5 ms·

As an Indian, I feel this article is overtly negative and fails to capture the real public opinion. For example, everyone in my friends + relatives circle (mix

As an Indian, I feel this article is overtly negative and fails to capture the real public opinion. For example, everyone in my friends + relatives circle (mix of salaried and small business owners) have been impacted, we have borne the grunt of standing in lines for 2-3 hours just to get cash, but each and everyone welcomes the change. We in fact want the govt. now to focus on the other big source of black money - real estate. The NY times also deliberately ignores the positive outcomes e.g. housing loans are now coming to a six year low, online transactions are increasing (which increases tax inflow to the govt. by bringing previously unreported transactions to tax bracket).

3pt14159 10y ago
Why didn't the government print the replacement notes in advance and just say they were modernizing the cash with new anti-counterfeiting technology?
- dman 10y ago
  That could possibly remove the element of surprise once people sized the amount of currency being printed.
- mido22 10y ago
  Indians (most unlike me) are a creative lot, the longer you take to implement a change, higher the amount of black money escapes, and smaller group knowing about the secret, the better
- rajeshp1986 10y ago
  Because black money boarders would get to know and figure out ways to exchange their money. The government officials are big time corrupt and once they get to know they would have figured out ways to sabotage the demonetization plans. The Government & Prime Minister Modi did an excellent job in keeping this as a secret till last minute. Otherwise, this scheme would have been a failure. Unlike the opinion expressed in the article, most Indians are happy about the demonetization step took by the gov. Most daily wage labours and farmers did not face any issues as pointed in this article. They were able to buy food items and necessary stuff and pay the vendor later. India runs on this kind of mutual credit system.
  - denzil_correa 10y ago
    > Otherwise, this scheme would have been a failure. How is this scheme a success? The amount of unaccounted income in cash is 6%, the amount of currency demonetized was 86%. The benefits are minuscule compared to the costs.
    - Broken_Hippo 10y ago
      I would think the main benefit from this point would be in the future. If folks have a lot of money stashed away in their house, tax free - and they dont' turn it in, that money is lost. Moving forward, it will be more difficult to do the same sort of thing (in theory) because of the sheer inconvenience of storing up all of those small bills. And if the people do, in fact, wind up being more upfront about their monies, it'll mean more tax revenue for the government - you know, for all the stuff governments want to do. Roads and security and improvements and such. Basically, this is a push for a better future, with some inconveniences and unfortunate stories in the present. There is some hope. Hope is pretty important. I'm not sure the benefits are so minuscule compared to the costs.
      - denzil_correa 10y ago
        > I would think the main benefit from this point would be in the future. There is nothing to suggest that there would be any change in the future. The incentives and mechanisms still exist. We can hope and think whatever we want - the reality still lurks around. The benefits are absolutely miniscule when you demonetize 86% of the currency to target 6% of unaccounted income in cash.
      - ararar 10y ago
        The people with black money will never again use the rupee as a storage medium. They will convert it into gold or US dollars or euros or <insert fungible thing>. It might lead to a "dollarization" of the black economy. It seems to me, in my opinion, that all this is Modi and the BJP posturing before their base. They are "doing something".
- statguy 10y ago
  Mostly because they didn't think it through. It is very likely that the move was taken almost unilaterally by the Prime Minister on the advice of a maverick, without really taking into confidence the cabinet or the Reserve Bank as the subsequent missteps and fumbles by the government such as the ATM calibration fiasco show.
denzil_correa 10y ago
> The NY times also deliberately ignores the positive outcomes The amount of unaccounted income in cash is 6%. You can definitely have positive outcomes but the costs outweighs the benefits. It's like using an elephant to kill an ant.
- adictator 10y ago
  > The amount of unaccounted income in cash is 6%. I've been looking for this info. How did you arrive at the 6% figure, is it in the NY Times article? Honestly I thought it was a lot bigger, at least low double digits.
  - denzil_correa 10y ago
    I think you are confusing between unaccounted income vs. unaccounted income in cash. The amount of unaccounted income (or black money) in cash is 6%. Just like accounted income, owners do not prefer their unaccounted income to be in cash - they use real estate, gold etc. to park them. This 6% figure is from the Ministry of Finance white paper on black money.
alkonaut 10y ago
How widespread is the use/acceptance of credit/debit cards? Can you typically get by for long periods of time without cash (e.g salary paid to bank account and then you buy food, pay rent with bank transfers or with a card)?
- 8ytecoder 10y ago
  Credit cards are widely accepted in all major cities. I used to carry exactly ₹100 (equivalent of less than $2) with me in cash. My salary was paid directly in the bank account - India has a pretty good electronic fund transfer system and it's pretty instantaneous - unlike ACH or even clearXchange where you need to wait 3-5 days. All restaurants accept cards. All sizeable supermarkets accept cards. This breaks down when you start interfacing with the informal economy - taxi drivers, road side stalls, small markets, street vendors, ...etc. And quite unintuitively for people here - large businesses - real estate, automobiles, big vendors (like the marriage vendors quoted), contractors ...etc. Basically, the formal economy exist within a thin margin of every day purchases. Everything above and below is in black.
  - statguy 10y ago
    I am guessing that you are extremely well to do by Indian standards and probably among the top 10% of the country by wealth. You paint a very optimistic picture, I would be surprised if more than 10% of the Indian population regularly uses a credit card.
    - alkonaut 10y ago
      My question was whether they could (e.g. if cash dries up). Of course, there is always a question of whether people can readily access debit cards and bank accounts. I heard stories from the US where even opening bank accounts and having debit cards (with zero credit) was out of reach for poor people for some reason. If that's the case in India then the fact that groceries and rent can be paid with debit cards or bank transfer is of little use to a large fraction of the population.
panglott 10y ago
Maybe, but the decline in commerce captured there is eyepopping. Projected GDP growth cut 1% so far. Vegetable prices dropping 42-78% due to falling demand. Small-scale services industries cut staff 35%. Job losses in auto manufacturing and construction jobs projected to hit 35% by March. That is a major economic shock.
- deleted 10y ago
  [deleted]
- statguy 10y ago
  In fact I would not be surprised if the growth cut is significantly higher. The previous Prime Minister of India, a renowned economist and the architect of India's economic liberalization in 1991, asserted in the Indian Parliament that the growth cut was likely to be more than 2%.
agustamir 10y ago
I have heard this argument of the Indian middle class standing in lines but having a positive outlook of the future. That’s the general sentiment floating around. Many economists and social scientists in India have been highly critical of the move and its implementation too. The govt didn’t present data about how much dirty cash was scooped up through this move. It’s narrative changed from bringing back dirty money to digital transactions. The population hit hard by this move is the poor, which frankly hasn’t got the kind of access to technology to be using credit and debit cards. Access to smartphones hasn’t picked up to the extent of substituting it as an alternative to cash. What about them? They form a large chunk. Not a lot of media attention has been given to this section of society - the daily wage earners, factory workers paid in cash, farmers[0]. Who’s talking about these folks? I would be more interested in some real insights into this instead of rhetoric and searching for some silver lining. [0] https://thewire.in/89578/costs-of-demonetisation-dampening-spirits-farmers-struggling/ https://thewire.in/89578/costs-of-demonetisation-dampening-s...
- seshagiric 10y ago
  There are also Nobel laureates who supported the move. http://www.firstpost.com/business/demonetisation-two-nobel-laureates-come-out-in-support-say-cashless-is-boon-3190706.html http://www.firstpost.com/business/demonetisation-two-nobel-l...
  - statguy 10y ago
    Virtually no economist of note has supported the move. The ones who did like Kenneth Rogoff, said that it was poorly implemented and India doesn't have the infrastructure to support a cashless economy. The above article that you linked to has selectively mined portions of comments by the Nobel Laureates out of context.
signal11 10y ago
If you're posting on HN, you and your friends are probably not the audience for whom there's pain. Reading the NYT piece, it appears to be hitting contractual labor the hardest - people who earn $220/month or less. From the article: "The worst affected by the cash crunch are the country’s hundreds of millions of farmers, produce vendors, small shop owners and daily-wage laborers who are usually paid in cash at the end of a day’s work." This makes sense as daily-wage laborers would form the backbone of any informal ecnonomy, and the lack of ready cash is killing the informal economy.
- seshagiric 10y ago
  What the article is missing or did not say is that cash is now coming back. It's not like they took cash out permanently without any alternatives. In reality, the 500 and 1000 rupee notes were removed, being replaced with notes of lower denomination. The time period in between the two is where commerce took a hit, no doubt. But it is also true that with cash back, things will return to normal.
  - mavelikara 10y ago
    > The time period in between the two is where commerce took a hit, no doubt. But it is also true that with cash back, things will return to normal. For you, it looks like, it will - no longer standing in the lines for 2-3 hours. But for many others in the country the effects are probably not as easily reversible.
- thwertyu 10y ago
  You can also be sure the cognac sipping bureau chiefs aren't well apprised of the problems of such people. I spent over a week in a rural area and it didn't appear like the agricultural workers were facing problems that would impact their livelihoods significantly. Part of this has to do with the widespread availability of ₹100 notes.
CyberDildonics 10y ago
> We in fact want the govt. now to focus on the other big source of black money - real estate How much black money did this stop?

3pt14159 10y ago

Why didn't the government print the replacement notes in advance and just say they were modernizing the cash with new anti-counterfeiting technology?

dman 10y ago
That could possibly remove the element of surprise once people sized the amount of currency being printed.
mido22 10y ago
Indians (most unlike me) are a creative lot, the longer you take to implement a change, higher the amount of black money escapes, and smaller group knowing about the secret, the better
rajeshp1986 10y ago
Because black money boarders would get to know and figure out ways to exchange their money. The government officials are big time corrupt and once they get to know they would have figured out ways to sabotage the demonetization plans. The Government & Prime Minister Modi did an excellent job in keeping this as a secret till last minute. Otherwise, this scheme would have been a failure. Unlike the opinion expressed in the article, most Indians are happy about the demonetization step took by the gov. Most daily wage labours and farmers did not face any issues as pointed in this article. They were able to buy food items and necessary stuff and pay the vendor later. India runs on this kind of mutual credit system.
- denzil_correa 10y ago
  > Otherwise, this scheme would have been a failure. How is this scheme a success? The amount of unaccounted income in cash is 6%, the amount of currency demonetized was 86%. The benefits are minuscule compared to the costs.
  - Broken_Hippo 10y ago
    I would think the main benefit from this point would be in the future. If folks have a lot of money stashed away in their house, tax free - and they dont' turn it in, that money is lost. Moving forward, it will be more difficult to do the same sort of thing (in theory) because of the sheer inconvenience of storing up all of those small bills. And if the people do, in fact, wind up being more upfront about their monies, it'll mean more tax revenue for the government - you know, for all the stuff governments want to do. Roads and security and improvements and such. Basically, this is a push for a better future, with some inconveniences and unfortunate stories in the present. There is some hope. Hope is pretty important. I'm not sure the benefits are so minuscule compared to the costs.
    - denzil_correa 10y ago
      > I would think the main benefit from this point would be in the future. There is nothing to suggest that there would be any change in the future. The incentives and mechanisms still exist. We can hope and think whatever we want - the reality still lurks around. The benefits are absolutely miniscule when you demonetize 86% of the currency to target 6% of unaccounted income in cash.
    - ararar 10y ago
      The people with black money will never again use the rupee as a storage medium. They will convert it into gold or US dollars or euros or <insert fungible thing>. It might lead to a "dollarization" of the black economy. It seems to me, in my opinion, that all this is Modi and the BJP posturing before their base. They are "doing something".
statguy 10y ago
Mostly because they didn't think it through. It is very likely that the move was taken almost unilaterally by the Prime Minister on the advice of a maverick, without really taking into confidence the cabinet or the Reserve Bank as the subsequent missteps and fumbles by the government such as the ATM calibration fiasco show.

denzil_correa 10y ago

> The NY times also deliberately ignores the positive outcomes The amount of unaccounted income in cash is 6%. You can definitely have positive outcomes but the costs outweighs the benefits. It's like using an elephant to kill an ant.

adictator 10y ago
> The amount of unaccounted income in cash is 6%. I've been looking for this info. How did you arrive at the 6% figure, is it in the NY Times article? Honestly I thought it was a lot bigger, at least low double digits.
- denzil_correa 10y ago
  I think you are confusing between unaccounted income vs. unaccounted income in cash. The amount of unaccounted income (or black money) in cash is 6%. Just like accounted income, owners do not prefer their unaccounted income to be in cash - they use real estate, gold etc. to park them. This 6% figure is from the Ministry of Finance white paper on black money.

alkonaut 10y ago

How widespread is the use/acceptance of credit/debit cards? Can you typically get by for long periods of time without cash (e.g salary paid to bank account and then you buy food, pay rent with bank transfers or with a card)?

8ytecoder 10y ago
Credit cards are widely accepted in all major cities. I used to carry exactly ₹100 (equivalent of less than $2) with me in cash. My salary was paid directly in the bank account - India has a pretty good electronic fund transfer system and it's pretty instantaneous - unlike ACH or even clearXchange where you need to wait 3-5 days. All restaurants accept cards. All sizeable supermarkets accept cards. This breaks down when you start interfacing with the informal economy - taxi drivers, road side stalls, small markets, street vendors, ...etc. And quite unintuitively for people here - large businesses - real estate, automobiles, big vendors (like the marriage vendors quoted), contractors ...etc. Basically, the formal economy exist within a thin margin of every day purchases. Everything above and below is in black.
- statguy 10y ago
  I am guessing that you are extremely well to do by Indian standards and probably among the top 10% of the country by wealth. You paint a very optimistic picture, I would be surprised if more than 10% of the Indian population regularly uses a credit card.
  - alkonaut 10y ago
    My question was whether they could (e.g. if cash dries up). Of course, there is always a question of whether people can readily access debit cards and bank accounts. I heard stories from the US where even opening bank accounts and having debit cards (with zero credit) was out of reach for poor people for some reason. If that's the case in India then the fact that groceries and rent can be paid with debit cards or bank transfer is of little use to a large fraction of the population.

panglott 10y ago

Maybe, but the decline in commerce captured there is eyepopping. Projected GDP growth cut 1% so far. Vegetable prices dropping 42-78% due to falling demand. Small-scale services industries cut staff 35%. Job losses in auto manufacturing and construction jobs projected to hit 35% by March. That is a major economic shock.

deleted 10y ago
[deleted]
statguy 10y ago
In fact I would not be surprised if the growth cut is significantly higher. The previous Prime Minister of India, a renowned economist and the architect of India's economic liberalization in 1991, asserted in the Indian Parliament that the growth cut was likely to be more than 2%.

agustamir 10y ago

I have heard this argument of the Indian middle class standing in lines but having a positive outlook of the future. That’s the general sentiment floating around. Many economists and social scientists in India have been highly critical of the move and its implementation too. The govt didn’t present data about how much dirty cash was scooped up through this move. It’s narrative changed from bringing back dirty money to digital transactions. The population hit hard by this move is the poor, which frankly hasn’t got the kind of access to technology to be using credit and debit cards. Access to smartphones hasn’t picked up to the extent of substituting it as an alternative to cash. What about them? They form a large chunk. Not a lot of media attention has been given to this section of society - the daily wage earners, factory workers paid in cash, farmers[0]. Who’s talking about these folks? I would be more interested in some real insights into this instead of rhetoric and searching for some silver lining. [0] https://thewire.in/89578/costs-of-demonetisation-dampening-spirits-farmers-struggling/ https://thewire.in/89578/costs-of-demonetisation-dampening-s...

seshagiric 10y ago
There are also Nobel laureates who supported the move. http://www.firstpost.com/business/demonetisation-two-nobel-laureates-come-out-in-support-say-cashless-is-boon-3190706.html http://www.firstpost.com/business/demonetisation-two-nobel-l...
- statguy 10y ago
  Virtually no economist of note has supported the move. The ones who did like Kenneth Rogoff, said that it was poorly implemented and India doesn't have the infrastructure to support a cashless economy. The above article that you linked to has selectively mined portions of comments by the Nobel Laureates out of context.

signal11 10y ago

If you're posting on HN, you and your friends are probably not the audience for whom there's pain. Reading the NYT piece, it appears to be hitting contractual labor the hardest - people who earn $220/month or less. From the article: "The worst affected by the cash crunch are the country’s hundreds of millions of farmers, produce vendors, small shop owners and daily-wage laborers who are usually paid in cash at the end of a day’s work." This makes sense as daily-wage laborers would form the backbone of any informal ecnonomy, and the lack of ready cash is killing the informal economy.

seshagiric 10y ago
What the article is missing or did not say is that cash is now coming back. It's not like they took cash out permanently without any alternatives. In reality, the 500 and 1000 rupee notes were removed, being replaced with notes of lower denomination. The time period in between the two is where commerce took a hit, no doubt. But it is also true that with cash back, things will return to normal.
- mavelikara 10y ago
  > The time period in between the two is where commerce took a hit, no doubt. But it is also true that with cash back, things will return to normal. For you, it looks like, it will - no longer standing in the lines for 2-3 hours. But for many others in the country the effects are probably not as easily reversible.
thwertyu 10y ago
You can also be sure the cognac sipping bureau chiefs aren't well apprised of the problems of such people. I spent over a week in a rural area and it didn't appear like the agricultural workers were facing problems that would impact their livelihoods significantly. Part of this has to do with the widespread availability of ₹100 notes.

CyberDildonics 10y ago

> We in fact want the govt. now to focus on the other big source of black money - real estate How much black money did this stop?