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The BJP govt. has cannily crafted a message where anyone who opposes this move is branded a traitor and conversely anyone who supports it must be a patriot - th

The BJP govt. has cannily crafted a message where anyone who opposes this move is branded a traitor and conversely anyone who supports it must be a patriot - this is largely responsible for the "positive" feelings many people have around this move. That and the fact that the internet savvy already used Credit cards so they were largely shielded from this. The Demonetization on the whole was a failure: 1) The strongest reason for pushing it was as an attack on "Black Money" (undeclared wealth outside the taxation net). More than 90 -95% of the demonetized currency is back in the coffers. This magical "back money" is nowhere to be found. 2) The growth rate fell by at least 1% - whatever the other impact this by itself means a massive loss. 3) A large number of "cash only" small-scale businesses have been badly hit - these people are not internet savvy and do not have a voice but they do exist 4) The so called "leap" to a digital economy is mostly a temporary phenomena - just wait till the new currency is available in sufficient quantities So on balance - all the pain and suffering of the people will NOT bear the reward most of them think it would. Edit: Source for #1 http://timesofindia.indiatimes.com/india/90-of-scrapped-notes-back-in-system-big-dividend-unlikely/articleshow/56210235.cms http://timesofindia.indiatimes.com/india/90-of-scrapped-note... Note that the actual number will be higher as newer estimates are released.

brutus1213 10y ago
I don't understand what happened wrt #1. Was the black money like the mythical WMDs and unicorns? Or did it just make its way into the new money supply?
- euphoria83 10y ago
  It got converted into white money by getting deposited into banks through other (mostly poor) people's accounts. Hence, a sum of 5 million rupees was distributed among 20 people (mostly domestic helps, gardeners, chauffeurs, etc). Each account's deposit is small enough to not raise suspicion. These amounts will slowly be withdrawn. In addition, bank managers also acted in complicity with rich black money holders by documenting that their currency bills were actually exchanged by multiple ordinary folk, whose IDs' copies (necessary proof for exchanging) exist in large numbers at any bank.
  - deleted 10y ago
    [deleted]
  - brutus1213 10y ago
    Any media reports on this? Really sad that a great human toll was paid for naught.
    - denzil_correa 10y ago
      80% of the demonetized currency was back into the banks, 20 days before the final date [0]. Bloomberg reports that the final number could be as high as 97% [1]. Now, the question you should ask is - How much of black money was in cash? The answer is approx. 6% according to Min. of Finance White paper on Black Money. So, effectively - 86% of the currency was demonetized to target 6% of unaccounted income. No matter how you slice/dice this policy, the costs significantly outweigh the benefits. [0] http://timesofindia.indiatimes.com/business/india-business/80-of-old-notes-worth-12-4-lakh-crore-back-in-banks/articleshow/55970699.cms http://timesofindia.indiatimes.com/business/india-business/8... [1] https://www.bloomberg.com/news/articles/2017-01-04/india-said-to-get-97-banned-notes-in-setback-to-graft-crackdown https://www.bloomberg.com/news/articles/2017-01-04/india-sai...
      - deleted 10y ago
        [deleted]
- denzil_correa 10y ago
  Multiple reports and research have said that black money in cash is approx. 6%. So, you can't get more than 6% back anyways and the government decided to demonetize 86% of the currency in the market.
photonwins 10y ago
wrt #1 where are you getting those numbers from? Can you cite the source?
- denzil_correa 10y ago
  The Reserve Bank of India is unusually silent but reports based on sources say that 97% of the demonetized currency is back into the system. http://www.livemint.com/Industry/RlRLIaViu44DYPKASuX76K/Banks-said-to-get-97-of-banned-notes-in-setback-to-Modis-b.html http://www.livemint.com/Industry/RlRLIaViu44DYPKASuX76K/Bank...
  - photonwins 10y ago
    I see, livemint's reputation for reporting facts is as dubious as nytimes. I say this because, livemint is owned by HT Media whose chairperson was a congress Rajyasabha (Upperhouse) MP. https://en.wikipedia.org/wiki/Mint_(newspaper) https://en.wikipedia.org/wiki/Mint_(newspaper) https://en.wikipedia.org/wiki/Shobhana_Bhartia https://en.wikipedia.org/wiki/Shobhana_Bhartia I would rather have some trust in the official RBI's figures, because they are accountable unlike some website.
    - denzil_correa 10y ago
      > I see, livemint's reputation for reporting facts is as dubious as nytimes. I say this because, livemint is owned by HT Media whose chairperson was a congress Rajyasabha (Upperhouse) MP. I doubt you read the link I posted. The report was from Bloomberg not Livemint. Would you now discard that too based on another tenuous link? https://www.bloomberg.com/news/articles/2017-01-04/india-said-to-get-97-banned-notes-in-setback-to-graft-crackdown https://www.bloomberg.com/news/articles/2017-01-04/india-sai... > I would rather have some trust in the official RBI's figures RBI has been unusually silent on this. As of December 10 (21 days before the final date), 80% of the demonetized currency was back into the banks [0]. So, even if you trust the RBI figures - don't keep your hopes high. [0] http://timesofindia.indiatimes.com/business/india-business/80-of-old-notes-worth-12-4-lakh-crore-back-in-banks/articleshow/55970699.cms http://timesofindia.indiatimes.com/business/india-business/8...
bogomipz 10y ago
I'm not following your first point, the denominations that were demonetized and exchanged for new issue were the black currency no? Can you clarify?
mdani 10y ago
About 75,000 CR (roughly $10 billion) did not come back in circulation. I don't think this is a small amount (more so by Indian standards) so while the estimates for #1 were way off, there was something uncovered. Nobody knew in advance how much black money existed so it was a wild guess before this exercise anyway. So I don't think your #1 criticism is valid. Source: http://indianexpress.com/article/business/economy/demonetisation-black-money-cash-crunch-rs-14-lakh-crore-in-old-notes-are-back-only-rs-75000-crore-out-rbi4465542/ http://indianexpress.com/article/business/economy/demonetisa...
- denzil_correa 10y ago
  The question is about Return of Investment. Sure, amount X did "come back" but what amount Y did you spend to make that money come back? Was it worth it? Based on various analyses by experts, it does not seem worth it at all.

brutus1213 10y ago

I don't understand what happened wrt #1. Was the black money like the mythical WMDs and unicorns? Or did it just make its way into the new money supply?

euphoria83 10y ago
It got converted into white money by getting deposited into banks through other (mostly poor) people's accounts. Hence, a sum of 5 million rupees was distributed among 20 people (mostly domestic helps, gardeners, chauffeurs, etc). Each account's deposit is small enough to not raise suspicion. These amounts will slowly be withdrawn. In addition, bank managers also acted in complicity with rich black money holders by documenting that their currency bills were actually exchanged by multiple ordinary folk, whose IDs' copies (necessary proof for exchanging) exist in large numbers at any bank.
- deleted 10y ago
  [deleted]
- brutus1213 10y ago
  Any media reports on this? Really sad that a great human toll was paid for naught.
  - denzil_correa 10y ago
    80% of the demonetized currency was back into the banks, 20 days before the final date [0]. Bloomberg reports that the final number could be as high as 97% [1]. Now, the question you should ask is - How much of black money was in cash? The answer is approx. 6% according to Min. of Finance White paper on Black Money. So, effectively - 86% of the currency was demonetized to target 6% of unaccounted income. No matter how you slice/dice this policy, the costs significantly outweigh the benefits. [0] http://timesofindia.indiatimes.com/business/india-business/80-of-old-notes-worth-12-4-lakh-crore-back-in-banks/articleshow/55970699.cms http://timesofindia.indiatimes.com/business/india-business/8... [1] https://www.bloomberg.com/news/articles/2017-01-04/india-said-to-get-97-banned-notes-in-setback-to-graft-crackdown https://www.bloomberg.com/news/articles/2017-01-04/india-sai...
    - deleted 10y ago
      [deleted]
denzil_correa 10y ago
Multiple reports and research have said that black money in cash is approx. 6%. So, you can't get more than 6% back anyways and the government decided to demonetize 86% of the currency in the market.

photonwins 10y ago

wrt #1 where are you getting those numbers from? Can you cite the source?

denzil_correa 10y ago
The Reserve Bank of India is unusually silent but reports based on sources say that 97% of the demonetized currency is back into the system. http://www.livemint.com/Industry/RlRLIaViu44DYPKASuX76K/Banks-said-to-get-97-of-banned-notes-in-setback-to-Modis-b.html http://www.livemint.com/Industry/RlRLIaViu44DYPKASuX76K/Bank...
- photonwins 10y ago
  I see, livemint's reputation for reporting facts is as dubious as nytimes. I say this because, livemint is owned by HT Media whose chairperson was a congress Rajyasabha (Upperhouse) MP. https://en.wikipedia.org/wiki/Mint_(newspaper) https://en.wikipedia.org/wiki/Mint_(newspaper) https://en.wikipedia.org/wiki/Shobhana_Bhartia https://en.wikipedia.org/wiki/Shobhana_Bhartia I would rather have some trust in the official RBI's figures, because they are accountable unlike some website.
  - denzil_correa 10y ago
    > I see, livemint's reputation for reporting facts is as dubious as nytimes. I say this because, livemint is owned by HT Media whose chairperson was a congress Rajyasabha (Upperhouse) MP. I doubt you read the link I posted. The report was from Bloomberg not Livemint. Would you now discard that too based on another tenuous link? https://www.bloomberg.com/news/articles/2017-01-04/india-said-to-get-97-banned-notes-in-setback-to-graft-crackdown https://www.bloomberg.com/news/articles/2017-01-04/india-sai... > I would rather have some trust in the official RBI's figures RBI has been unusually silent on this. As of December 10 (21 days before the final date), 80% of the demonetized currency was back into the banks [0]. So, even if you trust the RBI figures - don't keep your hopes high. [0] http://timesofindia.indiatimes.com/business/india-business/80-of-old-notes-worth-12-4-lakh-crore-back-in-banks/articleshow/55970699.cms http://timesofindia.indiatimes.com/business/india-business/8...

bogomipz 10y ago

I'm not following your first point, the denominations that were demonetized and exchanged for new issue were the black currency no? Can you clarify?

mdani 10y ago

About 75,000 CR (roughly $10 billion) did not come back in circulation. I don't think this is a small amount (more so by Indian standards) so while the estimates for #1 were way off, there was something uncovered. Nobody knew in advance how much black money existed so it was a wild guess before this exercise anyway. So I don't think your #1 criticism is valid. Source: http://indianexpress.com/article/business/economy/demonetisation-black-money-cash-crunch-rs-14-lakh-crore-in-old-notes-are-back-only-rs-75000-crore-out-rbi4465542/ http://indianexpress.com/article/business/economy/demonetisa...

denzil_correa 10y ago
The question is about Return of Investment. Sure, amount X did "come back" but what amount Y did you spend to make that money come back? Was it worth it? Based on various analyses by experts, it does not seem worth it at all.