7 ms·

Can you elaborate on the "disaster" of demonitization? The only things I've read have been breathless tech press coverage about online transactions and such.

by awongh 9y ago

balladeer 9y ago
Oh, it was a disaster both technically and economically and it turned out to be a humanitarian disaster in many rural areas. Made life hell and since it was not even half baked (it wasn't put in the oven at all) it affected people worse than anyone would have anticipated, if at all. It was a whimsical decision followed by distorted data floated around as facts, and then rumours, FUD being released, leaked and misrepresented from the Govt or related sources. I have not really done any elaboration here. I would just link you to https://www.google.com/search?q=how+india%27s+demonetization+was+a+disaster https://www.google.com/search?q=how+india%27s+demonetization.... I can answer follow up questions if any (or hopefully others might pitch in whether disagree or agree). I am assuming you are not from the place. I am not into finance and economics so I will try my best. I have one foot in an Indian metro and another in a village near a small town and I travel extensively during that time (in fact I happened to backpack across a fair portion of the country for 2 months during that period). And yeah, a lot of initial tech coverage just limited themselves to the failed online transactions (and similar issues in the cities) and completely ignored what was happening to the rural people and people in the small towns where most of India lives and does business. It was far far far worse.
- horsecaptin 9y ago
  Here's a more balanced search query: https://duckduckgo.com/?q=Results+from+India%27s+demonetization&t=brave&ia=web https://duckduckgo.com/?q=Results+from+India%27s+demonetizat...
- sarang23592 9y ago
  I am from a small town in India(Jammu). It was not as bad for the people you are making it out to be. And what you are googling is a confirmation bias. You can search how demonetization was actually impactful and you will see the corresponding results.
  - vijaybritto 9y ago
    A small town in Jammu doesn't represent the entire country you know. The impact of demonetization is incredibly bad on the poor. The GDP has come down. The govt acknowledges it in indirect ways like increasing the fiscal spending by 500 Billion rupees. It's insane that even educated people don't accept the truth and get carried away by emotional rhetoric. What are you all expecting exactly as economic slowdown? This is it!
    - sarang23592 9y ago
      >A small town in Jammu doesn't represent the entire country you know I never said it does and I never said that demonetization was successful. I was just replying with first hand experience that impact of demonetization was not too bad for the people from what I saw and that the google will show what you want it to show. >It's insane that even educated people don't accept the truth and get carried away by emotional rhetoric What made you think that I got carried away by emotional rhetoric?
      - vijaybritto 9y ago
        > What made you think that I got carried away by emotional rhetoric? Refusing to accept or understand failure means that there is something else that makes you argue for it even when there are explicit results for everyone to see. Also it was not directed at you personally, rather at anyone who supports this decision still. Again, the amount of impact it has caused is there for everyone to see. The numbers are out. Arguing anymore about this is like arguing with flat earth society. Let's not downplay the Poor's suffering.
        foo101 9y ago
        > Again, the amount of impact it has caused is there for everyone to see. That's your opinion. Two people have already mentioned that what they saw is inconsistent with what you claim everyone can see. Do you have a personal anecdote to share that describes your experience? If yes, do so. Do you have substantive evidence that your experience has been the experience of the majority? If yes, cite such statistics from trusted sources.
- awongh 9y ago
  I found this interesting article: https://www.forbes.com/sites/wadeshepard/2017/01/03/after-day-50-the-results-from-indias-demonetization-campaign-are-in/#6f3247eb50d1 https://www.forbes.com/sites/wadeshepard/2017/01/03/after-da... They mention a parable about a crocodile, where things will eventually re-adjust to favor the black market just as much as before, and these policies are just an inconvenience.... I'm not sure I understand how that would work, if transactions really do start to shift online. It seems to me that at the very least these policies will shift things in the right direction? Or is that an incorrect interpretation of the situation? Is it more a case of botched roll out of policies that are essentially positive for india, or is it just a political maneuver that won't change anything?
_jgdh 9y ago
Demonetization 101 - India is a cash based economy. Most people, apart from the few doctors, lawyers, engineers etcz, are paid in cash and in turn pay for everything in cash. - Since many businesses operate entirely in cash, revenue figures and tax payments are entirely self reported. The govt sees less tax receipts than it thinks it should. - in November 2016 the govt decided that all high value notes were no longer legal tender and had to be returned to banks. The idea at the time being that businessmen who had hoarded mountains of cash would be forced to let their wealth disappear or deposit it and explain their sources of income. Also, people indulging in illegal activities such as politicians accepting bribes would be forced to throw the money away - That's not what happened. - As I said, the economy is cash based. With everyone's cash invalidated and the ATMs requiring retooling before they could work with the new notes, the economy ground to a halt. People stopped making purchases they otherwise would have, both large and small. They bought fewer TVs and washing machines, and also fewer cigarettes, fewer meals at restaurants, fewer clothes, fewer vacations. Every single sector saw their revenues fall, and a lot of people, mostly rural, lost their jobs. Farmers at the time were selling their produce for less than a tenth of what they did previously because they were desperate for money. So yes, GDP took a hit. But it's cool because the govt fudged the figures and made it appear better than it actually was. - The real kicker however, is that the people with mountains of cash figured out ways to move that money into their accounts without raising any eyebrows. Brokers that did this merely took a 10-15% cut, rather than the 30-45% cut the govt hoped to take. 99% of notes were returned, hardly the success the govt hoped for. - Later they changed the goalposts, claiming that the goal of this exercise was to promote digital payments, not catch the tax dodgers. Hogwash. So to recap 1. Govt comes up with stupid scheme. 2. Implements it poorly when replacement notes are not available. 3. Scheme fails, innocent people are hurt, jobs are lost, growth grinds to a halt. 4. Govt shifts goalposts and claims victory. Sources 1. The high economic costs of India's demonetization - https://www.economist.com/news/finance-and-economics/21713842-benefits-withdrawing-86-rupees-circulation-remain-elusive https://www.economist.com/news/finance-and-economics/2171384... 2. Growth remains sluggish a year later - http://m.economictimes.com/news/economy/indicators/most-accurate-economist-sees-more-pain-from-modis-note-ban/articleshow/60318838.cms http://m.economictimes.com/news/economy/indicators/most-accu...
- puranjay 9y ago
thewhitetulip 9y ago
because our media is basically the mouthpiece of the govt!

Can you elaborate on the "disaster" of demonitization? The only things I've read have been breathless tech press coverage about online transactions and such.

by awongh 9y ago

Can you elaborate on the "disaster" of demonitization? The only things I've read have been breathless tech press coverage about online transactions and such.

balladeer 9y ago

Oh, it was a disaster both technically and economically and it turned out to be a humanitarian disaster in many rural areas. Made life hell and since it was not even half baked (it wasn't put in the oven at all) it affected people worse than anyone would have anticipated, if at all. It was a whimsical decision followed by distorted data floated around as facts, and then rumours, FUD being released, leaked and misrepresented from the Govt or related sources. I have not really done any elaboration here. I would just link you to https://www.google.com/search?q=how+india%27s+demonetization+was+a+disaster https://www.google.com/search?q=how+india%27s+demonetization.... I can answer follow up questions if any (or hopefully others might pitch in whether disagree or agree). I am assuming you are not from the place. I am not into finance and economics so I will try my best. I have one foot in an Indian metro and another in a village near a small town and I travel extensively during that time (in fact I happened to backpack across a fair portion of the country for 2 months during that period). And yeah, a lot of initial tech coverage just limited themselves to the failed online transactions (and similar issues in the cities) and completely ignored what was happening to the rural people and people in the small towns where most of India lives and does business. It was far far far worse.

horsecaptin 9y ago
Here's a more balanced search query: https://duckduckgo.com/?q=Results+from+India%27s+demonetization&t=brave&ia=web https://duckduckgo.com/?q=Results+from+India%27s+demonetizat...
sarang23592 9y ago
I am from a small town in India(Jammu). It was not as bad for the people you are making it out to be. And what you are googling is a confirmation bias. You can search how demonetization was actually impactful and you will see the corresponding results.
- vijaybritto 9y ago
  A small town in Jammu doesn't represent the entire country you know. The impact of demonetization is incredibly bad on the poor. The GDP has come down. The govt acknowledges it in indirect ways like increasing the fiscal spending by 500 Billion rupees. It's insane that even educated people don't accept the truth and get carried away by emotional rhetoric. What are you all expecting exactly as economic slowdown? This is it!
  - sarang23592 9y ago
    >A small town in Jammu doesn't represent the entire country you know I never said it does and I never said that demonetization was successful. I was just replying with first hand experience that impact of demonetization was not too bad for the people from what I saw and that the google will show what you want it to show. >It's insane that even educated people don't accept the truth and get carried away by emotional rhetoric What made you think that I got carried away by emotional rhetoric?
    - vijaybritto 9y ago
      > What made you think that I got carried away by emotional rhetoric? Refusing to accept or understand failure means that there is something else that makes you argue for it even when there are explicit results for everyone to see. Also it was not directed at you personally, rather at anyone who supports this decision still. Again, the amount of impact it has caused is there for everyone to see. The numbers are out. Arguing anymore about this is like arguing with flat earth society. Let's not downplay the Poor's suffering.
      - foo101 9y ago
        > Again, the amount of impact it has caused is there for everyone to see. That's your opinion. Two people have already mentioned that what they saw is inconsistent with what you claim everyone can see. Do you have a personal anecdote to share that describes your experience? If yes, do so. Do you have substantive evidence that your experience has been the experience of the majority? If yes, cite such statistics from trusted sources.
awongh 9y ago
I found this interesting article: https://www.forbes.com/sites/wadeshepard/2017/01/03/after-day-50-the-results-from-indias-demonetization-campaign-are-in/#6f3247eb50d1 https://www.forbes.com/sites/wadeshepard/2017/01/03/after-da... They mention a parable about a crocodile, where things will eventually re-adjust to favor the black market just as much as before, and these policies are just an inconvenience.... I'm not sure I understand how that would work, if transactions really do start to shift online. It seems to me that at the very least these policies will shift things in the right direction? Or is that an incorrect interpretation of the situation? Is it more a case of botched roll out of policies that are essentially positive for india, or is it just a political maneuver that won't change anything?

_jgdh 9y ago

Demonetization 101 - India is a cash based economy. Most people, apart from the few doctors, lawyers, engineers etcz, are paid in cash and in turn pay for everything in cash. - Since many businesses operate entirely in cash, revenue figures and tax payments are entirely self reported. The govt sees less tax receipts than it thinks it should. - in November 2016 the govt decided that all high value notes were no longer legal tender and had to be returned to banks. The idea at the time being that businessmen who had hoarded mountains of cash would be forced to let their wealth disappear or deposit it and explain their sources of income. Also, people indulging in illegal activities such as politicians accepting bribes would be forced to throw the money away - That's not what happened. - As I said, the economy is cash based. With everyone's cash invalidated and the ATMs requiring retooling before they could work with the new notes, the economy ground to a halt. People stopped making purchases they otherwise would have, both large and small. They bought fewer TVs and washing machines, and also fewer cigarettes, fewer meals at restaurants, fewer clothes, fewer vacations. Every single sector saw their revenues fall, and a lot of people, mostly rural, lost their jobs. Farmers at the time were selling their produce for less than a tenth of what they did previously because they were desperate for money. So yes, GDP took a hit. But it's cool because the govt fudged the figures and made it appear better than it actually was. - The real kicker however, is that the people with mountains of cash figured out ways to move that money into their accounts without raising any eyebrows. Brokers that did this merely took a 10-15% cut, rather than the 30-45% cut the govt hoped to take. 99% of notes were returned, hardly the success the govt hoped for. - Later they changed the goalposts, claiming that the goal of this exercise was to promote digital payments, not catch the tax dodgers. Hogwash. So to recap 1. Govt comes up with stupid scheme. 2. Implements it poorly when replacement notes are not available. 3. Scheme fails, innocent people are hurt, jobs are lost, growth grinds to a halt. 4. Govt shifts goalposts and claims victory. Sources 1. The high economic costs of India's demonetization - https://www.economist.com/news/finance-and-economics/21713842-benefits-withdrawing-86-rupees-circulation-remain-elusive https://www.economist.com/news/finance-and-economics/2171384... 2. Growth remains sluggish a year later - http://m.economictimes.com/news/economy/indicators/most-accurate-economist-sees-more-pain-from-modis-note-ban/articleshow/60318838.cms http://m.economictimes.com/news/economy/indicators/most-accu...

puranjay 9y ago

thewhitetulip 9y ago

because our media is basically the mouthpiece of the govt!