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> it is still unclear whether it worked or not. Didn't they report that almost all the cash came back - proving that there was basically no black money returne

> it is still unclear whether it worked or not. Didn't they report that almost all the cash came back - proving that there was basically no black money returned and the only people they inconvenienced was ordinary citizens with their hard-earned cash reserves?

sudhirj 9y ago
All the cash coming back was one thing, now everyone has to file their income tax returns, which is when it gets interesting. There’s going to be a lot of people filing tax returns for the first time, and a lot of explaining to do.
- crdoconnor 9y ago
  Black money largely isn't held as large stacks of suspicious looking cash - that's a Bollywood trope. It's invested domestically in real estate, art, gold, or other assets, or held offshore, either in the form of freely convertible currency or other assets, which is why 98.96% of the cash was returned. I strongly doubt a significant number of criminals openly advertised their possession of black money by returning it themselves. Modi's ploy was an unmitigated failure.
  - xapata 9y ago
    If criminals didn't turn in the cash, then it evaporated, which is just as good. No?
    - crdoconnor 9y ago
      No. Just 1% of the cash evaporated, as opposed to 33% as Modi predicted, and majority of that was probably just due to loss or unlucky circumstance. For such a disruptive event, that's pathetic. The only winner was the banking system, who saw one of their major competitors (cash), hobbled. Modi now seems to be saying that this was the point all along.
      - Retric 9y ago
        Direct evaporation is only one part of this. You need to consider the overhead as people tried to get money into the banking system without alerting the government. AKA, If you started with X money hidden then you don't get to keep 100% of that money if you hand it to other people to deposit. On top of that people where caught, so actual black money disappearing was much greater than 1%.
        dump121 9y ago
        Overhead didn't reduce black money, it just changed hands. From merchants to bankers and launderers.
        Retric 9y ago
        If you hand money being saved to several people, those Y people are going to spend the money they just got. Thus, moving it into the taxed economy.
      - product50 9y ago
        Just because cash came back into the system doesn't mean anything. The real troubles for those avoiding income tax begins now as the govt tries to go after those who replaced more cash than their declared income.
  - sudhirj 9y ago
    For real estate, art, gold, assets and overseas moves, the question still remains as to what the sellers then did with the cash. The buyers might have gotten away, but the sellers are still caught with bags of that need to be laundered. There was a huge collateral cost, I don't think anyone can deny that, but whether it was worth is still too early to call.
    - mattnewton 9y ago
      The sellers reported they sold real estate, art and gold before the cutoff, no? How would the government know they sold it illicitly if it was cash? How would some of these art, gold and real estates salespeople know for that matter?
- wtmt 9y ago
  Some would point that a lot of Jan Dhan accounts were flush with much smaller amounts. So any large sums of cash held by someone found a way to get into the system and back out again within a few months.
webbrahmin 9y ago
I am not an economist or a sociologist. These are my personal observations. Ordinary citizen is not a monolith in India. Ordinary citizen can be subdivided into (with overlap) 1. Middle Class 2. Salaried Class 3. Farmers 4. Daily Wage Workers 5. Unskilled, Semi-skilled and skilled working in Unorganized sector. 6. ... and so on Different people were inconvenienced to different extent. Middle class salaried category was inconvenienced to the extent that there was a cash crunch and India being a cash economy buying stuff became difficult for a few days. The ruling party the BJP won a major state election with record margin just 4 months after demonetization. Probably a large majority was not too much inconvenienced. BJP also re-aligned with a political ally in another major state. Had ordinary people being inconvenienced as some stories in media and reports suggest BJP would have become a political pariah. A lot of money has come back to the banking system. How it happened is another long story. This has reduced bank lending rates. Banks are offering housing, business and other loans at a lower rate.
- sifar 9y ago
  >> Had ordinary people being inconvenienced as some stories in media and reports suggest BJP would have become a political pariah. Chalk it up to the successful propaganda by the party. Anybody against it was either a corrupt/black money hoarder or unpatriotic or both.Nobody wanted to be labeled that with the growing nationalism. Of all the leaders of corporate houses only one spoke out against demonetization. >> This has reduced bank lending rates. Banks are offering housing, business and other loans at a lower rate. Yes, a major side-effect of this is that banks flushed with cash can show a reduction in NPAs(which is a major crisis India's banking sector is grappling with), and can freely lend again, which will lead to more NPAs down the line.
  - product50 9y ago
    Yes - basically everything about this move was bad but BJP is so politically skillful that not only they came out unscathed but continued winning! And nice try on using NPAs as an argument. Not denying it could have been a factor but simply saying that was the reason the govt made such a big move vs. potential tax benefits & getting ppl to open more bank accounts seems ignorant.
ashwinm 9y ago
In india two third economy was unaccounted. With demonetization everyone had no other option but to deposit it in to bank accounts. Which made a money trail. -- 2$-3$ billion worth of old currency IT department last year. -- The total tax base is increased. Evidence of this is that PAN card applications have increased 3x (Daily Issuance of PAN Nearly Triples Post Demonetisation), number of people filing tax has grown a lot [Income tax base expands by 9.1 mn people after note ban) and net tax collections is also significantly up. This is good for a lot of reasons. It makes the taxation fair and also can help government increased budgetary allocations. -- Economy is able to run normally with 20% lower currency levels.Which makes it harder for households to hoard money. When money is not hoarded, it makes for greater efficiency in the economy. -- Bank deposits have grown significantly -- Digital banking became a way of life atleast in the urban India.
- nocoder 9y ago
  >Digital banking became a way of life atleast in the urban India. No it didnt [1] >The total tax base is increased. Questionable [2] [1] http://www.livemint.com/Industry/S0AwBRAYuGbJw0SoXOaUaO/One-year-after-demonetisation-cash-is-still-king.html http://www.livemint.com/Industry/S0AwBRAYuGbJw0SoXOaUaO/One-... [2] https://www.ndtv.com/india-news/did-demonetisation-increase-tax-base-not-really-1772370 https://www.ndtv.com/india-news/did-demonetisation-increase-... https://thewire.in/168434/fact-check-claims-increase-income-tax-base-direct-taxes/ https://thewire.in/168434/fact-check-claims-increase-income-... http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-we-measure-demonetisations-impact-on-income-tax-collect.html http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-...
  - ashwinm 9y ago
    Your sources are staggeringly biased. Misrepresenting statistics by making it intentionally complicated. >No it didnt Average ~25-30% growth in urban india.[1] > Questionable Seriously ? Official data is available. Can't you judge it yourself? Communist 'thewire' is your source that too for when there is official clarifications?[4] [1] https://timesofindia.indiatimes.com/img/61556580/Master.jpg https://timesofindia.indiatimes.com/img/61556580/Master.jpg [2] https://timesofindia.indiatimes.com/img/61556578/Master.jpg https://timesofindia.indiatimes.com/img/61556578/Master.jpg [3] https://www.rbi.org.in/scripts/neftview.aspx https://www.rbi.org.in/scripts/neftview.aspx [4] http://pib.nic.in/newsite/PrintRelease.aspx?relid=170087 http://pib.nic.in/newsite/PrintRelease.aspx?relid=170087 [5] http://indianexpress.com/article/business/demonetisation-impact-nearly-25-per-cent-increase-in-income-tax-returns-filing-in-current-fiscal-year-says-cbdt-4786458/ http://indianexpress.com/article/business/demonetisation-imp...

sudhirj 9y ago

All the cash coming back was one thing, now everyone has to file their income tax returns, which is when it gets interesting. There’s going to be a lot of people filing tax returns for the first time, and a lot of explaining to do.

crdoconnor 9y ago
Black money largely isn't held as large stacks of suspicious looking cash - that's a Bollywood trope. It's invested domestically in real estate, art, gold, or other assets, or held offshore, either in the form of freely convertible currency or other assets, which is why 98.96% of the cash was returned. I strongly doubt a significant number of criminals openly advertised their possession of black money by returning it themselves. Modi's ploy was an unmitigated failure.
- xapata 9y ago
  If criminals didn't turn in the cash, then it evaporated, which is just as good. No?
  - crdoconnor 9y ago
    No. Just 1% of the cash evaporated, as opposed to 33% as Modi predicted, and majority of that was probably just due to loss or unlucky circumstance. For such a disruptive event, that's pathetic. The only winner was the banking system, who saw one of their major competitors (cash), hobbled. Modi now seems to be saying that this was the point all along.
    - Retric 9y ago
      Direct evaporation is only one part of this. You need to consider the overhead as people tried to get money into the banking system without alerting the government. AKA, If you started with X money hidden then you don't get to keep 100% of that money if you hand it to other people to deposit. On top of that people where caught, so actual black money disappearing was much greater than 1%.
      - dump121 9y ago
        Overhead didn't reduce black money, it just changed hands. From merchants to bankers and launderers.
        Retric 9y ago
        If you hand money being saved to several people, those Y people are going to spend the money they just got. Thus, moving it into the taxed economy.
    - product50 9y ago
      Just because cash came back into the system doesn't mean anything. The real troubles for those avoiding income tax begins now as the govt tries to go after those who replaced more cash than their declared income.
- sudhirj 9y ago
  For real estate, art, gold, assets and overseas moves, the question still remains as to what the sellers then did with the cash. The buyers might have gotten away, but the sellers are still caught with bags of that need to be laundered. There was a huge collateral cost, I don't think anyone can deny that, but whether it was worth is still too early to call.
  - mattnewton 9y ago
    The sellers reported they sold real estate, art and gold before the cutoff, no? How would the government know they sold it illicitly if it was cash? How would some of these art, gold and real estates salespeople know for that matter?
wtmt 9y ago
Some would point that a lot of Jan Dhan accounts were flush with much smaller amounts. So any large sums of cash held by someone found a way to get into the system and back out again within a few months.

webbrahmin 9y ago

I am not an economist or a sociologist. These are my personal observations. Ordinary citizen is not a monolith in India. Ordinary citizen can be subdivided into (with overlap) 1. Middle Class 2. Salaried Class 3. Farmers 4. Daily Wage Workers 5. Unskilled, Semi-skilled and skilled working in Unorganized sector. 6. ... and so on Different people were inconvenienced to different extent. Middle class salaried category was inconvenienced to the extent that there was a cash crunch and India being a cash economy buying stuff became difficult for a few days. The ruling party the BJP won a major state election with record margin just 4 months after demonetization. Probably a large majority was not too much inconvenienced. BJP also re-aligned with a political ally in another major state. Had ordinary people being inconvenienced as some stories in media and reports suggest BJP would have become a political pariah. A lot of money has come back to the banking system. How it happened is another long story. This has reduced bank lending rates. Banks are offering housing, business and other loans at a lower rate.

sifar 9y ago
>> Had ordinary people being inconvenienced as some stories in media and reports suggest BJP would have become a political pariah. Chalk it up to the successful propaganda by the party. Anybody against it was either a corrupt/black money hoarder or unpatriotic or both.Nobody wanted to be labeled that with the growing nationalism. Of all the leaders of corporate houses only one spoke out against demonetization. >> This has reduced bank lending rates. Banks are offering housing, business and other loans at a lower rate. Yes, a major side-effect of this is that banks flushed with cash can show a reduction in NPAs(which is a major crisis India's banking sector is grappling with), and can freely lend again, which will lead to more NPAs down the line.
- product50 9y ago
  Yes - basically everything about this move was bad but BJP is so politically skillful that not only they came out unscathed but continued winning! And nice try on using NPAs as an argument. Not denying it could have been a factor but simply saying that was the reason the govt made such a big move vs. potential tax benefits & getting ppl to open more bank accounts seems ignorant.

ashwinm 9y ago

In india two third economy was unaccounted. With demonetization everyone had no other option but to deposit it in to bank accounts. Which made a money trail. -- 2$-3$ billion worth of old currency IT department last year. -- The total tax base is increased. Evidence of this is that PAN card applications have increased 3x (Daily Issuance of PAN Nearly Triples Post Demonetisation), number of people filing tax has grown a lot [Income tax base expands by 9.1 mn people after note ban) and net tax collections is also significantly up. This is good for a lot of reasons. It makes the taxation fair and also can help government increased budgetary allocations. -- Economy is able to run normally with 20% lower currency levels.Which makes it harder for households to hoard money. When money is not hoarded, it makes for greater efficiency in the economy. -- Bank deposits have grown significantly -- Digital banking became a way of life atleast in the urban India.

nocoder 9y ago
>Digital banking became a way of life atleast in the urban India. No it didnt [1] >The total tax base is increased. Questionable [2] [1] http://www.livemint.com/Industry/S0AwBRAYuGbJw0SoXOaUaO/One-year-after-demonetisation-cash-is-still-king.html http://www.livemint.com/Industry/S0AwBRAYuGbJw0SoXOaUaO/One-... [2] https://www.ndtv.com/india-news/did-demonetisation-increase-tax-base-not-really-1772370 https://www.ndtv.com/india-news/did-demonetisation-increase-... https://thewire.in/168434/fact-check-claims-increase-income-tax-base-direct-taxes/ https://thewire.in/168434/fact-check-claims-increase-income-... http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-we-measure-demonetisations-impact-on-income-tax-collect.html http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-...
- ashwinm 9y ago
  Your sources are staggeringly biased. Misrepresenting statistics by making it intentionally complicated. >No it didnt Average ~25-30% growth in urban india.[1] > Questionable Seriously ? Official data is available. Can't you judge it yourself? Communist 'thewire' is your source that too for when there is official clarifications?[4] [1] https://timesofindia.indiatimes.com/img/61556580/Master.jpg https://timesofindia.indiatimes.com/img/61556580/Master.jpg [2] https://timesofindia.indiatimes.com/img/61556578/Master.jpg https://timesofindia.indiatimes.com/img/61556578/Master.jpg [3] https://www.rbi.org.in/scripts/neftview.aspx https://www.rbi.org.in/scripts/neftview.aspx [4] http://pib.nic.in/newsite/PrintRelease.aspx?relid=170087 http://pib.nic.in/newsite/PrintRelease.aspx?relid=170087 [5] http://indianexpress.com/article/business/demonetisation-impact-nearly-25-per-cent-increase-in-income-tax-returns-filing-in-current-fiscal-year-says-cbdt-4786458/ http://indianexpress.com/article/business/demonetisation-imp...