Category Archives: Cashless System

भारतीयों को बेच दिया भारत सरकार ने ग्लोबल बैकों से

भारतीयों को बेच दिया भारत सरकार ने ग्लोबल बैकों से

भारतीयों को बेच दिया भारत सरकार ने

जैसा के अब सभी को समझ आ चुका होगा के वर्तमान भारत सरकार और उसे चलाने वालों का एकमात्र उद्देश ग्लोबल बैंकरों के समूह को लाभ पहुंचाना है|

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इस समय भारत सरकार की बागडोर ग्लोबल बैंकरो और चंद उद्योगपतियों के हाथों में है जिन का सर्वप्रथम उद्देश्य भारतीयों की बचत और कृय शक्ति को शुन्य के बराबर कर देना है.

साथ ही काले धन के नाम पर सभी की जमा पुंजि को बरबाद कर देना है जिस से की आप को अपनी हर जरूरत के लिये बैंकों से लोन लेना पडे, आप को शादी करनी है, छुट्टीयों में घूमने जाना है,  घर में रंग रोगन करवाना है तो आप को लोन लेना पड़ेगा..

इस के लिये यह भी जरूरी है की भारतीयों के पास मौजूद ज्यादा से ज्यादा धन को बरबाद कर देना, इस बात का  उदाहरण है 10 दिन रहते सरकार की ये घोषणा की एक व्यक्ति 5000 रुपये से ज्यादा की रकम नहीं जमा कर सकता है..    फिर 50 दिन कि अवधि के बाद रिजर्व बैंक में पैसे जमा करने का जो प्रावधान था उसे भी निरस्त कर दिया जबकि सरकार रिजर्व बैंक के द्वारा टैक्स काट कर भी पैसा लौटा सकती थी.. और अभी तक सरकार जनता को अपना ही पैसा बैंक से जरूरत के मुताबिक निकालने नहीं दे रही है.

सवाल यह उठता है कि क्याें नहीं जमा कर सकता है कोई अपना ही पैसा और क्यों नहीं निकाल सकता ?

परन्तु डिमोनिटाईजेशन की आड में भारतीयों को अपना बंधुआ मजदूर बनाने का खेल खेलने वाली ग्लोबल बैंको का मुख्य उद्देश्य भारतीयों का जमा पैसा बरबाद कर के उन्हें लोन और अपने बैंकिंग सिस्टम का गुलाम बनाना है .

क्या आपने कभी सोचा है  के आखिर क्यों बरबाद करने पे तुली है मोदी सरकार भारत वासियों की जीवन भर की जमा पुंजि ? भारतीय ऱूपये पर से दुनिया भर का भरोसा गिराकर क्या हासिल किया सरकार ने..भारत की आर्थिक संप्रभूता को पूरे विश्व के सामने उजागर किसके लिए किया गया..   किसको फायदा पहुंचाना चाहती है मोदी सरकार ?

ऱिलायंस ग्रुप को 25 से ज्यादा देशों में बडे बडे प्रोजेक्ट दिला दिये गये हैं…  इस समय पूरी दुनिया की मीडिया में अडाणी ग्रुप को अस्ट्रेलीया में कोल मांईस चलाने में वर्ल्ड बैंक के द्वारा अनैतिक सहयोग देने की जम कर आलोचना हो रही है परन्तु भारतीय मीडिया ने चुप्पी साध रखी है.. क्यों कि सच यही है की इस सरकार और इसके सहयोगीयों को ग्लोबल बैंकों ने दुनिया भर में लाखों करोड रुपये दे कर खरीद लिया है और जो वो चाह रहे हैं वो यह सरकार कर रही है.

ग्लोबल बैंकों के ही ईशारे पर सरकार जनता पर जोर जबरदस्ती से कैशलेस सिस्टम थोप रही है..इस के लिए वह लोगो को अपना ही पैसा अपनी मर्जी से निकालने पर प्रतिबंध लगा रखी है. . जिस से की लोग कैशलेस का ईस्तेमाल करने पे मजबूर हो जाए और ग्लोबल बैंकों की झोली घर बैठे भरती रहे.

कैशलेस सिस्टम में उपभोक्ता को जहाँ भी अपना डेबिट और क्रेडिट कार्ड स्वाइप करना होता है वहाँ गौरतलब है कि कार्ड द्वारा किये गए प्रत्येक लेन-देन पर बैंक शुल्क लेता है, और इस शुल्क का भुगतान उस व्यापारिक प्रतिष्ठान को भी करना होता है जिसने अपने यहाँ पीओएस टर्मिनल लगा रखा है।

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इस शुल्क को एमडीआर (merchant discount rate) के नाम से जाना जाता है। एमडीआर का एक हिस्सा उस बैंक के पास जाता है जिसने उपभोक्ता कार्ड जारी किया है, एक हिस्सा उस बैंक के पास जाता है जिसने संबंधित प्रतिष्ठान के पीओएस टर्मिनल को स्थापित किया है, जबकि एक हिस्सा भुगतान माध्यमों (payment getways) को जाता है, जैसे वीज़ा (visa) रूपे (rupay) और मास्टरकार्ड (mastercard) इत्यादि ग्लोबल बैंकों को.

आप सभी को ये भी को ये जान कर भी हैरानी होगी की वर्ल्ड बैंक भी ग्लोबल बैंकों के समूह  का बनाया हुआ एक छलावा है जो असल में एक  प्राइवेट बैंक से ज्यादा कुछ नहीं है और जिसने वर्ल्ड बैंक नाम के छलावे के साथ दुनिया भर के देशों में काम करने की मान्यता ले रखी है

देशों की इकोनोमी को अपने हिसाब से प्रभावित करना इस का काम है  ग्रीस, पेरू, जिम्बाबवे जैसे देशों को कर्जदार आैर कंगाल बनाने में वर्ल्ड बैंक का ही हाथ था

आप अपने डेबिट और क्रेडिट कार्ड को पलट कर देखें तो वहां आप VISA, MASTER CARD, DINERS CLUB, AMERICAN EXPRESS जैसे नाम और लोगो पायेंगे, ये सभी इन ग्लोबल बैंकों की संस्थाएं हैं.. जान लें की ATM से आप के द्वारा 100 रू निकालने पर भी इन विदेशी बैंकों को कमीशन प्राप्त होता है .

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यही कारण है की ये विदेशी बैंकों के समूह और वर्ल्ड बैंक चाहते हैं कि सभी के सभी भारतीयों को बैंकिंग सिस्टम के अधीन ले आया जाए.

यानि आप के द्वारा किए गये हर टरांजैक्शन पर ग्लोबल बैंकों को कमीशन प्राप्त होगा .. हमारी सरकार को इन ग्लोबल बैंकों को इतनी चिंता है की यह हमें इनका कैशलेस सिस्टम यूज करने के लिये जो डिस्काउंट दे रही है वह सब्सिडी के रूप में ग्लोबल बैंकों के खाते में जमा कर रही है.

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एक तरफ सरकार हमसे रसोई गैस की सब्सिडी छिनती है दूसरी तरफ स्वदेशी का राग अलापने वाली सरकार विदेशी बैंकों को हमारी सब्सिडी का पैसा पहुंचाने में शर्म भी नहीं महसूस करती है.

आखिर शर्म भी क्यों करे आखिर पैसा पहुंचाने के बदले सरकार चलाने वालों को भी पैसा मिल रहा है और इस मामले में तो जिंदगी भर मिलता रहेगा .

More in next..

Andolanrat

Read further:

INDIANS TOWARDS MODERN SLAVERY

https://arresteddevelopments.wordpress.com/2016/11/08/indians-towards-modern-slavery/

World Bank Secretly Supporting Adani’s Carmichael Coal Mine

https://arresteddevelopments.wordpress.com/2016/12/23/world-bank-secretly-supporting-adanis-carmichael-coal-mine

Cashless Monetary System also means Absolute Power over you

https://arresteddevelopments.wordpress.com/2016/12/17/cashless-monetary-system-means-absolute-power-over-you

Indian Government must bring legal clarity to demonetization-masked compulsory deposits

https://arresteddevelopments.wordpress.com/2016/12/02/indian-government-must-bring-legal-clarity-to-demonetization-masked-compulsory-deposits

 

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https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

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Demonetization: A monumental disaster

James Wilson is a Member of the Mullaperiyar Special Cell, Government of Kerala, India. Who is a civil engineer by profession has presented an extremely detailed and meticulous calculations and inferences on the Demonetization of Indian Currencies.

Just go through the full article brought here , for the  knowledge of the subject is best expressed through a clear and concise presentation by Mr. James Wilson.

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A monumental disaster in offing!

Currency in Circulation 


High denomination notes of ₹500 & ₹1000, which is 86.4% of the total currency in circulation ceased to be legal tender due to the demonetisation. RBI denotes these demonetised notes as “Specified Bank Notes” (SBN). As per RBI Annual Report 2015-2016, as of 31/03/2016, the value of the total SBN is ₹14.18 lakh crores. Volume wise it consists of 15707 million ₹500 notes and 6326 million ₹1000 notes, ie, a total of 22033 million notes. Meanwhile, the total currency in circulationvalue wise increased to ₹17.975 Lakh crores (4/11/2016) from ₹16.415 lakh crores (31/03/2016)


Exact information of the amount of SBN as on 8/11/16 is now in public domain, thanks to a question-answer in the Rajya Sabha, which shows 17165 million pieces of ₹500 (₹8.582 lakh crores)and 6858 million pieces of ₹1000 (₹6.858 lakh crores) in circulation (Total Value: ₹15.44 lakh crores Total Volume:24023 million pieces) [So my assumptions in my earlier post  of value of 15.5 lakh crores and volume of 24000 million is almost in the target]. To print and replace 24023 million (24.023 billion) notes is an enormous challenge considering this sheer volume of notes to be printed and capacity of our printing presses.




Capacity of Printing Presses


How can RBI achieve this target with resources at their disposal? 


How much time RBI will take for to print and replace SBN with new notes? 

To understand this, in a pure resources management perspective, we have to examine the output capacity of our currency note printing presses. We have two currency printing presses under Security Printing and Minting Corporation of India Limited (SPMCIL), one at Nashik in Maharastra and the other one in Dewas in Madhya Pradesh. Nashik Press was established in 1928 and Dewas was in 1974. Also two more modern currency printing press were added later to augment the printing capacity, one in Mysore in Karnataka and the other at Salboni in West Bengal under the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), which were established by Reserve Bank of India (RBI) in 1996.


First look at the capacities of Nashik & Dewas presses under SPMCIL. I have relied the Annual Report of the SPMCIL as well as a presentation available on the internet by the Currency Management Wing of the RBI. From the above records, it is inferred that Nashik Press capacity is 5800 million notes per year and Dewas capacity is 2620 million pieces. 


Meanwhile, BRBNMPL’s Mysore & Salboni together can print 16000 million notes in 2 shifts in a year. See the screenshot of BRBNMPL website. So all these four presses can together print 24420 million currency notes in a year and this is closer to the supply RBI getting for last 3 years too. 


So all four presses together having a printing capacity of 66.90 million/day. If we take Mysuru and Salboni alone, this will be 43.84 million/day.


Please note that latter in this discussion, it is using billion instead of million as the volume unit since I made references to the statement given by RBI in billions. 

  • For your understanding please note that:

            1 billion = 1000 million = 100 crores


Printing aborad is out of question

My next exercise was to understand whether we can outsource this currency printing to any high quality security presses abroad. That research lead me to the Report of Committee on Public Undertakings (2012-13) which deliberates “outsourcing of printing of currency notes” as recommendation serial no.14. Selected extract from the above report is reproduced here:


“The Committee also find it pertinent to point out that during printing of currency notes worth 1 lakh crores in three different countries, there was always a grave risk of unauthorized printing of excess currency notes, which would have been unaccounted money. The Committee simply wonder how come a decision was taken to have the currency notes printed by above mentioned companies in three different countries. Logically speaking since all the said three countries are well developed, each country certainly had the capability of undertaking the entire printing assignment. In any case the very thought of India’s currency being printed in three different countries is alarming to say the least. During that particular fateful period our entire economic sovereignty was at stake.


The Committee is concerned of the grave implications of such a move as it has wider ramifications in a multi faceted angle. The danger of destabilizing the economy by the agencies of authorities who could have misused our security parameters vis-à-vis printing of currency notes, the use of such notes which could have been printed in excess could easily have fallen in the hands of unscrupulous elements such as terrorists, extremists and other economic offenders, looms large in our minds. The Committee expresses its strong resentment over such an unprecedented, unconventional and uncalled for measure. The Committee while recommending that SPMCIL be strengthened to undertake the printing and minting of the required currency notes/coins fervently emphasise that outsourcing of printing of currency notes/minting coins should never be resorted to in the future.”


Reply of the Government

Since corporatisation, SPMCIL and BRBNMPL have been meeting the requirement of coins and currency and no import has been resorted to. The concerns and recommendations of the Committee have been carefully noted for future guidance.

[Ministry of Finance, Department of Economic Affairs]

( O.M. No.3/8/09-SPMC dated 3rd January, 2013 )”

So this assurance rules out the very question of outsourcing of the currency printing abroad. I don’t think RBI will violate an assurance given to the Committee of Public Undertakings of the Parliament. Hence RBI has to depend on the four presses in our country to meet this enormous demand.


Comparison with demonetisation done in 1977-78


In this context, we have to note that during the demonetisation exercise in 1977-78 only less than 5% of the high value notes were demonetised. It is also important to note that ₹100 note, which was 50.1% of the total currency in circulation was not demonetised during 1977-78. Contrary to the above, this time RBI and Government decided to demonetise ₹500 note, which consists of 47.8% of the value of the total currency in circulation. They also demonetised ₹1000 notes in circulation, thus made 86.4% of value of total currency in circulation redundant, which choked and paralysed the entire cash based economy with a whimsical direction overnight!


₹2000 note – a short shrift solution

Now look at the ₹1000 notes, volume wise its quantity is 6858 million notes. If convert the entire ₹1000 notes to ₹2000 notes, keeping the same value, then the volume will be halved to 3429 million notes to facilitate quick printing and disposal. But there is a catch, RBI has to tweak the ratio between ₹500 and ₹2000 to provide easy change and mobility between these two notes. So obviously, there should be less  volume of ₹2000 notes and more volume of ₹500 notes is mandated to keep the equilibrium of the system. For the time being, let us assume that RBI has gone with a complete swap of ₹1000 with ₹2000 notes totally discarding the mobility in the system.Definitely this is a short shrift exercise without considering the much needed mobility and velocity of the demand of thes various denominations of the currency notes in circulation. In that scenario too, RBI has to print at least 20594 million notes (17615 million ₹500 &+ 3429 million ₹2000) in a short span of time.


Higher denominations will aid hoarding – RBI Study


The elimination of ₹1000 note and introduction of ₹2000 note is really perplexing and the RBI’s explanation made themselves a joke. In this context, invite your attention to RBI Study No. 39 “Modelling Currency Demand in India: An Empirical Study” to see how RBI and Government of India all along resisted to issue high denomination notes even when warranted in a short time to meet the inflation to control, considering the chances of this high denomination currency will be used for hoarding purpose by the black money holders.

The irony is now a high value currency note of ₹2000 is introduced in the guise of controlling hoarding of the very black money, but at the end of the day help the hoarders in transporting and hoarding! This haste and irrational decision was taken without considering the statistical principles of distribution of various denominations in the currency in circulation and also fully side lining the prudent decision to eliminate the chances of hoarding. This short shrift route of going for ₹2000 by RBI without considering any of the above consequences into account and only taking the ease of printing, is a telling reflection of how an Institution like RBI let itself to erode its independent stature to please the political masters!

Printing target – An estimation

I discarded here the essential tweak required for maintain the equilibrium between ₹500 and ₹2000 notes and also the increase of currency required to meet the demand of cash in the economy in the coming months till this disaster is mitigated. Many of Government sympathisers may definitely point that the entire ₹15.44 lakh crores of SBN will not return into the system and there is no need to replace the entire currency. My opinion is that these two factors balance and neutralise each other. Hence for the time being, I decide to go ahead with the figure of 20594 million new notes as our target for printing.

In the initial days, the WhatsApp army were busy in forwarding daring claims that only 50% of the SBN will return into the system. Even our Attorney General told to the Supreme Court that RBI & Government expects only a maximum of ₹12 lakh crores of SBN will be return to the system. Today we are hearing from the media quoting Ministry of Finance sources that around ₹14 lakh crores worth SBN is already returned to the system. Remember that we are still 13 more days away from the date set by Government to deposit the SBN at banks. So its time for RBI & Government to eat the humble pie. It is important to understand that the above cut-off date will not set free RBI’s responsibility to exchange the rest of the currency in circulation at their counters, it only limits the option of depositing/exchanging at banks. That is a detailed matter as it entangled in legal provisions and other issues and hence will be discussed in a future post.


Demonetisation Planning – Rajan or Patel?


To understand the currency printing schedule, first see the letter of transmittal dated 29th August 2016 of the RBI Annual Report 2015-16 signed by Former Governor Raghuram G. Rajan. Kindly note the above date, it is very important. We know that the present Governor Urjit R. Patel assumed office on 4th September 2016.

Now look at the same Annual Report again. Look at Table VIII.4, “Indent and Supply of Bank Notes by BRBNMPL & SPMCIL”. Look at the indent for the year 2016-17, RBI has given an indent for 5725 million ₹500 notes & 2200 million ₹1000 notes along with other lower denomination currency notes. If there was a plan in advance to demonetise these denominations, then why did RBI print and disburse such large quantities of SBN in to circulation? This is nothing but sheer wastage of exchequer’s money.

Moreover, if RBI had such an advance plan to replace the above SBN, they should have devoted their time and energy to print lower denominations notes instead of SBN. Hence it is beyond doubt that the entire demonetisation plan was come into picture after Urjit Patel taken charge. The new denomination note of ₹2000 bear the signature of the new Governor Patel, not of Governor Rajan, which also another explicit evidence to prove that these notes were introduced after Governor Rajan left RBI.

When new currency printing started?


So what is the possible date of starting the new currency printing, yes, after this so called meticulous planning, selling an amazing idea and getting a nod from high echelons to go ahead with the ‘surgical strike’? Many theories are floating in the air about this meticulous planning in the initial days by a certain section of cheerleader media and court jester journalists. I am not ready to buy any of those theories. We learnt from media reports that the printing of the new notes were confined to RBI’sBRBNMPL presses at Mysuru & Salboni. Neither Nashik nor Dewas of SPMCIL were on the loop, may be due to the secrecy of the mission involved. Another reason may be both these presses were already assigned with printing of the lower denomination notes (from ₹100 downward), which is already intended in huge quantities by the annual indent of RBI for FY 2016-17.


Considering all these constraints, let me put a rational date before you considering the resources planning angle. RBI disclosed that they have 2473.2 million ₹2000 in stock for disposal as of 8/11/2016 in response to a RTI query. With the printing capacity of 43.84 million/month of Mysore & Salboni together in 2 shifts, it will take 57 days to print the 2473.2 million notes, that means it started on 12th September 2016. Take another possibility, that RBI took an effort to enhance printing to 3 shifts from 2 shifts, then they can print 65.76 million/month, ie, means it will took 38 days, that means printing started on 1st October 2016 only.


I was really shocked to find that there was not a single ₹500 note was with RBI when they unleashed this demon over the nation! That means RBI unleashed demonetisation with just 32% of the total SBN in circulation, that too a less mobile ₹2000 note stock! They themselves will be aware that within the 50 days window period, they can’t print the rest of the SBN too!

Disbursal of Currency

Then, I look for patterns of disbursal of currency at various dates, which was inferred from the data provided through the press releases by RBI. Look at the table below:

We can see that there was a substantial increase of disbursal of currency between 27/11/06 and 05/12/16 from ₹12589 crores/day to ₹20548 crores/day, this is definitely due to the disbursement of salaries on the first of December. Thereafter, the disbursal drying up substantially in the succeeding period to ₹16000 crores/day. If we take the entire 31 days of demonetisation, the average daily release from 10/11/2016 to 10/12/2016 is ₹14871 crores/day. If the money is disbursed in the above daily average rate, between next 20 days a further ₹2,97,420 crores can be disbursed. Hence Government may be able to disburse a total of ₹7,58,420 crores or a maximum of ₹8,00,000 crores by 30/12/2016. That means just 52% of the total SBN going to be disbursed to us. But even this quantity is doubtful with the present printing woes, which is going to be examined in the subsequent paragraphs.

There is some serious cash delivery issue in the system due to inferior planning and poor judgement from the part of RBI as well as Finance Ministry. Otherwise what is the justification of various new restrictions unleashed day to day basis by RBI without respecting the notification dated 8/11/2016? It is quite depressing to see that even the address to the nation by the Prime Minister is not honoured!

RBI deleting information – why?

While looking for these data, I met with a really shocking finding. RBI published a transcript of the statement given by R. Gandhi, Deputy Governor on 07/12/2016 at its webstie under the title “press releases”. But later it is seen as purged from the RBI website! Meantime, the video of the press conference is still available in the internet (https://www.youtube.com/watch?v=IuSzeRX31ms). This really made me curious. What information was there in the above transcript, which forced RBI to delete it from the website, even sacrificing the very institutional credibility? What is there to hide from the public which was not there in the full video coverage of 5th bi-monthly monetary policy press conference 2016-17? Interestingly the RBI which deleted the transcript of R. Gandhi forget to wipe out that from the cache, so one of my friend in twitter grabbed the information from there and shared with me. See that transcript of R. Gandhi here!

It is quite an irony that the very RBI, which now exhorting us to go cashless by embracing digital mode of payment, did not even know the primary lessons of digital literacy of how to purge a document from their system! Look at the highlighted information – this is not available in the video but provided in the transcript, which RBI deleted. What is the relevance of this information? It cna lead you to the printing volume of new notes disbursed by RBI as of 10/12/2016, which they refuse to divulge so far. 

Disbursal of currency denomination wise

Look at the total value of the lower denomination notes of 19.1 million disbursed by RBI from the above. It comes only to ₹1.059 lakh crores! That means the higher denominations notes are ₹3.81 lakh crores minus ₹1.059 lakh crores = ₹2.75 lakh crores. As RBI has not given the volume of high denomination notes, I was not able to decipher the possible numbers of them.

But in the next press conference on 13/12/2016, RBI provided the numbers to decipher the new currency notes in the system. Look at the statement of R. Gandhi, Dy Governor.

Here Gandhi claimed that 19.1 billion notes of lower denomination on 5/12/16 was increased to 20.1 billion on 10/12/16 meanwhile claimed that RBI disbursed 1.7 billion higher denomination notes of ₹2000 & ₹500 notes. As the amount of the total cash disbursed is ₹4.61 lakh crores, it turned out to be a simple mathematical problem to solve. There is a limit for the lower denominations to fluctuate, as we know the denomination wise quantity of 19.1 billion notes in circulation. Then if 19.1 billion lower denominations increased to 20.1 billion notes, two borderline scenarios emerges:

  • If the entire 1 billion volume increase are of ₹100 notes, then total value will be increased by ₹1.159 lakh crores
  • if the entire 1 billion volume increase are of ₹10 notes, then total value will be increased by ₹1.069 lakh crores.
  • That simply means that the value of higher denominations notes will be in a range of ₹3451 crores to ₹3541 crores.
  • This means if the entire higher denomination notes are of  ₹2000 and its volume will fluctuate between 1.7 billion to 1.8 billion.

If Gandhi would not have given the exact volume wise distribution of each lower denominations in that 07/12/2016 in the transcript, we will not be able to emulate these scenarios. My strong feeling is that it is the very reason why RBI later deleted the said transcript from its website.

You can’t introduce more than a couple of million ₹500 notes into this equation, in that case the volume of higher denomination notes will go up from the 1.7 billion! Even after a month after unleashing the demonetisation on our heads RBI was not able to disburse any substantial quantity of ₹500 notes in the circulation, which are the most essential denomination for the reasons I cited in my previous blog post. That is why we are not seeing these notes in the market and feel the burn of cash crunch so badly.  Its shame on RBI to flash a couple of million notes of this ₹500 notes in metro cities and major urban centres for a limited purpose of optics management before the 24×7 electronics media and to flaunt in WhatsApp forwards & re-tweets on social media! It is really sad to see that a reputed professional organisation like RBI is letting down the nation with these type of cheap tricks of optics management rather meeting the pressing demands!

Lower denomination disbursal – a record??

Gandhi told on 7/12/2016 press conference that RBI has provided 19.1 billion lower denomination notes after demonetisation, which is a record as it is more than what reserve bank provided in last 3 years to the system. If we look at indent & supply for last FY year, from the above table, we can see that around 16 billion lower denomination notes were printed then. This FY year also RBI given an indent to print 16.6 billion lower denomination notes and if the presses print according to their capacity, there will be new 12.5 billion notes till 10/12/2016. Along with this quantity, there will be soiled notes which are being collected to dispose during this FY(Kindly note that, last year alone around 13 billion lower denomination soiled notes were disposed off), which are also pushed back to circulation as we see lots of old soiled notes back. Also note that the total number of lower denomination notes in circulation as  on 31/03/2016 was 56.6 billion. It is interesting to note that Gandhi never claimed RBI has printed 19.1 billion notes, instead he only made a tall claim that these notes were a record volume! Media never asked any questions to him and Gandhi barked in glory! I am sorry to say that I can’t digest this all-time record claim of attention diversion by twisting the facts!

Where is that ₹500 note?

Let us come back to the figure of 1.7 billion high denomination notes disbursed by 10/12/2016. This information is quite perplexing when we compare the printing press capacities. We have seen that RBI had a stock of 2.473 billion ₹2000 notes as on 8/11/2016 itself. So if these printing presses working at least 2 shifts/day, there would have been another 1.4 billion pieces of ₹2000 & ₹500 with RBI by 10/12/2016 (32 days x 43.84 = 1403 million). To completely replace, the ₹1000 notes by ₹2000 notes, RBI needed to print 3.429 – 2.473 = 0.956 billion pieces. So RBI should have by 10/12/2016 printed the entire ₹2000 notes to replace the ₹1000 notes. I hope and pray that RBI did not go ahead with another short shrift solution of printing more ₹2000 notes to replace ₹500 notes after done with ₹1000 notes, which will completely disrupt the mobility and balance of the currency in circulation. Why RBI holding the rest 1.729 billion of ₹2000 notes (3.429-1.7=1.729) without disbursing to public?

Also from the above we can find that a quantity of 0.444 billion ₹500 notes (1.4-0.956=0.444) printed after are with RBI, but a few millions are only disbursed to public. It is really perplexing that why RBI is not distributing these ₹500 notes in substantial quantities? This is quite baffling because RBI through its press releases informed that they disbursed ₹500 notes with the following series numbers:

·       without inset

·       with E as inset

·       with L as inset,

·       E and star as inset and

·       with R as inset.

This indicates that various printing presses are put to the task of printing the ₹500 notes, but as we are not seeing much of ₹500 notes in circulation, it is feared that some issues crop up during its printing. Recollect the media reports of two different design ₹500 notes crop up and RBI’s bizarre explanation. RBI informed that up to 10/12/16, they have disbursed 1.7 billion high denomination notes. This will definitely be 1.7 billion ₹2000 notes and a few million ₹500 notes, as I shown above. Also relying above printing calculations & RTI disclosure, we can very well conclude that RBI may have a stock of at least 1.7429 billion ₹2000 notes and  0.444 billion ₹500 notes as of 10/12/2016.

In the above context, let me put some questions to RBI:

  • Why you are not disbursing sufficient ₹500 notes to circulation to ease the mobility crisis?
  • Why you are not disbursing enough ₹2000 notes and imposing unreasonable restrictions on withdrawal for our money deposited in banks? 
  • Inform us whether the above stock of  notes is having any relation with the hoarding of huge quantity of currency notes seized from various parts of the country?
  • Exact quantity of ₹2000 notes and ₹500 notes printed and disbursed so far  
  • Or your printing systems faced any unexpected failure & you are struck?
  • Exact schedule and output of printing of various denomination of notes at various presses under RBI and SPMCIL

When we will get back our currency?


Now we have to consider when we will get back the ₹500 notes demonetised from the system back. As we seen from above that 0.444 billion ₹500 notes would have been printed up to 10/12/16, then how much time RBI will take to print remaining 16.721 billion pieces (17.165-0.444=16.721).

In this context, I am giving you three possible scenarios considering the printing capacity of our four currency printing presses. I have not considered certain constraints here, like additional skilled manpower needed to introduce a 3rd shift for a prolonged period, raw material supply constraints, machinery maintenance, forced plus routine shutdowns and other surprises which can crop up anytime. Then I have not considered additional output (?) possible with the reduced size of new notes too as someone argues. I gone ahead with a perfect printing mechanism with sufficient manpower and resources at disposal. So take this estimation and earliest possible dates with a pinch of salt.

First Scenario

Mysuru & Salboni (3 shifts/day) AND Nashik & Dewas

@88.82 million/day needs 188 days – 16thJune 2017

Second Scenario

Mysuru & Salboni (3 shifts/day) AND Nashik

@ 81.64 million/day needs 204 days – 2nd July 2017

Third Scenario

Mysuru, Salboni (2 shifts/day) & Nashik

@ 59.73 million/day needs 280 days – 16thSeptember 2017

These are the earliest possible dates to replace SBN with new currency in a pure resources management angle.

Looking at the above earliest dates will make anyone shudder, I don’t know when the normalcy of the system can be restored! Remember, our Prime Minister on 8/11/2016 sought us a couple of days to restore the normalcy  This will give you an idea about the planning prowess of the mandarins in RBI and Finance Ministry. Ask ourselves whether we have fallen into a rabbit hole? We Indians still believe in magic and we bear all subjugation as our bad karma or destiny. But here no magic wand is left to create miracles, we are destined to silently suffer this onslaught for half a dozen months too.

Estimation of possible return of SBN

Now look at the way SBN is coming back to the banks. This table extracts information from various press conferences.

This table will explain you why Government & RBI are getting panic and imposing new restrictions like deposits up to ₹5000 to non-KYC accounts and questioning people depositing more than ₹5000 into their KYC accounts. Why we are treated like criminals? Under which legal or constitutional provision Government and RBI arbitrarily gives this police power to the bank authorities to abuse us?

This is becoming a theatre of absurd when the very Government, who is reluctant to reveal to public the names of celebrities and big shots who keep thousands of crores of black money abroad arm twisting the common man and honest tax payers!. Tell us what is the crime committed by us? Are you intimidating and insulting us for believing the Prime Ministers address to the nation on 8/11/2016??

Look at various possibilities on 30/12/2016 (20 days from 10/12/2016)

  • With an average daily inflow of ₹15000 crores, entire SBN valued ₹15.44 lakh crores will return to banks
  • With an average daily inflow of ₹12800 crores, total SBN valued ₹15 lakh crores will return to banks
  • With an average daily inflow of ₹10300 crores, total SBN valued ₹14.5 lakh crores will return to banks

My strong belief is that SBN valued around ₹15 lakh crores will most probably return to the system, rest of the SBN will be trapped in Nepal & Bhutan and other countries for the time being. If ₹15 lakh crores of SBN return, then it will totally shatter and tear away all mighty claims by the Government and RBI that a maximum of ₹11 lakh crores to ₹12 lakh crores of SBN will only return to banks.

Then the entire demonetisation hungama will fall apart as a monumental disaster, yep, its now just a matter of time.. Now the deadline set by our Prime Minister in his 08/11/2016 speech has already expired.


 The above presentation is the hard work of Mr. Member of the Mullaperiyar Special Cell, Government of Kerala. A civil engineer by profession. Associated with construction & management of various hydro electric projects & thermal power projects of KSEB Ltd between 1994-2001. Since 2001, shfited to water resources management & inter state water disputes with special emphasis on the techno-legal aspects. Now working in a consultant role to provide the techno-legal inputs on various inter state water dispute issues & water policy related matters to Kerala State Government.

Via

https://decipherdemon.blogspot.in/2016/12/a-monumental-disater-in-offing.html?m=1

Read further:

The Trouble With India’s Demonetization Gamble

https://arresteddevelopments.wordpress.com/2016/11/28/the-trouble-with-indias-demonetization-gamble

Demonetization and Freakonomics

https://arresteddevelopments.wordpress.com/2016/11/30/demonetization-and-freakonomics

Indian Government has No Clues of Black Money in India

https://arresteddevelopments.wordpress.com/2016/12/16/indian-government-has-no-clues-of-black-money-in-india

Cashless Monetary System means Absolute Power over you

https://arresteddevelopments.wordpress.com/2016/12/17/cashless-monetary-system-means-absolute-power-over-you

India Came First

https://arresteddevelopments.wordpress.com/2016/12/19/india-came-first

arrested-ds-160x32

https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

RBI Partially Rolls Back Rs 5,000 Order

RBI Partially Rolls Back Rs 5,000 Order

The Reserve Bank of India’s 60th Notification, on day number 43 of Demonetisation, since the date of announcement of Demonetization has partially rolled back an earlier notification that caused anger because it sought to restrict deposits of over 5000 rupees, in the process creating more confusion.

The earlier notification, issued on December 19, allowed the deposit of over 5000 rupees in bank accounts by citizens only once, that too after a “satisfactory explanation” could be provided to three bank officials.

 rbi-reu

Wednesday’s rollback makes an exception for fully KYC compliant customers. But it means that customers without fully compliant KYC norms will still have to give a “satisfactory explanation”.

KYC stands for ‘Know Your Customer’, a process through which banks obtain information about the identity of customers with accounts so that they cannot be misused. A proof of identity and a proof of address – Aadhar, license, Voters ID card, Passport or nrega card – have to be supplied for account verification.

Wednesday’s notification means that customers with fully compliant KYC accounts will be exempt from the order that states that deposits of over Rs 5000 could only be made once till December 30 and that people making such deposits will have to provide a “satisfactory explanation” to three bank officials as to why they didn’t deposit these amounts earlier.

This rule caused widespread anger and confusion all round, with people questioning why they had to provide an explanation for depositing their own money in excess of Rs. 5000. People cited legitimate reasons for waiting till the last week of December to deposit money. They also cited Prime Minister Narendra Modi’s promise in his November 8 address that people could deposit bank notes till December 30.

The decision follows widespread criticism of the guidelines, with people saying the Prime Minister as well as the finance minister have asked people not to throng the banks as they have time till December 30 to deposit invalid notes in their accounts.

Yogendra Yadav told CNN News18 that an “unfair and stupid” order had been rescinded. “It erodes the credibility of the RBI further,” he told the channel in a phone interview.

Another decision by the government taken on Wednesday has added to the all round confusion enveloping digital payments.

The Government passed The Payment of Wages (Amendment) Bill, 2016 to remove a provision that made employers seek written permission from employees before paying salaries by cheque or crediting them directly to bank accounts.

Demonetisation: Yogendra Yadav’s special explanation mocks RBI and Modi government

Several people including politicians and media had criticised RBI for the previous decision. Attacking the RBI decision, Swaraj Party leader had said, “It is not just about an unfair and stupid order. It is about compromising trust in Reserve Bank. Remember, currency a piece of paper that works on turst.”

It’s not just abt an unfair&stupid order
It’s abt compromising trust in Reserve Bank
Remember, currency a piece of paper that works on turst https://twitter.com/_YogendraYadav/status/811075208958226432 

Below is the explanation Yogendra Yadav had given while depositing cash in a bank:
c0geka2veaajnpr
 Then comes Arvind Kejriwal’s tweet
c0iykbnuaaqosys
We’ve told earlier People are loosing trust in Government, The RBI and the Banks in India.
sources:

arrested-ds-160x32

https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

Will ‘Cashless’ may be the new normal

Why ‘cashless’ may be the new normal in India

The demonetization drive is not so much about curbing black money. Consider the likely outcomes of a cashless society, and read back from them the intent behind such a move

0915

Perhaps the most significant development since the November 8 announcement of demonetisation is the shift in the legitimising narrative around the note ban. What was touted as a ‘surgical strike’ on black money, fake currency and terror funding has now become a radical ‘reform’ to transform India into a cashless economy. A series of measures, not least a high-decibel advertising campaign, are already in place to build national consensus in favour of this transformation.

Cashless Ki Baat

It was Prime Minister Narendra Modi’s Mann Ki Baat of November 27 that officially signalled this narrative switch. In a nuanced execution of a sophisticated communication strategy, Mr. Modi drew on the equivalence, in the Hindu imaginary, between ‘Swachh’ and ‘purity’, and ‘purity’ and ‘virtue’, to give a moral colouring to the binary of cash/cashless.

India is an economy where 90 per cent of all transactions are in cash. This is due to the large informal sector, which employs 90 per cent of the workforce. The overwhelming majority of them are not hoarders of black money. And yet, India cannot become a cashless society unless its mammoth informal sector transitions to digital payments.

Canny communicator that he is, Mr. Modi sought to pre-emptively quell the resistance such a forced transition would evoke by presenting the campaign for a cashless India as a campaign against black money and corruption. By dissolving the distinction between legal cash and black money, he cleared the ground for the treatment of all cash as potentially black unless proven white.

In other words, the informal sector is not an unintended casualty of demonetisation but the intended target. As the Reserve Bank of India Governor has clarified, the government was fully cognisant of the consequences of its move, and it was not at all an ill-planned operation, as some have suggested. As it happens, cash is the most powerful instrument of financial inclusion. Anyone can access it directly, without depending on rent-seeking technological or financial intermediaries. Once you have it, you could spend it whenever, wherever, and in whatever quantity you want to, without anyone being able to track you doing it. These are basic freedoms and rights that we take for granted. It is because these freedoms matter that there is resistance to their loss — a loss that is a given in a cashless society.

There was thus a logical need for a ‘phase one’ of demonetisation where the idea that it was about black money could be firmly planted in public memory. In phase two, which would kick in after ‘black money’ and national pride have been inserted into the demonetisation discourse, ‘cashless’ would be equated with ‘clean’, and cash with ‘dirt’ and the suspicion of dirty or black money.

In the cashless utopia that India is set to become, anyone who insists on using cash, a signifier of dirt, has a ‘dirty mind’, and is thus a suspect — a possible beneficiary of black money and the vices associated with it. Indeed, Mr. Modi concluded his Mann Ki Baat by explicitly equating ‘Swach Bharat’ with a cashless (or ‘less-cash’) Bharat, as he proclaimed, ‘Swachh Tan, Swachh Mann, Swachh Bharat, Mera Parichay’.

Why cashless?

But what explains this urgent drive towards a cashless society? One way to answer this is to consider the likely outcomes of a cashless society, and read back from it the intent behind such a move.

One immediate outcome of a cashless India would be a sharp rise in indirect taxes compliance. Traders, small businesses, shopkeepers, and consumers routinely use cash as a means to avoid paying service tax, sales tax, VAT, and any number of indirect taxes and fees. This mindset needs to change if the imminent Goods and Services Tax (GST) regime is to actually work. Brutally enforcing a cashless payments system — by sucking out 86 per cent of paper money and letting people flounder for a period in a condition of acute paper money scarcity — is perhaps the quickest means way to get there.

Apart from the state, another big beneficiary of a cashless India is finance capital. At present, India’s low-income households access credit through informal systems — be it a pawn broker or employer or a relative with cash savings.

This informality has been partially dented with the arrival of self-help groups that can access formal credit. But given India’s population, both the debt and the savings of the working classes constitute an enormous market that global finance has so far been unable to access.

Forcing them to shift to cashless payment platforms instantly formalises this world of informality. As the Prime Minister himself has reiterated many times, the mass opening of bank accounts under the Pradhan Mantri Jan-Dhan Yojana is a means towards financial inclusion, but in reverse: it channels personal income (wages/cash transfers) to financial markets via insurance and pension schemes such as the Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana. Thanks to forced deposits, unlike cash in a piggy bank or a plastic pouch, money in Jan-Dhan accounts can serve as a fresh source of liquidity for financial institutions.

Go in for cashless transactions and get discounts, says govt.

The third beneficiary is the digital sector, which enjoys a complex but symbiotic relationship with finance capital. Digital payment apps and e-wallet companies have enjoyed record downloads and deposits post-November 8. Their massive ad spends were possible courtesy the financial institutions that have invested in these finance technology (fintech) businesses.

Finally, in a global scenario of debt-soaked slowdown, extreme income inequality, and stagnating real wages, capital accumulation is only possible through a mechanism that systematically administers an upward redistribution of income — from the 99 per cent to the 1 per cent. While an indirect tax regime like the GST would accomplish this objective for the state, the integration of personal savings into the global debt economy would manage the same for finance capital. The primary requirement in both cases is to capture the circuits of capital and commodity circulation that lie beyond their respective domains of taxation and credit — that is, the entire cash economy. The drive towards a cashless society is hence the lynchpin for securing the supremacy of the state-finance nexus.

The definition of ‘normal’

From businesses to analysts to ordinary citizens, everyone in India is waiting for life to return to normal. But what would constitute this ‘normal’? An easy definition for most people would be: no long queues at ATMs. But the queues are long not only because there are too many people and too little cash. They are long also because there is a limit on how much cash you can withdraw at a time, forcing people to queue up multiple times at different locations. A proper return to the pre-demonetisation ‘normal’ therefore entails something more: removal of any ceiling on cash withdrawals.

Indian Government to fund digital discounts

Such a definition of ‘normal’ would be valid if the reason for demonetisation was either destruction of black money or fake currency, or even a recapitalisation of banks — all of which has either already happened or no longer matter. Assuming you are an honest citizen who uses cash but not black money, you could legitimately expect to go back to the pre-currency ban status quo, with one difference: instead of old notes, you use new ones, which should soon be available in numbers proportionate to demand.

vid165470

But everything that the Prime Minister has said and done so far suggests that there may not be a return to this old ‘normal’. No matter how many currency notes are reportedly printed, how many ATMs are recalibrated, how many livelihoods affected in the informal sector, the ceiling on cash withdrawals may not be withdrawn any time soon — and no date has been indicated so far. The reason is simple: the demonetisation drive is not so much about curbing black money as it is about combating cash. The only way this could change is through extreme political pressure.

Not surprisingly, the banking sector is firmly behind the Prime Minister on demonetisation. So is the IT sector. Barring a few squeaks about the impact on growth, the corporate sector, too, is behind Mr. Modi. The only constituency that may not be, is the one targeted by demonetisation: the cash-dependent informal sector, which has taken a hit, and will continue to do so unless and until they switch en masse to digital payment platforms — which is what the government is expecting them to do.

While the political ramifications are a different story, one may view Mr. Modi’s push for a cashless India as the culmination of the economic logic of liberalisation unleashed by Manmohan Singh in 1991. From this ideological vantage point, a rapid transition to a cashless economy — even if it means not-so-subtle coercion — makes perfect sense.

Original Article published on The Hindu, an English Newspaper of India

sourced via sampath.g@thehindu.co.in

http://www.thehindu.com/opinion/lead/Why-%E2%80%98cashless%E2%80%99-may-be-the-new-normal/article16801344.ece

Read further:
Indian Government has No Clues of Black Money in India
https://arresteddevelopments.wordpress.com/2016/12/16/indian-government-has-no-clues-of-black-money-in-india
Cashless Monetary System means Absolute Power over you
https://arresteddevelopments.wordpress.com/2016/12/17/cashless-monetary-system-means-absolute-power-over-you

arrested-ds-160x32

https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

Cashless Monetary System means Absolute Power over you

Why the Governments Will Implement the Cashless Monetary System

Of all who are working to bring your nation into a cashless monetary system, the desire to do this is greatest in the hearts of those who would rule over us and the world.

Governments, Bankers, Elites and Capitalists will become more Richer and more powerful but the average citizens will bear the burnts.

Absolute Power

Those who dream of absolute power over the masses realize that in order to achieve their goal, it is necessary to have absolute control of the world’s economic system. Tyrants know that if they can effectively separate every individual from his or her wealth, requiring the approval of the system for every financial transaction, that they can control the world. They have been, and are, continually working to develop and implement this system.

While banks, businesses, and others will gain financially from an electronic cashless monetary system, government will exponentially increase its power over the people.

conspiracy-quotes-lord-acton-absolute-power

 The people who wield power within government are those who are most able to effect this fundamental change in the way the world does business. This is because it will be those in government who will determine, by law, the type of system that will be used to control buying and selling and the form of currency that will be used.

Let us consider a few of the reasons why those who desire power over others want to implement a system of trade that they can control completely.

“Government” Money

Since government does not produce wealth, it must take the money it needs to operate by taxing those who produce wealth; that is, those who work.

The innumerable layers of taxes that have been heaped on the worker have caused him to render unto Caesar much of his hard earned wealth. Not only is the worker’s income taxed by the government, but in most cases he must pay taxes on his income to the state and sometimes even to the local government.

Property taxes must be paid regularly if he wants to keep his property. Other taxes are imbedded in the cost of the goods and services and are paid by the consumer when an item is purchased. Then there are sales taxes that must be paid to state or local governments when an item is purchased. All taxes are paid to the government, and while few people know it, all taxes come out of the pockets of those who produce wealth — again the workers.

While we like to think of ourselves as “the land of the free”, the truth is that there is almost nothing we can do that isn’t either taxed, or regulated in some way by some level of government.

The Income Tax and Power

The income tax system as it now exists is one of the most burdensome, corrupt, confusing, and oppressive methods of taxation ever devised by man. One reason for this is that the system is used not only for the collection of money to operate the government, but it is also a mechanism by which those who are in power may increase their power. It is so complex that it is understood by no one. It is easily manipulated by those who write the laws and has been used by politicians to reward friends and punish enemies.

Over the years, it has metastasized so that its tentacles now reach into every part of our lives, and the farther it reaches the more it controls.

From time to time many have suggested, and some have worked very hard, to replace this monstrosity with tax systems that would be simpler and less intrusive. All of these attempts have failed. The reason every attempt to replace the graduated income tax with some other form of taxation has failed can be summed up with one word: power. The graduated income tax gives those who control it the power to control every segment of the economy and thereby the ability to control every part of our society and even the behavior of individuals.

when-should-nri-file-income-tax-returns-in-india

They say it would enable our economy to grow by leaps and bounds and would increase our liberty and privacy, but it would actually increase the power of those who use the present system of taxation to oppress and control the people.

Under our present system of taxation, every part of a person’s life is open to the government. The requirements of reporting income and expenditures for tax purposes creates a record of a company’s or an individual’s life. The government requires that any and all information that is demanded by the tax collecting agencies be supplied to them. This information gives the government the ability to examine not only a person’s financial dealings but their personal and political lives as well.

With the present system, there are various tax rates, deductions, exemptions, and tax credits, enabling those who write the tax laws to exert forces upon the economy, society in general, organizations, and even the individual. Sometimes this is done in order to force industry and individuals to make decisions based upon tax considerations rather than what would otherwise be best for the business or the individual.

The power to reward friends and punish enemies is perhaps the most misused power derived from this complicated and easily manipulated system. Many favors can be bestowed upon those who support the right party, politician, or program. Much misery and even financial ruin can be visited upon those who don’t.

The Collection of Taxes

In order to make certain that people don’t spend their earnings before they meet their tax obligations, employers are required to withhold a portion of each employee’s earnings. The money that is withheld from the employee’s earnings is sent by the employer to the government’s tax–collecting agencies. This enables the tax–collecting agencies to claim their share of a person’s earnings before the person gets possession of their earnings.

Problems Collecting Taxes

When it comes to the payment of taxes, companies and persons who are self employed operate under a different set of rules. The rules under which a company, or someone who is self employed are based somewhat on the honor system. This system requires them to pay taxes based on their estimated income.

 This gives them access to their money before the tax–collecting agencies of the government. This arrangement means that the government must rely on the honest reporting of income by companies and those who are self-employed. It is also gives the dishonest taxpayer opportunity to conceal income. This is especially so when the business is conducted on a cash basis.

Ever since there have been taxes, there have been those who evade the payment of taxes. Government has had to implement enforcement measures to ensure that it collects the amount of money it demands of the people. Those who are charged with collecting taxes are always seeking better and more efficient ways to collect the revenue they believe should be paid to the government.

If the government becomes lax in the collection of taxes, then few, if any, people would pay taxes. The age old problem for governments when it comes to tax collection is that with cash or some other medium of exchange that allows individuals to deal directly with others, transactions are easily concealed from the government. Many people attempt to conceal profits from the tax–collecting agencies of the government by simply failing to report income. Also, by its very nature, income derived from illegal activities is not reported, unless it is reported as having come from some other activity that is legal. The fact that there is a great amount of economic activity concealed from the government creates problems in the area of tax collection.

To minimize tax fraud, the tax collecting agencies must develop accounting procedures and investigative methods that will ensure all income is reported. This is a very complicated and costly undertaking, since it requires the creation a huge bureaucracy which must try to monitor all economic activity. If tax–collecting agencies had a way of knowing about every transfer of money or goods from one entity to another, tax fraud would be eliminated. This would result in a huge windfall of money for the government as a result of increased collections. Tax evasion, though, can never be entirely eliminated as long as our present economic system is in place, because financial transactions can still be conducted privately by the use of cash, or the transfer of other items of value.

No Place to Hide Wealth

Once the cashless monetary system is in place, hidden cash transactions will no longer be possible because cash will no longer exist.

All financial activity will take place within the computers of the new electronic economic system. Every financial transaction, no matter how small, whether it involves funds credited to, or debited from a person’s account, will be known by the government. All income and expenditures will be carefully monitored and examined by the government’s computers. The tax–collecting agencies will know all there is to know about every company’s or individual’s financial dealings. They will know the sources of all income. They will also know when, how, and where all money is spent. This will ensure that taxes are paid on all income.

Such a system will enable governments to subject everyone to a continual financial strip search.

Instant Tax Collection

Since all currency will consist of electronic credits that cannot be removed from the system, the tax–collecting agencies will no longer have to depend on voluntary reporting of income by companies or those who are self-employed.

 The government will not have to rely on the honesty of those who are reporting income. Tax–collecting agencies, by the use of computers, will be able to immediately calculate for themselves the amount of tax owed by companies and the self-employed.

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This will be done by comparing revenues to expenditures. Once the amount of tax owed is determined, the amount will be automatically debited from the financial account of the person or business. This will enable the government to claim the taxes that it determines are owed on a more frequent basis than the present system. Tax payments will be transferred from the taxpayer’s account to the government as frequently as the tax–collecting agencies desire. This means that the government will be able to confiscate money on a daily basis, if this is the desire of those who collect taxes. This will prevent a company or an individual from coming up short when taxes are due. These features of the cashless system will eliminate the problem of delinquent tax payments. It will also eliminate tax evasion.

Maintaining the Money Supply

Manufacturing paper currency and coins is a very expensive task. Physical currency must be designed and manufactured in such a way as to make counterfeiting as difficult as possible. It must also be manufactured in sufficient quantities to supply the demand of the economy. Since physical money wears out with usage, recalling and replacing worn currency is a continual process. Distribution of money once it is created is expensive in that it must be transported, and security must be provided as it is moved from the treasury to the banks.

Since much of our economy’s business is already transacted electronically, only a portion of the money that is presently in circulation actually exists as paper currency and coinage. Those who control the monetary system know that elimination of all paper money and coins is necessary in order to obtain the power they desire.

This transition is already well underway.

First of all, the creation of electronic credits is much easier and faster than creating physical money. Creating electronic credits and adding them to the money supply is a very simple task that could be accomplished with a few keystrokes on a computer’s keyboard or by a program that will make automatic adjustments to the money supply. It does not involve the purchase of expensive paper, inks, or metal as does the creation of physical money. It does not require complicated and expensive printing presses or dies. It also eliminates the lag between the decision to adjust the money supply and the actual adjustment.

Electronic currency is not subject to wear and tear so it never needs to be replaced. While physical money must be transported from place to place, electronic currency is moved instantaneously to any place on earth through communication networks. By eliminating paper currency and coins and replacing them with electronic currency, the huge expense of creating and maintaining the physical money supply will be eliminated.

Controlling the Economy through Wage and Price Controls

Since all commerce will be conducted within the closed electronic monetary system, wages, the prices of all goods and services, as well as the profit margins of companies could be set at particular levels or within certain ranges, there are many who subscribe to the notion that the pressures of supply and demand can be regulated in this way. With a closed monetary system, controlling wages and prices will be very easy, and the temptation to use this power to attempt to control inflation and other economic pressures will be too great to resist.

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Since all transfers of funds must be approved by the system, any wage, price, or profit margin that is deemed too high will result in the transaction either being refused or automatically adjusted to be within the allowed limits. This will be the end of free enterprise and will eventually reduce the availability of goods and services.

Cashless Monetary System + RFID = Absolute Control

The main objective of tyrants is to have the ability to force the populous to comply with every command. This goal will be attained when absolute control of all buying and selling is achieved by the convergence of the closed cashless monetary system and the RFID system of inventory control.

This will be done by interfacing these two systems so they will perform as one system.



To accomplish this goal requires that the transition to a cashless monetary system be completed, and for all items produced or offered for sale to be identified with RFID chips. This will mean that in order for an item to be sold or for ownership of an item to be transferred from one person to another, it must contain a chip and the item must be registered with a database that is controlled by the government. This will be done to eliminate any possibility of a black market that might circumvent the closed monetary system of trade.

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Once this system becomes operational, buying and selling apart from the closed monetary system will become impossible.

Bartering will also be impossible, since ownership of items will be recorded within the system. Money laundering will also become extremely difficult, if not impossible The reason for this will be that since the government will have an inventory of all items produced and all items possessed by individuals, they cannot be sold unless they are deleted from the inventory of one person’s possessions and added to another person‘s inventory.

If an item does not have an RFID chip registering it with the inventory system, it cannot be sold. This will be because when credits are to be transferred from one person’s financial account to another person’s financial account, there must be a corresponding transfer of goods which takes place at the time of sale. Even items offered for private sale must first be tagged with an RFID chip and then registered with the government‘s inventory system before there will be an authorization of payment to the seller. Unless these steps are performed, the item cannot be sold.

With the closed cashless system in place, those who control the system can implement any law or program they desire. It will be a simple matter to use the closed monetary system as the engine of social and political change, and as the weapon for enforcement.

If a particular activity is deemed to be good by the powers that be, then it will be permitted, or even encouraged.

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 This will be done by allowing the approved activity through the use funds stored within the system. If an activity is determined to be in inappropriate, for example certain religious or political activities, then the funds that are needed by the individual or group to engage in these activities will be denied.

 All expenditures, and therefore every activity, will not only be monitored, but must also meet the approval of the authorities who will control the closed cashless monetary system.

Once the closed monetary and RFID systems are completed and interfaced one with the other, those who would rule the world will have absolute economic power over us, and with this power they will force compliance with their edicts. The cashless/RFID system will enable the ruling power to do this without a large military or police force.

more to come…

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Indian Government has No Clues of Black Money in India

Indian Government has No Estimation ever of Black Money in India

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There is no official estimation of black money either before or after November 8 — the day government announced scrapping of old Rs 500 and Rs 1,000 notes, Indian Finance Minister Arun Jaitley said in Parliament on Dec 16.

“There is no official estimation of the amount of black money either before or after the government’s decision of November 8, 2016 declaring that bank notes of denominations of the existing series of the value of Rs 500 and Rs 1000 shall cease to be legal tender with effect from November 9,” he said in a written reply in Lok Sabha.

And You are very much aware that the Indian Government is not even sure how much counterfeit currency was rolling in India before Demonetization and how much rolling now.. All they have stated that the govt had been informed of a mint in Peshawar where only fake Indian currency notes are printed every year by which Pak pushes Rs 70 crore worth of fake currency every year into the Indian economy.

And according to RBI, there is only Rs 400 crore worth of counterfeit currency in India.

Then Why Demonetization?

According to the Indian prime minister, there are two objectives. One is (curbing) terrorist financing and counterfeit currency—and the second is that the black economy has become very large and it is the source of poverty and all the problems in India so we need to get rid of the black economy.

The question isdoes demonetization overcome these two problems. As far as counterfeit notes are concerned, they are only 400 per million, which is very tiny. And according to RBI, there is only Rs 400 crore worth of counterfeit currency.

Total currency in circulation is Rs 17.5 lakh crore. Its not even oont ke muh me zeera, as they say in Hindi. Its negligible.

Terrorists need financing. So they print these fake notes and circulate it. But once they have given the money to another person, it’s circulating within the economy. So they have to print more and more money. That is what you have to stop.

And how do you stop that?

Not by demonetization, because there are state actors involved in counterfeiting. They can counterfeit the new currency notes also.

Then & Again Why all this Drama and Ho-Hoopla of Demonetization in India ?

The Answer has been already given by us in our post Indians towards Modern Slavery on 8th November, the day India announces Demonetization.

All this has been done for just one single objective “pave the path to Cashless Economy” just for the benefit of the Global Bankers who are now the Shadow Government in India along with some of the Super Rich and ultra powerful people.

The US has had acute trouble dealing with black money and dirty cash for over a hundred years now. Yet, not once has it declared its currency illegal since it began issuing notes in 1862. That is the strength of its financial system, on which the entire world relies.

But Indian Rulers have not only sold the Indians to the Global Bankers they also exposed the strength of its financial system as well the reliability of their own currency.

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A currency note is a promise that must be kept, whatever the circumstances.  This trust has also been broken in India.

Only to bring Cashless Economy in a Camouflaged way.

No Debates, No Discussions, No Public Opinion, No Bills…. Withot looking at the Drawbacks.

Mind you.. it’s not the Government but the Shadow Government going full throttle for Cashless Economy in India.

And Don’t be fooled.. You are always at risk in Cashless Economy and you will never be the absolute owner of your own wealth..There are a lot more things you need to know about Cashless System which will really make you cashless..

more to come…

Read further:
Indians towards Modern Slavery
https://arresteddevelopments.wordpress.com/2016/11/08/indians-towards-modern-slavery/
Demonetisation Loot And Plunder Says Manmohan Singh
https://arresteddevelopments.wordpress.com/2016/11/24/demonetisation-loot-and-plunder-says-manmohan-singh
The cash crunch may paralyse economic activities in India
https://arresteddevelopments.wordpress.com/2016/11/20/the-cash-crunch-may-paralyse-economic-activities-in-india

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https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

Currency Ban Is Tearing India’s Rural Banks Apart

Currency Ban Is Tearing Rural Banks Apart

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On 8 November this year, the manager of a small semi-rural government bank branch in eastern Uttar Pradesh sat down for dinner in front of his television and found that Prime Minister Narendra Modi had destroyed his cash stock.

“I froze when I heard that Rs 500 and Rs 1,000 notes would be phased out in four hours,” he said, requesting anonymity to speak freely, “We had almost nothing in small notes.”

His branch had a little over Rs 6 lakh in Rs 100 notes, another Rs 5.5 lakh in 20s, and about Rs 90,000 in Rs 10 notes, out of a total chest of over Rs 60 lakh.

“We had no fifties,” he said ruefully, “and that was just the beginning.”

 (Photo: Rahul Gupta/The Quint)
(Photo: Rahul Gupta/The Quint)

In 3 Weeks Since Notes Ban, Bank In Rural UP Received Cash Only On 7 Days.

India’s banking system has seized up under the strain of Prime Minister Modi’s decision to phase out high denomination banknotes with immediate effect. Its effects are most visible in rural India. The eventual benefits of demonetisation, economists say, are uncertain; but the costs are clear and visible.

 

A startling 81 percent of Indians in the countryside live in settlements without a brick and mortar bank, according to figures put out by the Reserve Bank of India; the corresponding number for urban India is zero.

 

Unbanked areas, which account for 93 percent of rural India’s geographic expanse, are serviced by Rs 1.2 lakh “business correspondents”, young men like 30-year-old Dhruv Narayan Yadav who act as one-person bank counters in village markets and bazaars.

Since 8 November, villagers desperate to exchange their defunct notes for valid currency have swamped the few functional banks and correspondents like Yadav, stretching an already strained system to breaking point.
What follows is an account of two lives: one semi-rural bank branch manager, one young business correspondent, and their frantic efforts to stave off catastrophe even as the system intended to support them stuttered and failed.

 (Photo: Rahul Gupta/The Quint)
(Photo: Rahul Gupta/The Quint)

On 9 November, the day after PM Modi’s announcement, banks across the country were closed to the public. The bank manager spent the day on the phone with his circle office, pleading for cash.

 

We asked for about Rs 25 lakh to service our approximately 40,000 account holders. Usually, during festive season, we have an average payout of Rs 40 lakh a day.

 Unbanked areas in India are served by “business correspondents”, essentially “human ATMs” operating out of small kiosks. (Photo: Esha Paul/The Quint)
Unbanked areas in India are served by “business correspondents”, essentially “human ATMs” operating out of small kiosks. (Photo: Esha Paul/The Quint)

The next morning, as thousands queued up to exchange their money, the cash came in.

“Our circle office had sent us Rs 4 lakh.”

Staff were called back from leave, everyone including the bank manager manned the cash counters. Some customers got Rs 2,000, some got Rs 1,200, some got Rs 700. At 9 pm, when the branch finally closed, the cash counting machine packed up under the strain. “We stopped work and waited for a replacement.”

The banker went home at 3:00 am.

The next day, he asked for another Rs 25 lakh. “We got Rs 4 lakh.”

By now, people were desperate. The wedding season was beginning – everyone needed cash.

We informally told people, ‘come after banking hours with a copy of your marriage card as proof, we’ll try to give you Rs 5,000.’ What could we do?

Bank Manager

After a while, the banker felt bad asking his head office for more money, “Because we knew that every single rural bank was going through the same thing.”

 (Photo: Rahul Gupta/The Quint)
(Photo: Rahul Gupta/The Quint)

Dhruv Yadav, the SBI business correspondent (BC), was still in bed on 9 November when his bank manager called. As a correspondent in Badya Buzurg village, Yadav works like a human ATM machine: account holders can walk up to his small shop in the market and deposit up to Rs 20,000 a day with him or withdraw a similar amount.

Yadav records the transactions on his computer and in the passbooks of his customers.

“But now, we were told, you can take a deposit of only Rs 2,000 and you can give out only Rs 2,000. Also you can’t exchange any notes.” As he was leaving, the branch gave him some cash too, in case his customers in the village needed to withdraw money from their accounts.

“They gave me a total of Rs 12,000,” he said, “I distributed the money between 25 people.”

An SBI customer service centre in rural UP. (Photo: Esha Paul/The Quint)
An SBI customer service centre in rural UP. (Photo: Esha Paul/The Quint)

He asked people what they needed the money for. For instance, those buying vegetables got Rs 500, some got even less.

“A woman came up to me and said, ‘my child has pneumonia’,” Yadav recalled, “If you don’t give me money, he’ll die.”

The only person who got Rs 2,000, he said, was that mother. “I would have given her more, but I couldn’t break the rules.” Then he took her husband’s number and said he would call her when he got more money. A week passed; Yadav is still waiting for the money.

In the meantime, 30 people across India died waiting to get hold of their own money.

On 14 November, Finance Secretary Shaktikanta Das told the press, “there is absolutely no reason for the members of the public to feel any kind of panic” as there was enough cash in the banking system.

 

Yet in Uttar Pradesh, the bank manager was making hard decisions. On 16 November, a week after demonetisation began, his branch finally got Rs 20 lakh. So they decided to give cash to 1,000 account holders. “It’s a trade-off,” he said, “Give lots of people some money, or less people more money.”

The long working hours were putting a strain on his staff. The queue outside the bank would begin at 5 am, four hours before opening time. Customers were turning hostile, bank staff were so stressed they would occasionally erupt into shouting matches with each other. Some now had high blood pressure, others had low blood pressure.

“Modi says the drive is also to reduce counterfeit currency,” he said, “but we are so short-staffed, we have no time to check each note. Cash is stacked into bundles, shoved into sacks and sealed.”

 (Photo: Rahul Gupta/The Quint)
(Photo: Rahul Gupta/The Quint)

What if a bundle of 1,000s turned out to be fake, the banker worried, would they force him to pay out of his savings?

As the date of his retirement draws closer, the banker said he is increasingly reminded of a joke from the time Indira Gandhi nationalised the banks in 1969.

“When the dogs would bark in the dead of night, people would say – go to sleep; it’s probably just a banker going home.”

“It feels like we are back in those days again.”

With the government pushing farmers and the rural population to open bank accounts in the wake of the currency ban, the situation at this bank in rural Uttar Pradesh, however, has not improved even after 35 days since the cash ban was announced.

sources:

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https://arresteddevelopments.wordpress.com

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The Trouble With India’s Demonetization Gamble

The Trouble With India’s Demonetization Gamble

The country is in uproar following the bold and risky move.

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On November 8, Indian Prime Minister Narendra Modi announced the surprise demonetization of the Rs 500 and Rs 1000 notes of Indian currency. Less than three weeks since the nonrecognition of these notes as legal tender, the country is in an uproar. While this is not the first time that India has attempted to demonetize in a professed bid to tackle the issue of black money in the country, unlike the last time under Prime Minister Moraji Desai in 1978, this time the Reserve Bank of Indias governor Urjit Patel is in full support of the decision and has called it a bold move that addresses the growing menace of fake Indian currency notes.

However, opinion on this decision is very far from a consensus in both the expert and the non-expert realm. The first question raised against this move is the significance of cash as a component of the money laundering networks in India. Economists have argued that this move has left the biggest chunk of black money untouched the stacks that lie in undisclosed accounts in Swiss Banks.

While former RBI governor Raghuram Rajan has not made an official statement regarding this move, he has expressed reservations in the past about the effectiveness of demonetization as a means of tackling money laundering, possibly indicating that he too might be in this camp of skeptics. The IMF has made a statement supporting Modis efforts, but has also very clearly indicated the need for prudence in managing the transition to new notes, given the pervasiveness and importance of cash to the economy.

The chief ministers of the states of Bihar, Andhra Pradesh, Odisha, and Telengana have openly expressed both support and appreciation for this move in the long run, while the chief ministers of Uttar Pradesh, Karnataka, Maharashtra, and West Bengal have expressed varying degrees of criticism and worry at the potentially very harmful short term impacts. Members of the Congress and the Samajwadi Party have violently opposed this move as well.

New Delhis Chief Minister Arvind Kejriwal has been vocally critical of the demonetization, stating that the experts he has consulted have not indicated much confidence in this move as a means of getting rid of black money. Drawing upon his own election promises to weed out corruption, he has in fact accused the government of having strategically informed its friends and allies (who might have hoarded black money) in advance thus effectively only complicating the life of the common man with this move.

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BJP President Amit Shah has retorted, asking for skeptics to provide concrete reasons for their opposition, and implied that only anti-social elements have a cause for worry as a result of this move.

The next question that may be raised is the preparedness of the government and the banks regarding implementation of a move of this scale. The argument provided for why this move was announced and administered overnight is that it denies hoarders of black money the chance to dispose of it. While that may appear to be sound logic, it has also apparently impacted the banking systems ability to ensure a smooth transition. Several ATMs across the nation continue to be useless by virtue of not having enough fresh notes, while the ones that are refilled are attacked by painfully long lines and eventually emptied at once.

Some leading Bank Unions have criticized the move as having been improperly planned resulting in a severe shortage of Rs100 notes that in turn ensures that the large tender of the new Rs2000 notes is rendered useless for routine everyday transactions. Rajya Sabha MP Subramanian Swamy of the BJP has alluded to a lack of a proper contingency plan on the part of the government. At an all-party meeting, the Lok Sabhas speaker said that the demonetization had become chaotic due to implementation issues.

On November 15, the Supreme Court sat down to hear multiple petitions and four Public Interest Litigations regarding this move some of which requested a complete rollback of this policy due to its severe impact on everyday citizens. The court decided not to stay the decision right then and instead will examine its legal validity before making a decision. After asking the government to file an affidavit justifying its notification, the court adjourned the hearing to November 25.

Now The Supreme Court will hear on December 2 the challenge to the constitutional validity of the demonetisation decision and the inconvenience caused to the people due to it.

Meanwhile, government authorities were asked to ensure that the average citizen was not deeply impacted by this policy but RBI like any rural landlord coming out with new rules every other day to put the citizens in confusion and jeopardy.

This in turn is the third major question raised against this policy who is affected the most?

The removal of large sums of legal tender unquestionably affects all individuals who need to engage in cash transactions in some form. Those with access to plastic money are less directly impacted even in the short term, but in both the long and short term, specific sections have been disproportionately hit.

Take example of the Residents of the sleepy village Dudko, 75 kms (45 miles) southwest of the capital Delhi, say they are struggling to pay for basic goods like food and fuel in the absence of an effective banking and exchange system.

Disenfranchised groups who lack the access to ID documents are chief among these.

Out od service ATMs

The rural poor who lack the infrastructure to set up deposit accounts and who currently hold all their money in cash form have been directly hit. Even those who do have access to accounts among them struggle with ill prepared banks and post offices, small and dispersed in number, and the need to take off several crucial hours from work sometimes in vain. It is also difficult to estimate the numbers of women across the board who will be potentially irrecoverably impacted by this policy women who do not inform their families of hidden stashes of cash, who are otherwise fully dependent on male members of the family and who stand to lose years of savings because they cannot confess to their presence.

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Refugees who lack the requisite documents to create accounts are also now seeing months of savings potentially vanish, as they still lack mechanisms to access the banking sector. Socially ostracized communities who are again disproportionately cut off from the banking systems – like transgender communities and sex workers – are other immediate victims. This is in addition to the fact that reports indicate that the government may have over-estimated the existing levels of connectivity to banking.

The demonetization drive has had an impact on wedding celebrations as well

A large number of Marriages were postponed due to the acute cash crunch as all the wedding related business are refusing the accept old denominations.

Modi, in a rousing rhetorically rich speech, requested the nation for 50 days to launch this self-labeled war on black money. He asked the people to make short-term sacrifices in the interest of long-term gains by virtue of all the money that will be seized from hoarders. Both the activist and the non-activist sections of social media have equally raved about or ripped apart this rhetoric. While it is remain to debate whether the long-term gains are indeed forthcoming, the short term sacrifices have been more than just significant. They have been immensely painful.

sources:

By Padmapriya Govindarajan  for http://thediplomat.com/

http://timesofindia.indiatimes.com/

Read further:

Supreme Court of India To Hear Challenge To Demonetization On December 2

https://arresteddevelopments.wordpress.com/2016/11/25/supreme-court-of-india-to-hear-challenge-to-demonetization-on-december-2

Why BJP Govt’s Demonetization Move Is An Absolute Disaster

https://arresteddevelopments.wordpress.com/2016/11/24/why-bjps-demonetization-move-is-an-absolute-disaster

Demonetisation Loot And Plunder Says Manmohan Singh

https://arresteddevelopments.wordpress.com/2016/11/24/demonetisation-loot-and-plunder-says-manmohan-singh

The cash crunch may paralyse economic activities in India

https://arresteddevelopments.wordpress.com/2016/11/20/the-cash-crunch-may-paralyse-economic-activities-in-india

Demonetization may leads to Riots On The Streets in India

https://arresteddevelopments.wordpress.com/2016/11/19/demonetization-may-leads-to-riots-on-the-streets-in-india

Rupee Falls To Near Record Low

https://arresteddevelopments.wordpress.com/2016/11/25/rupee-falls-to-near-record-low

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https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

Demonetization Demonetization… The poor will suffer the most

Demonetization is a foolish step… The poor will suffer the most: Prof Arun Kumar

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Economics professor ARUN KUMAR is one of the most widely quoted authors on black money. He has authored The Black Economy in India (Penguin, 1999) and Indian Economy since Independence: Persisting Colonial Disruption (Vision Books, 2013).

In an interview to India Legal’s Editor-in-Chief, INDERJIT BADHWAR and Associate EditorMEHA MATHUR, Prof Kumar describes how this hasty drive will adversely impact demand, employment and investments. Excerpts:

When and under what circumstances is demonetization used as an economic tool and how common is this practice worldwide?

As a tool for economic surgery it has been used elsewhere, but not in the context it has been used in India. Where it has been used largely is where currency has totally lost its value, like the Soviet Union or Weimar Republic—where you had to carry sackfull of currency to buy your daily supply. There the currency was abolished and new currency created. But India is not in that situation.

Was the Indian economy facing a crisis that needed such a swift and heavy surgical strike?

Not at all. In fact, our macro-economic indicators were reasonably good. But the real point is, what does this move achieve? According to the prime minister, there are two objectives. One is (curbing) terrorist financing and counterfeit currency—and the second is that the black economy has become very large and it is the source of poverty and all the problems in India so we need to get rid of the black economy.

The question is—does demonetization overcome these two problems. As far as counterfeit notes are concerned, they are only 400 per million, which is very tiny. And according to RBI, there is only Rs 400 crore worth of counterfeit currency.

Total currency in circulation is Rs 17.5 lakh crore. It’s not even “oont ke muh me zeera”, as they say in Hindi. It’s negligible.

Terrorists need financing. So they print these fake notes and circulate it. But once they have given the money to another person, it’s circulating within the economy. So they have to print more and more money. That is what you have to stop. And how do you stop that? Not by demonetization, because there are state actors involved in counterfeiting. They can counterfeit the new currency notes also.

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If you take out 85 percent blood from somebody’s body and then put five percent into it, what will happen to that person? He will die. Similarly, when you take out 85 percent liquidity from the economy and slowly replace it by five percent, then the circulation of income goes down.

India’s growth rate, trade, GDP and forex reserves have been relatively steady. Why meddle so drastically with a system that seemed to be producing results?

This is a complete miscalculation that you have to overcome black economy through this measure. Understand the meaning of this. First you earn income, out of which you save and you create wealth. Whatever income you have, you consume a part, you save a part of it, and that saving you invest in various assets. That gives you your wealth. Wealth is held as a portfolio—you can put it in real estate gold, share market or cash. Cash is only one component of your wealth— possibly one per cent of your wealth. The black economy, which, according to my estimate is 62 percent of GDP, for the current GDP of Rs 150 lakh crore, we are generating Rs 93 lakh crore this year as black income. Black wealth could be three times more so about Rs 300 lakh crore. Out of that, rupees three lakh crore would be held as cash which we can call black money.

So there is a difference between black wealth and black income?

Yes, black income, black money and black wealth, all three are different.

This is the common mistake that people make. They think the three are same. Black money is only one percent of your black wealth. So suppose you are completely successful in eliminating three lakh crore, you are only eliminating 1 percent of your black wealth and three percent of your black income.

The next point is, will you be able to eliminate even rupees three lakh crore? People have found ways of recycling this. On the day this announcement was made, jewelry shops were reported to be open till 3 am, issuing backdated receipts for purchase of gold, etc. One businessman said he had Rs 20 crore rupees and he gave four months’ advance salary to his workers. They will deposit it in their banks. So your black gets utilised. Then, the Jan Dhan Yojana is being used in large amount in rural areas. The landlord can tell, say, 100 people to take Rs 20,000 each from him, deposit, and return it to him later. So you won’t be able to demobilize even rupees three lakh crore, at best you may demobilize Rs 50,000 to Rs 70,000 crore, so neither of the two objectives that the PM has stated will be fulfilled.

Further, you are only demobilizing rupees three lakh crore at the most for one year but black income generation will continue as before. Say, by selling spurious drugs, narcotic drugs, charging capitation fee, under-invoicing and over-invoicing in business and trade and so on. Therefore, cash will again be generated here. And you are introducing Rs 2,000 notes so storage of black will be even more easy. Therefore, you are defeating your own logic that large denomination currency is used to stash black money so it needs to be demonetized.

In fact, 97 percent are already the sufferers due to the black economy and now another burden is placed on them, without solving the problem of the black.

We all know India has a huge and thriving parallel economy. Perversely, this parallel economy, run entirely on cash, has produced results in terms of employment, consumer demand, rural credit, informal “banking,” and money-flow. How will demonetization hit/hurt this sector? This is also being projected as a Robin Hood kind of measure—taking it from the rich and giving it to the poor. That is the political message going out. Is this a pro-poor measure?

No. basically, it’s not a parallel economy. Black economy and white economy are largely intertwined in India. So when you sell your real estate property you generate black and white income simultaneously. When you produce sugar, you don’t show 10 percent and show 90 percent of the output. That’s why when the black economy is affected the white economy is also affected. This move, which is supposed to impact the black economy, is affecting the white economy terribly. Demand is going down.

As someone gave a very good analogy, if you take out 85 percent blood from somebody’s body and then put five percent into it, what will happen to that person? He will die. Similarly, when you take out 85 percent liquidity from the economy and slowly replace it by five percent, then the circulation of income goes down. Footfalls in malls are falling, charging of mobile phones is declining, the balloon seller is not able to sell balloons, the small trader is not able to sell goods. Even the large trader is not able to sell produce because discretionary expenditure has slowed down. For example, instead of buying a shirt I decide to buy it next month. So circulation of income is slowing down, leading to a decrease in demand. When demand slows down, production slows down, employment drops and investment falls. And when investment falls it will have long-term consequences.

If this goes on for a month or two, investment will decline and, the impact will persist for more than a year. Anyway the cash shortage will not be sorted out very quickly so demand will be affected for much longer than 50 days.

You have to replace the Rs 500 and Rs 1,000 notes worth Rs 14.5 lakh crore that you printed over 15 years and you have to replace it very quickly. That is not possible because you need paper and ink which are largely imported. And ink is in short supply, which is why they floated a tender a few days back. According to Business Standard, it will take 108 days to replace the old currency, provided there is no shortage of ink or paper. And if you are printing Rs 100 notes, then you need to print 10 times more notes than for a Rs 1,000 note and that will take a lot more time.

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Circulation of income is slowing down, leading to a decrease in demand. When demand slows down, production slows down, employment drops and investment falls. And when investment falls it will have long-term consequences.

The next point is, people are hoarding currency because they are not sure when the supply will be normalized. As a result, the demand for currency will be 50 percent more. The people who will suffer the most are those in the unorganized sector, as they don’t have credit or debit cards or card readers. They are the ones who need more currency in circulation. The entire agriculture is unorganized sector. This sector is also a major component of manufacturing and services.

Is there the danger of a huge chunk of people being left “economically disabled” for a long time to come?

That’s what is happening. So the balloonwala’s earning has dropped sharply. A beggar complained that people are not giving alms now and she had four children and one of them died for lack of food. Even those who don’t deal with Rs 500 and Rs 1,000 notes are being impacted. In rural areas, farmers are not able to buy seeds and fertilizers. Arhtiyas (rural commission agents) don’t have money to lend. So, sowing next season may also be affected. Money is what you don’t eat. With money you buy food, clothes and services. So money is for circulation. It’s like the blood flow of the body, which keeps everything going. If there is a shortage of that then there is a problem.

At the moment we are feeling the discomfort. When do you think will real pain start?

The real pain for the poor is already on. Real pain for the middle classes is less because we can use credit cards, etc. It will start when our income gets affected. When production slows then middle class people will face lay off. And they will begin to feel the pain. When truckers go on strike, which is a possibility. If the government had prepared properly and managed to create enough supply of new currency then possibly this pain would have been less.

The other option would have been benign neglect.

Coming to options, this move does not sort out the black economy but creates problems for the whole economy. The point is that black economy has not been created yesterday. It has been growing for 70 years. So this problem can’t be solved overnight. There is no magic wand. What you could have done immediately is to appoint a Lokpal to bring about accountability in the system; one of the key ways of tackling black money. Businessmen, politicians, bureaucrats, police and judiciary are not accountable. So how do you bring about accountability? That’s the key. If you can bring about accountability of these sections then you can solve the problem of black money. So RTI for political parties is essential but they do not agree. Whistleblowers are very important because they are the ones who expose the scams—be it Vyapam or Adarsh etc. But instead of strengthening the Whistleblowers Act it is sought to be diluted.

Then we are not doing much about simplifying direct tax. There is GST but more important is the Direct Tax Code Bill. You have to simplify your direct taxes. Intelligence agencies tab Hawala on daily basis but you are not doing anything about that. So, there are many things you can do immediately because you have the laws. That shows the intention is not there. If you had taken recourse to these laws, you could have targeted the three percent of people who indulge in black money without adversely affecting the 97 percent not generating black incomes. In fact, 97 percent are already the sufferers due to the black economy and now another burden is placed on them, without solving the problem of the black.

And you have not offered carrot to those who have by default become part of the black economy.

No, the Income Declaration Scheme (IDS) was there till September 30, wherein you could disclose the black amount for 15 percent penalty. The FM said: “Please come clean, then you can sleep in peace.” But as long as you say we will not take steps against the corrupt businessman he is happy. So wherever amnesty has been given that has not worked.

Voluntary disclosure scheme (VDS) has been implemented six times in India. The government gave an undertaking in the Supreme Court in 1997 that we will not have this scheme ever again, the reason being that it’s unfair to the honest person. The honest businessman’s capital is rising slowly because he is paying full tax. The dishonest businessman’s capital is rising fast. So the honest one says let me also become dishonest. The CAG report on voluntary disclosure scheme in 1997 said two things. People have become habitual tax offenders. Those who declared in the earlier five schemes also declared in the sixth scheme. They think another scheme will come, let me generate more black income today. Therefore after 1997 they have not done a VDS, although the IDS of 2016 was also like VDS.

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The balloonwala’s earning has dropped sharply. A beggar complained that people are not giving alms now and she had four children and one of them died for lack of food. Even those who don’t deal with Rs 500 and Rs 1,000 notes are being impacted.

The Mauritius route is also like a VDS. You take the money out, bring it back through round tripping and so you don’t pay tax. So the system has created these easy ways of generating black income. We have wonderful laws. But we don’t implement them. Political will is needed to implement laws.

Another thing, cash does not necessarily mean black. So of the Rs 17.5 lakh crore, Rs 14.5 lakh crore is in Rs 500 and Rs 1,000 notes. Out of that, at least 50 percent would be with businesses. If you go to petrol pump or shops you see wads of currency notes with the cashier at the end of the day. Railways, airport—everywhere it’s needed. Companies have petty cash. Bulk of the cash is white which has to be used for circulating the economy. As to households, an ordinary peon generating Rs 10,000-20,000 of black is nothing compared to the size of the black economy. One Madhu Koda generating Rs 6,000 crore of black is more than the entire black income generated by all class C and D employees.

The misnomer is that black economy means cash. That is where the understanding of Modi is lacking. He thought that if he demobilizes the cash the black economy will collapse.

But that sounds more like a self-serving political ideology….

The political ideology is that I will be the hero of the poor, that I have eliminated the black economy that was affecting the poor. What he might do if that Rs 2 lakh crore doesn’t come back is to say I am giving 10 crore families Rs 20,000 each. These rich people had stolen this amount, so I have taken it back from them and distributed it to the poor. But it can fall flat for the following reason: while they may get Rs 20,000 one shot, if they lose their employment, they will lose far more over the year.

So as you are saying its very basic genetic structural reforms and which means gradualismBecause reforms can’t come without gradualism. Like Chandrashekhar had to mortgage gold as that was a crisis situation. Even to some extent wheat control orders of Indira Gandhi in 1972 were passed during shortage times.

But the point is that those (measures) were affecting where the crisis was. This is affecting everything.

So it is a billion dollar political blunder.

The trading community will desert him as far as I can tell, because traders are very upset. Farmers are upset, workers are upset.

What they will do is to restore money supply to Delhi, Mumbai, Kolkata and Chennai so that the national press says the queues are dwindling. But there will be little money in villages. They have to walk long distances to get to the bank for money and often return empty handed. And there’s little money in Tier-2 and Tier-3 towns.

Now they will go after lockers….

No, that will affect only the middle class. The poor doesn’t use lockers.

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Black economy has not been created yesterday. It has been growing for 70 years. So this problem can’t be solved overnight. There is no magic wand.

But you get money for political parties from this three percent.

But if you have the political will to do this you should also have had the political will to do that. Like, a UP leader is reported to have told funders to take back old notes and give new notes. So, political funding won’t stop. Now it will be easier with Rs 2,000 notes. They won’t be harmed. I was talking to a commissioner who said we don’t touch those cases where we know there is political backing. Anyway, Income Tax department doesn’t have the capability to handle so many cases.

It’s just one man’s mind at work….

He just didn’t consult anyone. In his address he said that the departments of government and bankers are hearing this for the first time.

We have to look at Article 21 of the constitution. Property right has been granted by the constitution. Your job has been recognized as a fundamental right.

He is not doing that. He is replacing old currency with new currency. He is not depriving you of your property.

But he is taking away livelihoods.

That’s the consequence of this move. As far as property is concerned, he is not taking away your property. It’s a legal tender saying “I promise to pay” and government is paying with new currency—of equal value. But it creates recession. It’s a foolish step. Any policy can go wrong.

The SC can condemn you for the process.

The SC is a responsible institution. It can say anything orally, scold, but when it comes to judgment it is circumspect. PILs have been filed and government wants them consolidated in the Supreme Court but the court has refused that till now. But ultimately it is quite likely that the court will say it’s a policy issue and therefore we can’t do anything.

One man is trying to deliver on something that is undeliverable, against the advice of everybody else. 

That’s not how you run such a complex country like India. If I were there I would have asked 100 people. He didn’t trust his own cabinet and took away their mobiles and confined them to a hall till 8 pm. Urjit Patel called all bankers and told them to watch an important announcement. This is absolutely not the way to make such a complex policy in a complex country like India.

Lead picture: Professor Arun Kumar is regarded as an authority on the black economy of India. All Photos: Anil Shakya

sources:

http://www.indialegallive.com/commercial/special-story/demonetization-will-adversely-impact-97-percent-indians-15912

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Rupee Falls To Near Record Low

https://arresteddevelopments.wordpress.com/2016/11/25/rupee-falls-to-near-record-low

Supreme Court of India To Hear Challenge To Demonetization On December 2

https://arresteddevelopments.wordpress.com/2016/11/25/supreme-court-of-india-to-hear-challenge-to-demonetization-on-december-2

arrested-ds-160x32

https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015

Rupee Falls To Near Record Low

RBI Intervenes As Rupee Falls To Near Record Low

The rupee has been hit hard this month by a rally in the dollar and outflows from emerging markets, as well as worries about the country’s demonetisation drive.

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The Reserve Bank of India (RBI) intervened to steady the rupee as it neared a record low on Thursday due to broad strength in the U.S. dollar, capital outflows from emerging markets, and worries about India’s demonetisation drive.

The rupee has fallen around 3 percent so far this month, its biggest fall against the dollar since August 2015, though it has fared better than many other emerging market currencies have done since Donald Trump’s shock win in the U.S. presidential election.

Traders spotted the RBI intervening when the rupee fell to around 68.83 per dollar and more heavily later in the morning, sending the rupee sharply higher to 68.74. The central bank likely sold around $500 million so far in the morning, the traders said.

At its weakest, the rupee reached 68.8375, putting it within sight of the all-time low of 68.85 that was struck in 2013. 

Back then, pressure on the current account plunged India into its worst currency crisis in more than two decades, but this time India is seen as being far better positioned to resist outflows from investors attracted by higher U.S. interest rates. 

Expecations that President-elect Trump will pursue an expansionary fiscal policy that will drive inflation higher and lead to higher U.S. interest rates, are behind rising U.S. yields that have attracted investors to the dollar. 

Although foreign investors are pulling money away from Indian bonds, analysts say India’s strong economic growth should sustain investor interest in equities, while foreign exchange reserves are at a near record high while inflation remains low. 

There are worries, however, that Prime Minister Narendra Modi’s shock move this month to ditch higher-denominated banknotes could dent the growth rate. 

India is also still seeing outflows tied to the redemptions of dollar deposits, or foreign currency non-resident accounts (FCNR), that were raised from Indians living abroad to help pull the rupee out its crisis three years ago. 

“The rupee is weakening due to a combination of three factors – dollar strength globally, FCNR outflows and the impact of demonetisation on GDP,” said a trader at a domestic bank. 

500-1000

There are fears that Prime Minister Narendra Modi’s shock move to remove 500 and 1,000 rupees notes from circulation will dent consumer demand and economic growth in the near-term.

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https://arresteddevelopments.wordpress.com/2016/11/24/demonetisation-loot-and-plunder-says-manmohan-singh

The cash crunch may paralyse economic activities in India

https://arresteddevelopments.wordpress.com/2016/11/20/the-cash-crunch-may-paralyse-economic-activities-in-india

Demonetization may leads to Riots On The Streets in India

https://arresteddevelopments.wordpress.com/2016/11/19/demonetization-may-leads-to-riots-on-the-streets-in-india

arrested-ds-160x32

https://arresteddevelopments.wordpress.com

Along with thanks and compliments to the sources for the shared data

Creative Commons Copyright © Arrested Developments 2015