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RBI has mismanaged our currency? Sorry the global crude oil prices are soaring, thanks to sanctions on India's major oil supplier(Iran). Major world economies

by kamaal 13y ago

RBI has mismanaged our currency? Sorry the global crude oil prices are soaring, thanks to sanctions on India's major oil supplier(Iran). Major world economies are in a state of war since the whole past decade. None of these are under RBI or Government of India's control. Yes there is corruption, but we are equal partners to that. In case you haven't noticed bulk of India's import business depends on software. There is massive anti-outsourcing wave, and at the same Indian start up industry hasn't really compensated for that. There is every reason why the government can be skeptical Bitcoin in India. We have massive tax evasion situation prevalent here. This is not a anti-technology anti-capitalism stance the government is having here. The public cheats on taxes so often, the government has 0 reasons why it should trust some thing new like Bitcoin.

ashray 13y ago
You are right that the entire blame for INR depreciation does not squarely sit on the shoulders of the RBI. It is a problem with reasons that go far beyond the control of the RBI. Yes, there is a huge current account deficit (export/import imbalance) and that is a big part of it. However, as the agency that manages the circulation and control of the currency, ultimately I look at the RBI as the 'face' of the Indian Rupee. That said, the government doesn't have to trust bitcoin. However, regulatory burden in India is extremely high regardless of the kind of business you want to start. India ranks poorly on several 'Ease of doing Business' indexes. [1] I'm bringing this up since you mentioned the start up industry. It's just not that easy to start something in India. Yes, tax evasion is a huge problem in India. But that's a cultural thing. The government has made it very hard to evade taxes (as long as you rely on existing banking channels) for now, but it doesn't really stop anyone. I can imagine that they are afraid that people will launder money by exchanging cash directly into bitcoin. However, why doesn't the government then go after the real estate business in India that normally takes 30%+ of the money in cash ? It is extremely hard to buy properties in resale unless you agree to pay a large percentage in cash. Oh wait, the government likes to put their black money into real estate. For the same reason as Real Estate, I highly doubt that the Indian government will ban bitcoin or make it illegal. They have plenty of money they would like to sink into this new genius asset class. They might however make it harder for regular people to get into it. Besides, you can always wire money to bitstamp and buy bitcoins as much as foreign exchange controls would let you. [1] - http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings
- vellasib 13y ago
  The biggest concern they have is transactions which happen within Indian users. They will get absolutely no information about it. Although when finally someone realizes the money, it has to come to the bank, but taxes like Sales Tax/Service Tax (think chain of transactions), which are based on the transactions cannot be enforced.
  - ashray 13y ago
    But isn't that the same as selling something through OLX ? I suppose the issue with buysellbitco.in was that it was missing some paperwork that it should have had because they were accepting people's money (INR) and selling bitcoins on a commercial scale. I'm not sure why they said it violated foreign exchange acts though..
    - sreevishwa 13y ago
      >But isn't that the same as selling something through OLX? Absolutely correct, which is why banning or restricting its transaction is not the solution. Bitcoin is equally anonymous as cash in this aspect.
    - rikacomet 13y ago
      the statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA. As someone said above, money laundering is a big issue in India. On the financial side of things, it is very hard even for seasoned "hawala" operators to launder any money. Bitcoin is undoing that in Indian context, no matter how you see it. And the fact the silkroad used bitcoin, doesn't help things either.
      - ashray 13y ago
        the statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA Where is this statement ? I only have: http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247 http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?pr... Was there another statement from the RBI ?
vellasib 13y ago
You can't go around banning stuff to curb tax evasion, this does not solve the root cause.
- rikacomet 13y ago
  its not banned, or anything like that. For the time being, "under consideration" as you should read the RBI statement again.
splintercell 13y ago
> Sorry the global crude oil prices are soaring, thanks to sanctions on India's major oil supplier(Iran). Major world economies are in a state of war since the whole past decade. None of these are under RBI or Government of India's control. Only and only thing makes a currency depreciate in its value, and that is increasing the money supply by the Central bank. Even if the currency is being dumped by a foreign nation which purchased it in past, it still is merely a delayed loss of value being visible. Plus what the hell does the war in the past decade have to do with inflation of last year. Indian rupee was in low 40s, and now it has gone to high 60s, only and only the entity which is allowed to issue Indian rupee is responsible for it(measuring it in dollars is just an expression, I can measure it in kgs of wheat too and it will be the same problem).

by kamaal 13y ago

ashray 13y ago

You are right that the entire blame for INR depreciation does not squarely sit on the shoulders of the RBI. It is a problem with reasons that go far beyond the control of the RBI. Yes, there is a huge current account deficit (export/import imbalance) and that is a big part of it. However, as the agency that manages the circulation and control of the currency, ultimately I look at the RBI as the 'face' of the Indian Rupee. That said, the government doesn't have to trust bitcoin. However, regulatory burden in India is extremely high regardless of the kind of business you want to start. India ranks poorly on several 'Ease of doing Business' indexes. [1] I'm bringing this up since you mentioned the start up industry. It's just not that easy to start something in India. Yes, tax evasion is a huge problem in India. But that's a cultural thing. The government has made it very hard to evade taxes (as long as you rely on existing banking channels) for now, but it doesn't really stop anyone. I can imagine that they are afraid that people will launder money by exchanging cash directly into bitcoin. However, why doesn't the government then go after the real estate business in India that normally takes 30%+ of the money in cash ? It is extremely hard to buy properties in resale unless you agree to pay a large percentage in cash. Oh wait, the government likes to put their black money into real estate. For the same reason as Real Estate, I highly doubt that the Indian government will ban bitcoin or make it illegal. They have plenty of money they would like to sink into this new genius asset class. They might however make it harder for regular people to get into it. Besides, you can always wire money to bitstamp and buy bitcoins as much as foreign exchange controls would let you. [1] - http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings

vellasib 13y ago
The biggest concern they have is transactions which happen within Indian users. They will get absolutely no information about it. Although when finally someone realizes the money, it has to come to the bank, but taxes like Sales Tax/Service Tax (think chain of transactions), which are based on the transactions cannot be enforced.
- ashray 13y ago
  But isn't that the same as selling something through OLX ? I suppose the issue with buysellbitco.in was that it was missing some paperwork that it should have had because they were accepting people's money (INR) and selling bitcoins on a commercial scale. I'm not sure why they said it violated foreign exchange acts though..
  - sreevishwa 13y ago
    >But isn't that the same as selling something through OLX? Absolutely correct, which is why banning or restricting its transaction is not the solution. Bitcoin is equally anonymous as cash in this aspect.
  - rikacomet 13y ago
    the statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA. As someone said above, money laundering is a big issue in India. On the financial side of things, it is very hard even for seasoned "hawala" operators to launder any money. Bitcoin is undoing that in Indian context, no matter how you see it. And the fact the silkroad used bitcoin, doesn't help things either.
    - ashray 13y ago
      the statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA Where is this statement ? I only have: http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247 http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?pr... Was there another statement from the RBI ?

vellasib 13y ago

You can't go around banning stuff to curb tax evasion, this does not solve the root cause.

rikacomet 13y ago
its not banned, or anything like that. For the time being, "under consideration" as you should read the RBI statement again.

splintercell 13y ago

> Sorry the global crude oil prices are soaring, thanks to sanctions on India's major oil supplier(Iran). Major world economies are in a state of war since the whole past decade. None of these are under RBI or Government of India's control. Only and only thing makes a currency depreciate in its value, and that is increasing the money supply by the Central bank. Even if the currency is being dumped by a foreign nation which purchased it in past, it still is merely a delayed loss of value being visible. Plus what the hell does the war in the past decade have to do with inflation of last year. Indian rupee was in low 40s, and now it has gone to high 60s, only and only the entity which is allowed to issue Indian rupee is responsible for it(measuring it in dollars is just an expression, I can measure it in kgs of wheat too and it will be the same problem).