India raises withdrawal limit as rupee anger mounts | Hacker News Reader

India raises withdrawal limit as rupee anger mounts

bbc.com

87 pointskristianp110 comments

My understanding is that India's new rules on the high denomination notes was intended to curtail corruption. This was a major topic of discussion in my workplace as we have many Indian developers. Most of them were very proud that this action was taken. So it was a surprise to me to read the significantly negative tone in the BBC article. As a check, I googled "accuracy of BBC articles on India" and encountered the following : https://www.quora.com/Why-does-BBC-publish-more-negative-new...

"It is true that channels like BBC and CNN have long tradition of editorializing many issues of third world countries. So when any major development happens in countries like India, Pakistan or China, they go on with their usual views on the subject rather than looking at it through fresh lenses."

That might be true, but your Indian colleagues are probably well off with much of their transactions happening in plastic/electronic anyways, so this will have very little effect on their day to day lives. Since much of the Indian economy is cash based, there is a lot of frustration in the working class and there is a serious cash (as in bank notes) crunch.

I do accept this fact. Is there better option? I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

Not necessarily. It is never a good premise to expect good faith from politicians.

I don't know if there is a better option but the GoI definitely didn't think this throughly. Countries that demonetized in the past did this over a span of a time to prevent panic and fear. If the Govt set a deadline instead of abolishing them overnight that would go a lot smoother. Sure, that'll give 'some' tax evaders time to plan their 'exit' smoothly but it'll make lives of millions so much easier. Most likely, the evaders use that money to buy gold, so the Govt can temporarily track all gold purchases (they do it anyways for puchases over 2 lakh rupees). Even if they end up spending the cash on inflated real estate, they're in someways helping the economy instead of hoarding the cash and will end up in someone's bank account eventually. Also, all the big tax evaders rarely hoard cash. They usually have offshore accounts and sophisticated corporate structures.

Secondly, the new notes being minted have no additional security features. The RBI confirmed that the new 500 and 2000 bank notes carry the same security features as the previous ones, which probably makes it similarly easy to counterfeit. The RBI previously claimed that it would take 5-6 years to design notes with new security features and I think they should've waited until they have better bank notes to curb fake notes.

> I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

I have no hope for this country to find such views on HN of all places.

EDIT: I acknowledge this is low content comment. So I quote "the first job of an economist is to tell governments what they cannot do". Please sit back and give this a fair read [1].

[1] https://mises.org/about-mises/what-austrian-economics

>>I do accept this fact. Is there better option?

Which fact do you not accept? Do you believe every person in India has a bank account? Every person has credit cards? Debit cards?

Do you believe purchasing chain from production to end consumers has infrastructure for electronic transactions? Or that there is a way to make the economy run when close to 80% of the money is taken out of circulation?

>>I am quite sure this decision was taken after discussing with lot of people who might have done PhDs in Economics and serving for Govt.

That doesn't mean much when the results on the ground say the opposite.

Well, due to Prime Minister's Jan Dhan Yojana scheme, a lot more people have bank accounts and debit cards now. Over 220 million bank accounts were opened since 2014. People who have those accounts can actually make use of them now.

A lot more != All, let alone that. A lot more != Everybody-in-the-purchase-chain.

Now it was a known fact that 80% of the currency will go out of rotation. Now regardless of whether you have an account, 80% of the money people use to trade is gone!

Doesn't help if you have a account either. You don't have money to buy stuff.

Your point is if(and that is a big 'if' given 80% is gone!) you have money you could deposit it. Not spend it.

Well, I didn't actually say 'lot more == all'. I was just mentioning that PMJDY bank accounts and debit cards would ease things a bit for the people who have them, compared to the days when they had no bank accounts whatsoever (remember, PMJDY bank accounts are specially tailored for people with low income and/or unstructured income). Anyway, you don't need a bank account to exchange demonetized currency notes.

Biggest motivator for those accounts was not the privilege to have a bank account. But direct deposits in case the government wanted to pay the farmers and alike. That was the whole point in linking those to Aadhar too!

Now I'm not saying that this won't be possible. But its just these kind of changes can't be done with a throw of switch. You need to do a lot of incremental work before you can even think of this kind of big risky moves. Roll backs are hard, and in this case impossible(will lead to increase in inflation if done). Nor can you sit down quietly as there is no real way to put money back into circulation.

We all want to change the world. But we have to understand we need to change the world with consensus from people we want the changes to effect. The world is not in a hurry, and everything/everyone has their own priorities. You need to work with all that. Tech idealism is great, but at times something like this comes to remind us we know nothing about the daily complexities of other citizens.

Actually the previous time that this was shared on HN, the article clearly pointed out that less than 25% of the accounts are actually active.

Yes. Now, a lot of PMJDY bank accounts are seeing activity. This could be the case where people actually using their accounts, or could be the case where they are being misused to stash black money. In any case, GoI is looking into it[1].

[1] http://economictimes.indiatimes.com/news/politics-and-nation...

Nope. This decision seems to have happened at the whim of 3 people - the PM, the finance minister, the RBI governor. Clearly they didn't even proof read the notes. The back side of the 2k rupee notes is a mess. They screwed up the spelling of 2 in Hindi and 1000 in Urdu making it Bazaar from Hazaar

"Two" appears as "दो" (do) in Hindi in the 2000 INR notes. This looks correct to me: https://en.wikipedia.org/wiki/File:2000_INR_Rev_2016.jpg (see the left edge of the note just below the string "2016").

If you are talking about "दोन" (don) appearing twice within the pink rectangular box, that's Konkani and Marathi, not Hindi. Two is indeed written as "दोन" (don) in Konkani and Marathi.

Then the question arises why write it like that twice. Why is not written in Hindi even once?

I thought I have explained that already in my previous comment. It is written like that twice because "Two" is "दोन" in Konkani as well as Marathi. Both languages are used in the language panel of the reverse side of the note.

"Two thousand rupees" (in English) = "दोन हजार रुपया" (in Konkani) = "दोन हजार रुपये" (in Marathi).

This is nothing new about the new 2000 INR notes. This is true for the older 5 INR, 10 INR, 20 INR, 50 INR, 100 INR, 500 INR and 1000 INR notes as well. The language panel shows only 15 of the 22 official languages of India, in alphabetical order. The 6th language in the language panel is Konkani and the 8th one is Marathi.

I have also explained in my previous comment that the denomination is also written in Hindi. Why do you think it is not written in Hindi even once? In fact, the denomination is written in Hindi on the reverse side of every note, outside the language panel, either at the bottom left corner or at the left edge. In fact, in the new 2000 INR notes, "दो हज़ार रुपये" is written in Hindi at the left edge of the reverse side of the note.

I can read Urdu and from what I can make out in images of the note, the Urdu text is fine. The font could have been better. The orthographic sign that makes the H in 'hazaar' is correct; the 'be' nuqta is a different shape. There should have been a hair-width's space after the 'dal' in 'do', but it is easily readable as 'dal' and not 'lam' as some people are claiming.

Yes. So, can I read Urdu and the hey looks like a bey. ب has the dot below it which you can clearly see in all images. ح doesn't have any dots beneath it.

Hazaar is spelt with a choti he which does have that inverted comma under it (clearly distinguishable from a nuqta by the elongated head shape, as it is on the note (but it is tiny because the font size is tiny)).

Here's an example of hazaar with the spelling I mean: https://lh3.ggpht.com/FXu7LY_Ki5uDcYTcOWwMSxAL0lC9ttGLbNZrrT...

Totally agree with you. I have read couple of BBC articles, they show same negativity

Isn't this what's happening even in the US though? Look at the 2016 US election and how it was reported. Hardly impartial or rational. I mean where are the people cheering for Trump and their view points?

Spot on. We need new media with more diverse viewpoints and more viewers for this new content. Why does every airport always have CNN on by default?

I've long suspected CNN pays airports for this.

> Hardly impartial or rational. I mean where are the people cheering for Trump and their view points?

In other highly impartial and irrational places, like breitbart, the_donald and other conservative media sources.

Fair enough :) I meant on television. I guess Fox News. And maybe I'm in the online echo chamber. It's really hard to tell.

Trumps facebook groups, twitter feeds, and the aforementioned subreddits around his campaign are non-stop pumping out Trump love.

The Internet is only as much of an echo chamber as you let it be. You can always go look in those alternative forums.

But most of those places are exactly the same kind of echo chambers...just for a different side

Human beings as a species are highly partial (was the word you were looking for) and irrational. Aside from the internet, the low population density, rural areas of the US are heavily pro-Trump.

The Fairness Doctrine was partially removed in 1987 and completely removed in 2011. There's no legal requirement that a news organization be impartial any more. If you want balanced news you need to watch multiple sources and decide what really happened yourself.

https://en.wikipedia.org/wiki/Fairness_Doctrine

Those Trump supporters exist, I'm sure. I've never met any of them in California, though. I assume the media has the same problem.

You, a single person, not meeting a single Trump supporter may not be surprising. You may tend to meet only like-minded people. But the media is/must be a different animal: they should spend time trying to gauze the social moods from different strata of the society. But in USA, it seems most of the mainstream media is serving to Saudi funded Democrats [1]. So there is no news critical of Clinton, nor Islamic ideology. That's one of the important points what triggered people's support for Trump.

edit: added link

[1] https://www.youtube.com/watch?v=Ex9ldUHSgjs

If one group promotes eating dirt and tree bark and another proposes we dine on sandwiches you may unsurprisingly find that the media promotes one message more often than the other.

The fact that the clinton foundation took Saudi money is an issue but hardly germane to any current discussion and link you provided was of extremely low quality and contained disreputable nonsense like the theory that Obama is a cryto muslim.

It would be great if you wouldn't pollute hacker news with this.

Many Trump supporters in California are afraid to declare their support openly.

And not without reason; Trump supporters have been assaulted.

I don't know. I'm the only American-born scientist in my research lab (though not only US citizen), but is that really uncommon in tech? So maybe my situation is different? Living next to UCLA probably doesn't make it easier to mix with Trump supporters. When I was in China a few months before...well, expats aren't exactly known for being xenophobic white people.

Characterizing Trump supporters as "xenophobic white people" probably doesn't make it easier to mix with them either.

You may know Trump supporters who just don't want to fight about it.

In LA county, Clinton got 60+% of the vote, I don't know many here (just moved from Beijing to LA in August), but they were all more apprehensive than me about the election results. I honestly think I've never met a trump supporter in real life, how many immigrants (many of the people I know) were enthusiastic about Trump anyways?

Abroad is the last place to meet a republican (at least outside of the high earning senior manager demographic), let alone a trump supporter. Ya, they just might not be talking about it, but it is a very self selective bunch of people that are going to be basically migrant workers in another country, they won't be anti immigrant since that would be too hypocrititical.

I come from a lower-middle-class family in Kolkata, and I can say from experience that a lot of older people (my parents!) are over the moon with the whole thing. My mother, in particular, has suddenly turned into some sort of Modi fangirl, saying stuff like, "See what he's doing for the country!" (and variations on that). At some level, it's just the fact that anyone who replaces years of (perceived?) inaction with something striking -- however naive, or well-intentioned-albeit-disastrous-in-the-long-run -- will elicit this kind of reaction.

I imagine for people like my parents, the cost of going to a bank and getting all their suddenly-demonetised banknotes exchanged (which we anyway had very little of) isn't too much. And when some restaurant, say, or a drugstore, is unwilling to accept one of the new 2000-rupee notes, we have credit/debit cards to fall back on. The fact that that people may not have Aadhaar[1] cards or voter ID cards stored safely somewhere, that not everyone has bank accounts which hold >99% (excuse the arbitrary figure) of the money they have, that not everyone has the ability to spend what might possibly be the better part of a day walking to $DEITY knows where the nearest bank is (probably to be turned away because they're out of cash or because the line is a kilometre too long) -- that the very act of going to a bank may not be as trivial or no-brainer-like to everyone as it is to oneself! -- is something we have to work very hard to even imagine. And the cash they have stored is, in many cases, all they have. (Remember what I said about not having a bank account?)

Cash, for us, is what we use for bags of chips and ice-cream and sheets of graph paper and ... bus fare, I guess? Cash, to someone living from day to day, is everything.

edit: yay downvotes, I can tick that off my list

[1]: https://en.wikipedia.org/wiki/Aadhaar

There is atleast some indication that the Modi government took some steps in the prior years/months to strategically encircle the medium to big hoarders of black money and soothe the impact of the drastic demonetization step on the poor. Having said that any action of this magnitude is bound to have misplanning, unintended consequences and hardship

2013 Under previous government Replace subsidies with direct deposits in bank accounts of poor citizens[1]

2014 Under Modi Massive push to open bank accounts for poor people which seems to have bought banking to many households who never previously had one[2]

2015 Renegotiation of Tax treaties and Information sharing treating with tax heavens[3][4]

Window for hoaders of black money to declare it for a flat penalty[5]

2016 Demonetization

A more detailed step by step account http://indiatoday.intoday.in/story/prime-minister-modi-surgi...

[1] http://www.voanews.com/a/india-replaces-subsidies-for-the-po... [2] http://qz.com/257548/the-response-to-modi-governments-first-... [3]http://swarajyamag.com/economy/campaign-against-black-money-... [4]http://pib.nic.in/newsite/PrintRelease.aspx?relid=146245 [5] http://www.thehindu.com/news/national/10-things-to-know-abou...

The timing is suspicious though, ahead of state elections in the key states of UP, Punjab, Gujarat and Goa. For campaigns that are largely fought on cash, depriving other parties of cash is the biggest advantage.

Better timing would have been to wait until adoption of the Government's own pan-Indian electronic payment scheme ('Unified Payment Interface'), including giving small vendors card reading devices.

>The timing is suspicious though

Well, there are elections every year [1] in India in some or the other key states. Not denying what you are saying but any timing would raise political eyebrows. IMO average citizens have no problem with politicians drumbeating things that has positive impact.

[1] http://www.elections.in/upcoming-elections-in-india.html

There is always a major election coming up in India. By the time we're done with Gujarat (2018), there will be Rajasthan and a few others coming up. Not to mention the next Lok Sabha (Parliament) elections in 2019.

Yes, the timing does mean that major political parties in UP would be hurt because their insane amount of hoarded cash is in trouble but really, is that a bad thing?

As pointed out in comments above, this step does make sense given what the govt. has been trying to do to fight black money in the past 2 years.

In fact Modi keeps mentioning that this is not the last of the steps and there will be more measures coming into affect soon. Keeping the hoarders scared was really needed here.

If you're on the ground in India, you can tell people are thinking twice before selling their properties for cash (it's very common for people to sell for 70/30 or so ratio for white and black money) / other hoarding activities.

The bad or unfair thing is if the BJP is hurt less than its competitors, which is possible if they have more of the newly valid currency to spend. Whether they accumulated this before or after the announcement is irrelevant; but there is now a scarcity which can be manipulated.

> If you're on the ground in India, you can tell people are thinking twice before selling their properties for cash (it's very common for people to sell for 70/30 or so ratio for white and black money) / other hoarding activities.

On the other hand, demand for gold has gone up. That's definitely a more fungible form of black money than property.

Even as a self-confessed critic of Modi, I have to admit that these hiccups are only temporary.

What's more disturbing to me is the rumors I've heard from some wealthy friends' parents that they've already found loopholes to launder money through charitable trusts

>>What's more disturbing to me is the rumors I've heard from some wealthy friends' parents that they've already found loopholes to launder money through charitable trusts

This has existed forever. Cleaning up is not easy as most religions run their worship places under these trusts.

Politically very hard to deal with this situation.

BBC is right in its analysis, this measure only targets 20% of Indian wealth. The richest 5% owning 80% of Indian wealth are at ease, only poor and middle class troubled. Moreover this 20% money will be available to them as cheap loans. The total money owed by big corporates in India is way bigger then this parallel black money. Also the person Rajan who was planning to reign this loans is forced out of office. Modi is Indian version of Donald trump building Great Wall across India against corruption in media. A normal Indian will never know that black money outside of India far outweigh anything in Indian homes.

Demonetization is not a magical wand that will remove all the black money overnight. Now people who says it only for red middle and lower classes, know that it affected mostly people with black money in cash. Cash hoarders, Hawala money, counterfeit money and cash involved in rigging elections, help terrorism and many such illicit activities. Yes, middle class people will have to bear the pain of changing their currency but look at what it is bringing to you. And yes, it is first step, time will come and other sources of Black money will also be taken care of, matter of time, wait and watch. Even writing one such long comment takes time, let alone removing corrupt money fro a nation of 1.2 Billion where people love to ease taxes.

The BBC is always like this. You should have seen the bias in the 2014 general elections, they did not want Narendra Modi to win and become the prime minister and they made that very clear in every article leading up to the election. He did end up winning. When India successfully sent a probe to Mars the BBC suggested the money could be better spent elsewhere. I would not rely on the BBC for India news, or even United States news for the matter.

If you relied on the BBC for India news you wouldn't ever want to visit because you'd be afraid you would get raped as soon as you step out of the airport. In the case of the USA, you wouldn't even make it out of the airport, you would be shot dead at the baggage carousel. What annoys me most is I am forced by law to pay for such news reporting.

They write like they know everything in the world but still they don't twist the facts. Also if some good was done they write like 'oh look these ex slaves have done this good' and if bad' oh look the poor bastards are adding just another bad thing to the list'. These are metaphors and they don't literally write this! And many neutral toned articles are mistaken as negative by nationalists here.

>My understanding is that India's new rules on the high denomination notes was intended to curtail corruption...

How can this curtail corruption?

It was primarily intended to bring out undeclared income and wipe out counterfeit notes.

However, IMHO, undeclared income facilitates corruption.

Rather than attacking the messenger and correlating it with the anecdotal evidence from the people you know, try to look at this objectively.

- The white-collar middle class of course is lauding this move. Most of them (us) use digital money, are educated, want to see the corruption eradicated etc.

- BUT, the majority of the population is poor, working class, not education enough. India is still a cash-based economy. Poor people have all their savings in either cash or gold. Women in India still hide money from their husbands.

- Business - Real Estate, Transport, what have you, is still done in cash. Soon, the truckers who get paid in these denominations will stop getting paid, and stop bringing in food to the cities. What then?

- A kid has already died because the private hospital refused to accept the currency.

- There is talk going on about a possible Bank Run.

- Most importantly, I firmly believe this was a political move to cripple his opponents in the upcoming elections in the heartland states of India. He's lost the last few state elections despite going to rallies himself. This is him tightening his grip on the power.

- Now we know why Mr. Raghuram Rajan left the RBI and has gone back to U Chicago.

- Edit: Oh yeah, the new note only contain one non-English script, devnagari. The language and culture wars that took 2 decades to resolve will begin anew.

The privileged HN readers here who are like "I'll just order from Amazon" live in such a bubble that it's hilarious. This is the most brazen and irresponsible move that this govt has ever done. It's a draconian ruling that in the name of progress, is going to (already has) ruin the lives of the poor people of this country who have nothing to do with the daily corruption.

The middle class will hail Mr. Modi as a visionary, drinking his kool-aid, click Purchase and go about its business. To call this a "temporary hiccup" is callous and frankly, disgusting.

> Oh yeah, the new note only contain one non-English script, devnagari.

Other scripts are on the back.

Script-wise, it looks like the previous notes: https://en.wikipedia.org/wiki/File:2000_INR_Rev_2016.jpg

the kid did not die due to refusal of news. see the news article and the on record statement

The Indian media spreads rumor;all the time

the kid did not die due to refusal of notes.

cite source.

> There is talk going on about a possible Bank Run.

Mind sharing any source? As per my layman knowledge, what's happening here is opposite. Bank have received $30B [1] so far in deposits in last few days.

[1]http://www.forbes.com/sites/timworstall/2016/11/13/indias-gr...

"There is talk going on about a possible Bank Run."

Stop spreading false rumors that will cause fear or alarm to the public. It's an offense, according to Section 505, in the Indian Penal Code: https://indiankanoon.org/doc/1198526/

Perfectly said. The audience on hacker news is so privileged and enbubbled its hilarious. I can see the Modi trolls are already hilariously threatening you.

Modi is Indian version of Donald trump building Great Wall across India against corruption in media.

A normal Indian will never know that black money outside of India far outweigh anything in Indian homes.

I am not sure about BBC but now people know why Rajan previous RBI governor and govt has differences and he was forced out.

Actions against corruption are always tough. There is no easy way to get black money out. Short term it will hurt even common people but this will play out nicely in longer term.

If you follow the Palestine-Israel conflict to any degree you'll realise very quickly that BBC only ever reports on anything that's pro-Israel and never the other way.

The move was _intially_ welcomed, but as the days went on massive flaws in execution became obvious. Hence people are upset.

Source: I am an Indian living in the US who has immediate family living in India.

What's interesting is that Bollywood stars whose names were in the Panama Papers are lauding this 'demonitisation' move... it kinda underscores that real 'black money' isn't stuffed in mattresses, it's stored more cleverly in different types of assets, companies, offshore accounts.

Raghuram Rajan, former Governor of the Reserve Bank of India, had this to say a couple years ago about the idea: “Unfortunately, my sense is the clever find ways around it. They find ways to divide up their hoard in to many smaller pieces… I would focus more on tracking data and better tax administration to get at where money is not being declared. I think it is very hard in this modern economy to hide your money that easily.” http://www.huffingtonpost.in/2016/11/09/heres-what-raghuram-...

The fact that our Prime Minister’s fans are so enthusiastic and the move is aimed at curbing ‘black money’ makes it hard to clearly take a stand against this move, but I personally find it ill thought-out. The fact that some wealthy people are evading taxes by sticking cash in a cupboard somewhere doesn’t mean that hundreds of millions of ordinary people should suddenly be unable to buy milk or bread, damn.

  What's interesting is that Bollywood stars whose names were in
  the Panama Papers are lauding this 'demonitisation' move...

Those Bollywood stars are the ones who (1) own huge stretches of agricultural land posing as farmers, (2) own benami properties.

Perhaps publicly supporting anything a ruling government says is their way to demonstrate support towards the government and avoid any scrutiny.

"This (demonetisation) is not an end. I have more projects in mind to make India corruption-free. …. We will take action against ‘benami’ property." - PM Modi [0]

Whether he takes further action and if those actions will be effective remain to be seen.

http://indianexpress.com/article/india/india-news-india/pm-n...

Common people can very well buy milk and bread.

I am amazed the amount of selfishness we exhibit.

If I am unable to pick up groceries for the lack of cash, I can surely choose to order it online (using a credit/debt card). A vast majority of Indians cannot.

A majority of Indians don't have access to banks either. They will be forced to exchange their now illegal currency with the help of agents who would charge them 50 to 60%.

Most of the ATMs are out of cash. There are huge queues at banks; most of them are giving away Rs. 2000/= bills. Amusingly, if you were to give the new bill to a shopkeeper chances are that he'd refuse to tender the change back as the closest denomination to that is a Rs. 100/= bill.

Statistics reveal that only 6% of the black money is in the form of cash. As such, the argument of declaring higher currency notes as illegal tender in order to curb black money in unconvincing.

If it's really just 6% of tax evasion, then I honestly think this is just a political decision trying to keep their promises.

> A majority of Indians don't have access to banks either.

Forget banks, many don't have ID. Ration cards exist, but those are tied to your household so you may not easily be able to get access to your ration card (say if you're in a city with family -- and ration card -- back home). In case of estranged women it's even hader.

Without ID they can't exchange larger amounts. It's also hard to create a new bank account on short notice without this.

My mother once helped a young woman set up a bank account. She had come to Mumbai to find work, and used to live at her aunt's place, and her aunt would hold her money for her (but skim off it). Most such people keep their savings in cash someplace "safe", though some use post office accounts. Anyway, the process was arduous. Her name was garbled on her family's ration card, and they needed the original, which was back at the village. This took forever to sort out.

This is going to be hard to work through for a few. Especially those with lower income who keep most of their life savings in cash.

Actually dealing with banks is a luxury which Urban Indians assume is available for everyone. Its not.

Most banks are huge red tape in India and corruption is quite common. Even to dispense cash/loans a lot of times local rural banks ask for bribe. Which is why most people go a distance to avoid dealing with banks.

This problem was addressed by co-operative societies to an extent, but it doesn't scale though.

Debit/Credit/Electronic transfers are for the privileged in India.

FWIW post office savings and patpedhis exist and can be a viable alternative to banks, but you're right in that it's still problematic (and these can be more prone to corruption).

I completely agree. We can see the full picture of it now. The banks are such a pain and since most of the banks are nationalized the employees are a real pain. The post offices do not even have proper facilities to store large sums of money and there are cases where rats have eaten currency in lockers!

  This is going to be hard to work through for a few. Especially
  those with lower income who keep most of their life savings in
  cash.

They don't keep their savings in cash because of will, but because they are essentially forced to. I've seen several people (maids and such) struggling forever to open a bank account or even get a LPG connection.

... and whose fault is that ?

I'm really curious as to where you learnt of that 6% statistic. Any links you can provide?

  Cash recovery has been less than 6% of the undisclosed income
  seized from tax evaders, shows an HT analysis of data from tax
  raids from financial year 2012-13 onwards.

  Financial year 2015-16 saw the highest black-money detection in
  the period, of which 6% was cash.

Source: http://www.hindustantimes.com/india-news/cash-has-only-6-sha...

The going rate for Rs.500 in Bangalore which is a fairly developed part of India is Rs. 180. So, your 60% number is not fully wrong.

Ahh, it's the BBC.

I think we have reached a point in journalism where it has now become important to identify who is reporting it as well. At this rate we will need a simple content bias/color code plugin for different sites.

As an Indian, I have found that the BBC has been overly pessimistic about India especially on the web. Their story selections, headlines, and the voices listed as sound bites in the stories support the "downplay theme" for India.

>I think we have reached a point in journalism where it has now become important to identify who is reporting it as well.

We were always at that point even if not many people realized it. The difference is with electronic media you're not depending solely on organizations like the BBC for information.

My initial gut reaction is/was, a costly political stunt to fullfill an election promise. But I will wait when we have figures about cost to economy vs additional tax revenue. It also should be taken into account that Rupee now is even more unlikely to become a global currency.

Instead of money going directly to corrupt bureaucrats now it will directly going to politicians to be spent on unsustainable welfare (subsidies/reservations/PSUs) which would get them even more votes clamouring for more welfare. Ah dont you fking cry when they up the sales tax 200% on your favourite gadgets in the name of the poors. All thanks to this cashless/surveillance there will be no escape.

I suppose that if election promises were to be fulfilled then the government might have chosen to act upon those stashing billions of dollars in tax havens abroad.

I find even the concept of income tax injustice at massive scale. But I have a feeling that this was a least costly way to shut up a socialist population. Assuming Modi is not just another socialist and this is the last of it we are seeing.

Taxation by a state which has very little legitimacy is more akin to thievery. This shows all the signs of a new Indira Gandhi-esque regime in the making (with about the same amount of fanfare).

- The currency replacement is likely going to take about ~$5B (the "Black money" is valued at $20B).

- Nothing stops Pak from counterfeiting these new notes.

- This move creates a reverse bank run to build up reserves, which in light of the rate (10-15% ?) of bad loans in Indian Banks, is interesting to say the least.

- There also appears to be a very big push under this regime to push for cashless-id transactions. With the UIDAI in place, pessimists would believe there to be the coming of an even more efficient 1984-esque system for producing more cheap labor for US & pals.

There will definitely be inflation and cost of goods will steeply rise in the short term. I am not sure whether we can even survive long term.

The taxes and the present losses will simply be passed on to the consumer. This is because there were legitimate services being provided with such black money.

A middle class Indian here. Average Indian is facing some problem. Here is a list.

1. If someone has cash in hand for emergencies then he/she has to stand in a bank queue for 2-3 hours to deposit it into a bank account. 2. One has to stand in a bank queue for 2-3 hours to exchange old currency for new or to withdraw Rs 10,000 from one's account. Rs 10,000 is sufficient money to take care of basic needs for about 15 days.

3. There is a shortage of lower denomination notes. RBI received 5 million Rs 500 denomination notes yesterday. It will heal ease the problem.

I live in the National Capital Region. I have faced no problem at all. I am doing my grocery purchase online. Urban India pays it's utility bills online. There are a number of e-wallet solutions which have made online transactions easy.

I am not aware about the inconveniences faced by Indians living in rural areas. Economy in rural India is cash based. But since I have my roots in rural India I have seen many transactions happening through informal credit channel. It is not uncommon for a worker to get paid once every 3-4 months. Migrant workers often get payed by contractors at the end of their contract. The actual impact is not earth shattering.

There is a high decibel political noise around the whole thing. But as someone who has paid his taxes honestly his entire life, I welcome and support this move.

  Average Indian is facing some problem.

Some? I've heard of some cases wherein a funeral was deferred for lack of cash.

It affects the dead too: http://www.thehindu.com/news/national/other-states/demonetis...

Baby dies as parents had no cash to buy medicines in Vizag: http://timesofindia.indiatimes.com/city/visakhapatnam/Baby-d...

Currency ban: Kids couldn't attend dad's funeral: http://timesofindia.indiatimes.com/city/hyderabad/Currency-b...

Marriages to moksha, all adjourned: http://timesofindia.indiatimes.com/city/ahmedabad/Marriages-...

I think the BBC has completely missed the sentiment on the ground. There is widespread support for this. Every single person I've spoken to in the long queues near ATMs have expressed that they don't mind the inconvenience because it will help the country.

But then again, by definition those are not the people who are hurt the worst, because they have bank accounts.

You don't need a bank account to exchange demonetized currency notes.

You need ID, though. See https://news.ycombinator.com/item?id=12947147

You need a bank account for this process to be convenient and easy. Without it you have to exchange in bits and pieces.

No, but having a bank account and therefore a payment card a) gives you another means of paying for things besides cash, and b) likely means that you don't have your life savings in the form of now-invalid currency.

Yes, I personally have been very surprised by how positive the reaction has been. My home has a lot of small shops around ("chaiwalla" tea booths, tiny grocery "kirana" shops, little idly shops, lots of roadside vendors, etc.), and the reaction has been almost universally positive. There's of course a bit of grumbling about cash being hard to find in the first two days, but even those come in a manner similar to how one might complain about rain - taken as an inevitable small nuisance in the larger scheme of things.

One part of the explanation is that these are the same folks that often deal with the small politicians and exploitative moneylenders - so now, seeing these corrupt people suffer greatly from this move, they're full of heartfelt praise for the central govt. At least half the praise I hear has been in the form of "you should have seen that politician's face" or "that moneylender is roaming all over town trying to change his black money".

The problem is that that sentiment will turn sour pretty soon as the supplies will get affected badly. Most of the truck drivers which supply essential goods are paid in cash by their owners. Think what will happen if the payment is deferred.

It might be very sad to say but a lot of these shops exists because of the black money. Some are mere shopkeepers whose owners would have opened these shops to invest their money. Now think what would happen when their cash gets sucked away. There would definitely be a huge loss of jobs.

If real estate is hit badly then a lot of laborers would be jobless overnight. A lot of projects would have to be stalled.

Presently there is an uneasy calm and some sort of schadenfreude but when the dust settles the consequences will not be good.

I appreciate Modi regime for their efforts to curb black money, though they failed to keep up their poll promises.

Before elections, we'll give OROP. After elections, we cannot do it;

Before elections, we'll clean GANGA. After elections, we cannot do it;

Before elections, we'll catch DAWOOD. After elections, we cannot do it;

Before elections, we'll solve KASHMIR. After elections, we cannot do it;

Before elections, we'll bring KOHINOOR. After elections, we cannot do it;

Before elections, we'll prosecute VADRA. After elections, we cannot do it;

Before elections, we'll prosecute DIKSHIT. After elections, we cannot do it;

Before elections, we'll build RAM-MANDIR. After elections, we cannot do it;

Before elections, we'll scrap ARTICLE370. After elections, we cannot do it;

Before elections, we'll end DYNASTY politics. After elections, we cannot do it;

Before elections, we'll create VIDARBHA state. After elections, we cannot do it;

Before elections, we'll give special STATUS to AP. After elections, we cannot do it;

Before elections, we'll disclose NETAJI documents. After elections, we cannot do it;

Before elections, we'll bring COMMON-CIVIL-CODE. After elections, we cannot do it;

Before elections, we'll DEPOSIT 15 lakhs in your a/c. After elections, we cannot do it;

Before elections, we'll prosecute SIKH-RIOT culprits. After elections, we cannot do it;

Before elections, we'll bring BLACK-MONEY in 100 days. After elections, we cannot do it;

Before elections, we're the HONEST. After elections, 50% Ministers have CRIMINAL cases;

I think the BBC is missing some of these images:

https://twitter.com/NileshShah68/status/797097848470929412

https://twitter.com/gbhimani/status/797021076182077440

https://twitter.com/_anujsinghal/status/796348883362283524

https://twitter.com/lady_gabbar/status/796269539067457536

https://twitter.com/jhunjhunwala/status/793799136592011264

It's BBC. Can't expect anything from positive from them when it comes to India.

The partisan nature of this piece is amazing. Contrary to what is presented here, the whole exercise was one that was brilliantly executed, and one that has caused minimal disruption. See this: http://swirlingtea.blogspot.in/2016/11/demonetization-why-20...

Canada got rid of $1000 bills in the year 2001 to combat crime and money laundering.

https://en.wikipedia.org/wiki/Withdrawn_Canadian_banknotes#....

If you do not support demonetization https://www.linkedin.com/pulse/great-indian-demonetization-w...

otherwise http://www.thecitizen.in/index.php/NewsDetail/index/8/9164/M...

13 ways how Indians can convert black money http://www.huffingtonpost.in/2016/11/13/13-ways-in-which-ind...

"Media does not spread free opinion; It generates opinion" --Oswald, 1918 https://en.wikipedia.org/wiki/Decline_of_the_West VERIFY and TRUST;

Ah! Yet another "anti-India" article by BBC ;) This is not the first time BBC is doing it (can we call it as "propaganda"?) ;) I've seen a few firsthand instances of people who hoarded illegal cash impacted by this demonetization move. Yesterday, somebody even dumped wads of cash into a lake in Bangalore (near KR Puram area).

I suggest people here to read this thread: https://www.reddit.com/r/india/comments/5c195e/do_you_guys_k...

It is all funny anecdotes. Good for a laugh and some happy revenge.

Now remember that not all have just hoarded the cash. Many have actively invested and this investment actually goes to the poorer sections of the society as daily wages. What would happen if that cash is sucked out? The rich class can live without the investment but the poor have no way to go as they suddenly find themselves jobless.

Next the government will throw cash around with policies such as NREGA to help the poor and then again you have all this money sloshing around in the economy albeit with higher denomination and newer currency.

This is a huge pain in the ass for absolutely no gains whatsoever. Around 20 fucking people have died because of this very scheme. The worst thing is that there are so called educated fools down voting criticizing comments here even after witnessing all this mess and chaos. Absolute shambles!

UPDATE: 25 fucking people dead by now. Within 6 days. Refer this http://www.huffingtonpost.in/2016/11/15/demonetisation-death...

It was said that it was to remove black money from the market but the percentage of cash in black money is only 6%. The remaining are assets mostly outside of India. And such a major move affecting a billion people must have been well thought out to avoid the chaos. There have been couple of deaths because of this. Two children were dead because docs refused to accept old currency for admission in hospitals. But questioning this is being termed as anti national. Hope this fake nationalism stunts end soon.

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