment services in India even as a payment bank is enormous. Startups in no way can compete with this without having VC's backing them right from the beginning.

notahacker 10y ago

tbh I'm reading the opening anecdote about soda hawkers and roadside egg vendors accepting PayTm and thinking last time I was in India and R500 and R1000 notes were legal tender, I wouldn't have expected those guys to have accepted the large denomination notes (no change), never mind digital payments...

jtchang 10y ago

This is a huge move and in the end will benefit India in a big way. Basically by banning cash you are making transactions much easier to track. In turn this kills a lot of black market activity and stamps out corruption. By doing this India is making a move toward creating stronger protections toward businesses in the way of contract law and and intellectual property. This makes it much more favorable to innovation (your IP is more protected because the government is stronger)

jaypaulynice 10y ago
But what happens when there is a major disaster? How will people pay if there is no internet/electricity etc.? At least with cash you can plan ahead...also what are the poor people to do?
- photonwins 10y ago
  People can still use lower denomination notes you know.
- swatkat 10y ago
  I guess the linked Bloomberg article doesn't make it clear? Cash hasn't been banned in India. Only ₹500 and ₹1000 denomination currency notes have been scrapped. Replacement currency notes (₹₹500 and ₹2000) with new design are being disbursed at banks and ATMs. It would take few more days to stabilize, that's all.
  - jaypaulynice 10y ago
    Thanks! I was responding to the comment by saying that banning all cash wouldn't be necessarily good...but yeah the article does make it sound like all cash would be banned...
Ar-Curunir 10y ago
They aren't banning cash...

deleted 10y ago

[deleted]

matt_wulfeck 10y ago

I pray that this never happens in the United States. Money is the most powerful thing in any modern society. When transactions are controlled and surveilled then what can stop total control by a determined government? The black market is a bogeyman. I hope others see this as well.

swatkat 10y ago
No offense, but do you think your transactions are not surveilled by your government or any of those three lettered agencies? ;)
- nothrabannosir 10y ago
  That's his point. Yes they are, when they can be. You can't track cash transactions.
  - swatkat 10y ago
    So is the case in India. Cash transactions aren't banned. The linked article title is misleading. Existing ₹500 and ₹1000 currency notes are being replaced with new ₹500 and ₹2000 ones.
    - matt_wulfeck 10y ago
      I didn't know that. Was the motivation simply to get everyone to turn around their cash?
pavanky 10y ago
When transactions are controlled and surveilled then what can stop total control by a determined government? Where do you get the impression that this is happening in India ?
greglindahl 10y ago
The US did this after WWII, that's why you can't get a bill bigger than $100 anymore. It was done over 20 years. The rule that any cash transaction over $10k must be reported goes back to 1970.

wnevets 10y ago

misleading title, cash hasn't been banned just ₹500 and ₹1000 denominations.

swatkat 10y ago
True. Even ₹500 and ₹1000 aren't banned per se. They are being replaced with new currency notes (of 500 and 2000 denomination).

pavanky 10y ago

I am assuming a lot of people are coming into the thread reading the title and not the article. All cash is not banned in India. Only a couple of denominations have been demonetized and are being replaced by their newer counterparts. This has happened in India before without issues. The current problems exist because of the scale at which it is being done and the short period of notice given. Digital payments are taking off because there is a shortage of currency for the amount of money being demonetized. This is not a move made by the Indian government to push surveillance or other nefarious purposes.

gruez 10y ago
>This is not a move made by the Indian government to push surveillance or other nefarious purposes. what makes you think that?
- pavanky 10y ago
  Unlike some people, I prefer to take the current state of facts at face value until further proof has been provided. Without proof, this is speculation at best and conspiracy chasing at worst.
- Ar-Curunir 10y ago
  Because they are not banning cash? Only replacing certain variants with newer denominations.
  - 234dd57d2c8db 10y ago
    You mean less useful and smaller denominations, not "newer". They are trying to make cash unappealing to use by requiring more bills to carry out a transaction. If the government came and said "Because terrorists drive cars between the hours of 1pm-3pm, we are banning all car use between those times." You wouldn't say they replaced the current driving rules with newer ones, you'd be upset you couldn't drive between 1pm-3pm and instead had to use a less efficient means to carry out your business. The government is unjustly punishing the whole class because some individuals made the decision to break the rules, and as punishment, it is now harder to maintain financial privacy. Yay. Just what I wanted, less privacy in the age of everything is in a database and everyone is on a list.

megous 10y ago

> This is not a move made by the Indian government to push surveillance or other nefarious purposes. So why do you need ID when changing the notes? It looks like move to approximately sum up who had how much money in cash.

Ar-Curunir 10y ago
It's for income tax purposes; people attempt to bypass paying taxes by making transactions with "black money", i.e. cash. By forcing people to exchange cash, they're forcing people to declare untaxed income, which will be taxed at a higher rate.
swatkat 10y ago
Then how do you catch people who deposit hoards of black money and get away without paying taxes? If banks don't ask for ID, then this whole exercise becomes pointless.
pavanky 10y ago
I assume you were trying to reply to me. Yes that is the case because India does have a huge problem with people not paying taxes, taking bribes and other illegal activities. So this may be a necessary step taken to acheive that. There are more clear cut cases of the Indian government trying to create a surveillance state. Trying to group this under the same category just creates unnecessary noise.

sirius87 10y ago

Just to set the stage: India is highly polarized on this issue. A lot of discussions around govt policies right now end up in heated debates. Loosely speaking, liberals aren't very much in favour of the right-wing govt in power and often criticize every major policy announcement, not always based on merit. The majority of working-class people in India are going through a phase of love and adulation for the ruling party and the Prime Minister, so any public opinion on social media against the establishment is met with intense opposition. The news media aren't helping decipher the actual state of reality. Much like the US elections, Indian media fuels the polarized population with provocative news stories, and "alt-media" outlets publish opinions and fake news as facts. Many accuse major media houses of unfairly favouring the right-wing govt (much like Fox News in the US) due to connections of the govt with business houses that run them. The demonetization move comes at a time when political parties are gearing up for elections in major states. From extravagant political rallies to feasts, a lot of aspects are funded by cash. Politicians have a history of hoarding cash for elections and "buying" votes from the poor. The demonetization issue was also promoted as a way to deal with a fake-currency printing industry allegedly being run in arch-rival Pakistan. This bodes well with the "Nationalism Wave" promoted in recent years.

Ar-Curunir 10y ago
> The news media aren't helping decipher the actual state of reality. Much like the US elections, Indian media fuels the polarized population with provocative news stories, and "alt-media" outlets publish opinions and fake news as facts. Many accuse major media houses of unfairly favouring the right-wing govt (much like Fox News in the US) due to connections of the govt with business houses that run them. Is this really true? The mainstream media houses are all helmed by pseudo-liberals that have in the past been very biased towards the Congress Party.
- sirius87 10y ago
  Shall we say we have left-leaning and right-leaning news channels, and depending on your personal inclination (read: echochamber), you could be accusing the liberals on left-wing newsmedia as "pseudo-liberals" (often accused of being anti-national too!), and disagreeable newsmedia as favouring the govt?

ppurka 10y ago

This may have been a good idea, but it is terribly implemented. Especially, notes of denomination 500 should not have been banned with immediate effect. In general many poor people, even in cities, do not have bank accounts and face lot of issues when opening such accounts. Sometimes bank require a "reference" from an existing customer to open an account. Sometimes many such poor families (say 20 families - think of it as a big landed area with 20 small houses) live together at a single address, paying rent for a single room, and the banks will refuse to open so many accounts under a single address. Their are several such smaller issues that crop up when trying to open an account that are not well known and that only the people in a particular city or locality face. These people cannot deposit their savings since they don't have a bank account to begin with. And they definitely have savings in Rs 500 denomination since 500 is nowadays often used in the markets. Essentially, this ban has hit hard the common people. The very rich are hiring others to do the transactions and exchange of money. The lower middle class and poorer sections are left wanting for cash. Hence, good idea, but bad implementation.

abhishivsaxena 10y ago
In general many poor people, even in cities, do not have bank accounts and face lot of issues when opening such accounts. Sorry, but I absolutely can't stand when I see these kinds of arguments, because everyone reading this would believe this to be true apriori. Check this article from Feb 2015. Only 23k families were without a bank account. In a country of 250m families! In the last two years I think they opened 200m - or something like that - accounts. http://www.business-standard.com/article/current-affairs/nearly-every-indian-household-has-a-bank-account-115021101677_1.html http://www.business-standard.com/article/current-affairs/nea... Agree about it not being very well managed, specially the ATM calibration issue. But I have no doubt, it would massively help in making digital payments mainstream. Already since 9 Nov, digital payments have overtaken credit/debit cards as stated in this article. Possibly it would even make India an even bigger market than China. It would also fight tax evasion - right now India borrows 60b$-70b$ every year - when coupled with tax reforms like GST which is set to kickoff next year. Btw, since last few years you need to supply an Tax Id whenever making transactions of more than 1k$ in cash, so this step fits in perfectly with that as well. There's some short term pain, but the medium/long term gains massively outweigh it.

kylebenzle 10y ago

Is this going to be today's "bitcoin" article?

whowalrus 10y ago

I see a lot of commenters bring up privacy viz. tracking transactions and tax avoidance. Now I'm all for respecting people's privacy; but I also don't see why the govt. shouldn't be able to detect and extract what is legally owed to them. Raghuram Rajan, the ex-RBI governor was in favor of tracking transaction data too (and wasn't in favor of demonetization), especially since he felt that the tax rate in India is already reasonable compared to other Industrial nations. [1] So instead of ending the discussion at "It invades people's privacy, full stop", can we talk about ways of ensuring greater chance of collecting taxes? Maybe examples of how other countries have successfully tackled it? [1] http://www.newindianexpress.com/business/2016/nov/10/the-clever-find-ways-around-demonetisation-raghuram-rajan-said-two-years-ago-1537108.html http://www.newindianexpress.com/business/2016/nov/10/the-cle...