India pulls highest-denomination notes from circulation | Hacker News Reader

India pulls highest-denomination notes from circulation

ft.com

In 2016, Indian government banned all notes of Rs500 & Rs1000 denomination with immediate effect and launched a new note of Rs2000 denomination. Then they found out that because the new note was larger than earlier notes, and ATMs were not designed to fit the new note. They had to spend weeks to upgrade all the ATM machines to accept new notes where whole county was in lines at the banks to exchange their money. [1]

Now they are discontinuing the note of Rs2000 denomination that they launched in 2016. People have till September 30 to exchange Rs2000 denomination notes for other currency. But one person can only exchange Rs. 20,000 at a time. Guess now it's again time to line up in banks. [2]

[1] https://www.hindustantimes.com/business-news/new-notes-new-c...

[2] https://www.ndtv.com/india-news/rs-2-000-notes-to-be-withdra...

> Guess now it's again time to line up in banks.

Yeah, no. Unlike with demonetization, 2000 rupee notes still remain legal tender. The timeline for withdrawal is significantly longer and the proportion of cash in circulation that needs to be exchanged is significantly lower.

There is no rational reason to queue up at banks now.

Thats not how most of the people feel at the ground level. Pharmacies/medical-stores, vegetable shops, petrol stations are already refusing to accept the notes. [1] [2] [3]

>> When asked for the reason, a chemist said, "Who will stand in the long line to exchange the notes? We don't want to accept it anymore." This was the reason given by most of the shopkeepers. [1]

[1] https://www.indiatoday.in/india/story/rs-2000-note-reality-c...

[2] https://timesofindia.indiatimes.com/city/bengaluru/day-after...

[3] https://www.cnbctv18.com/business/retailers-delivery-agents-...

> Thats not how most of the people feel at the ground level.

People and ground level probably also believe there's a GPS Chip in those 2000 rupee notes and that 10 rupee coins are all fake.

Nevertheless, I did not see anyone queuing up at banks yesterday. Because there is no reason to.

During the 2016 demonitization, so called 'Journalists' in mainstream channels shared news that new notes have a nano-GPS chip and satellite can detect black money even if it's several hundred feet under the ground. The BJP propaganda team then shared this type of videos to the public across their Whatsapp groups across the country. [1]

[1] https://twitter.com/bprerna/status/799577707969249280?lang=e...

[2] https://twitter.com/shahnawazk/status/796950815332147200

People believe all kinds of nonsense with no basis in reality was exactly my point.

The problem is that this "nonsense" is not a coincident. All of it is carefully planned, executed and fed to the public to divert their attention from core issues.

You can see how all the "journalists" of different Indian news channels tweet at same time sharing same spelling mistake. Seems like they are getting the content copy from the same "office". [1]

https://twitter.com/samjawed65/status/1340554570766946305?la... [1]

> The problem is that this "nonsense" is not a coincident. All of it is carefully planned, executed and fed to the public to divert their attention from core issues.

So, you do agree that this is a boring exercise which doesn't deserve the breathless coverage that it's getting?

I think you misunderstood the parent, the 'breathless coverage' is intentional. 'Deserve' is completely orthogonal to the intentions of those pushing it.

The Financial Times is acting at the behest of the BJP is an interesting take.

The parent clearly linked to sources on Twitter that do not include the FT. Trying to deflect in a passive-aggressive manner doesn't help your credibility.

Linking to a completely unrelated story isn't a deflection but referencing TFA is? The GP suggested goverment collusion with media to create distractions. In the context of the story and TFA, that would mean the FT is in on it.

IMHO, you mentioned "There is no rational reason to queue up at banks now."

So I replied to you by sharing news articles about people facing challenges on the ground level.

Then you mentioned "People and ground level probably also believe there's a GPS Chip in those 2000 rupee notes and that 10 rupee coins are all fake."

So I replied by sharing articles of mainstream journalists sharing misinformation, and I also shared how these journalists are actually sharing content forwarded by Modi Government.

I don't know how you got this impression: "The Financial Times is acting at the behest of the BJP is an interesting take."

I have never tried to imply that FT is doing anything wrong here. FT is simply reporting on what Indian Government did.

> So I replied to you by sharing news articles about people facing challenges on the ground level.

The articles you posted suggested most places are accepting 2000 rupee notes. The vendors refusing to accept them are misinformed. The breathless coverage of what is a routine exercise is at least partly to blame for the uncertainty and confusion.

People believe in nonsense for all kinds of reasons including the government feeding them lies. But that is hardly the only source of misinformation. Nobody benefits from the fake 10 rupee coin story or the misunderstanding of what the current exercise entails.

The comment I replied to suggested that this particular story was being deliberately hyped by media outlets in collusion with the government.

2000 rupee notes stopped being released by banks over a year ago so these stories are really hard to believe.

Fed stopped printing money a couple of years back but they are still unable to swoop it back after what is it 18 months of working on it? Sometimes when you overprovision it takes a lot of effort to reverse it.

I'm sorry, do you believe the Fed actually printed excess currency notes? If not, I don't understand why you think your analogy makes any sense in this case.

That doesn't mean there weren't any 2000 rupee notes in circulation. https://www.deccanherald.com/city/top-bengaluru-stories/big-...

How does it matter if they stopped releasing these notes a year ago? Do the notes that they released earlier disappear from pockets of public?

On March 31, 2023 the total value of these banknotes in circulation was Rs 3.62 lakh crore constituting 10.8% of all the currency notes in circulation. [1]

[1] https://economictimes.indiatimes.com/news/economy/policy/rs-...

> was Rs 3.62 lakh crore constituting 10.8% of all the currency notes in circulation

Is the point. Demonetization made ~80% of the currency in circulation no longer legal tender overnight. This phasing out is in no way comparable. Which makes the idea that people will have to queue up at banks unbelievable.

So deposit your 2000/- notes hoard in a bank, withdraw as many 500/- notes as you need. There's no limit to deposits, only on exchanging cash anonymously.

"Guess now it's again time to line up in banks."

Thats what I mentioned in the top comment to which are you are replying.

Ever played the game of passing the parcel? Any similarities? ... given that you can deposit only 10 notes in one go, why would I want to be the last one holding the bag?

They can depoiste any amount. They can "exhange" 20k. there is the difference. if you have source to explain the money, I guess you can just go and deposit it.

Indian friends mentioned that that was a tactic to push people towards less usage of cash. This now feels just like that.

Yup, move everyone to digital payment system and then add charges on that too.

https://www.outlookindia.com/business/should-you-worry-about...

I fear for a future where financial privacy is non-existant. While I recognize the potential for abuse and enabling for bad actors to skirt laws, I think it should be private by default with measures that allow for auditing. For example, Monero's ability to publish view keys. Sadly, I think many governments will instead rush to the authoritarian option instead.

Edit: if someone wants to enlighten me on why I shouldn't worry about the surveillance capitalist dystopia that's slowly rolling out before our eyes, I'd love to hear it.

I expect it'll happen in my lifetime, there was a senator a few years ago making a push to ban the $100 bill because he felt it enabled crime by allowing larger amounts of physical currency to be moved in a smaller package.

I'm personally of the opinion we're better off with the crime -- the psychic burden of knowing that there is no way to make a financial transaction, even for a pack of gum, without an overbearing control-freak government knowing about it is just too much for me. There's other ways to catch criminals without mistreating your citizens, anyway.

I live in the Deep South and many place are cash only. I grew to like it. They are also very clear on why they are cash only.

Not sure why you are getting downvoted, but you are right. Governments can ban the paper currency and lock you out from your digital currency at any time. All the mainstream media channels gets loads of advertisement money from government and they are ready to defend every move of government.

Hackernews is viewing this too much from an American - "Oh they want to get rid of privacy" lens. The reality is that this move is to hurt the opposition party more than the BJP, but nobody in India really wants a completely surveilled currency because most of parliament is involved with dirty money (Inevitable when you get paid nothing but have insane amounts of political power).

> The reality is that this move is to hurt the opposition party more than the BJP,

This makes zero sense. The 2000 rupee notes remain legal tender. And given the long time lines, nobody is going to have any trouble converting their unaccounted cash. And why wait until after the Karnataka elections if the intention was to hit the opposition?

The big Kahuna is in December with lot more people going to polls then. which means election campaigning will be in full swing in November maybe late October too. The currency ends September 30, so the 2000 will not be useful for them.

They have 4 months to get rid of them. That is assuming that they are sitting on hard cash which is not how political parties work.

Absolutely. Every political party has cash that they use in election. So by doing the demonetisation, ruling party can virtually disable their opponent parties while their own party members enjoy the insider knowledge and makes tons of money by doing deals. They use the same money to feed to mainstream news channels who then promotes the ruling party as a fighter against corruption.

Did some BJP leaders go on a land purchasing spree before the demonetisation policy was announced as per news? [1]

[1] https://indianexpress.com/article/india/india-news-india/bjp...

Nothing seems thought through with some of these policies. A lot of these types of governments see nothing wrong in making normal citizens run through hoops. Increasing amounts of vague rules are being brought in India like the credit card tax launched recently which requires you to go through a claims process at the year end. Last year there was the subscription related disruption on credit cards, etc etc. The list goes on.

The thing that most people are missing are, at both time the aim of demonitisation and this is to cut the air supply of opposition parties before election.

In India there are huge cash transactions at time of elections for buying votes, and all sorts of illegal activities to win elections. Demonitisation helped BJP the UP elections which was just impossible, now this will help with the LS elections.

Again? https://en.m.wikipedia.org/wiki/2016_Indian_banknote_demonet...

Fortunately this is just the highest denomination, in 2016 it was all high denominations and thus much more painful.

No. The 2000 rupee notes still remain legal tender. They are being withdrawn from circulation, not demonetised.

http://archive.today/VyD9Z

This seems like a push for digital payments.

No it’s not. This is to eliminate all the fake notes and illegally collected money (via bribes) as depositing the money or exchanging them will force corrupt politicians and others to have to show tax receipts for where did they earn it from. Hahahaha. This is so awesome. Indian culture is full or corruption where you have to bribe to get anything done.

Oh, but are you saying they didn't take care of all the fake notes and corruption by banning 80% of the currency in 2016?

And do the people have fake notes of the currency that was launched in 2016? Whats the plan going forward? Denomination every couple of years?

Hassle the whole country instead of catching the corrupts. May be thats why they have speed breakers installed even on the major roads.

I guess its fun if one does not have to line up in the banks.

The original demonetization resulted in 99.3% of old notes being returned. This time the notes in question aren't even demonetised but merely being pulled out of circulation.

The idea that this will somehow eliminate corruption is moronic.

Earlier this month, Indian Government also imposed 20% tax on international purchased made through credit cards by Indians. They can apply for tax claim when they submit their income tax return but that is after the end of financial year. [1]

[1] https://economictimes.indiatimes.com/markets/expert-view/20-...

1. I don't understand why you think this is relevant to TFA.

2. The tax only applies to purchases exceeding 7 lakhs in a year: https://pib.gov.in/PressReleasePage.aspx?PRID=1925592

1. This was in response to "This seems like a push for digital payments."

2. Yes, they did raise the limit to 7 lakhs in a year after public backlash. Initially the 7 lakhs was not there.

Why are you conflating digital payments with Forex transactions?

> Yes, they did raise the limit to 7 lakhs in a year after public backlash. Initially the 7 lakhs was not there.

The limit was always there. The notification is simply a clarification because the earlier rules were ambiguous.

Following is the text from the link that you shared. They took the decision to raise the limit to Rs 7 lakh per financial year after public concern. This limit was definitely not there before.

>> To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards upto Rs 7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS.

> Indian Government also imposed 20% tax on international purchased made through credit cards by Indians. They can apply for tax claim when they submit their income tax return but that is after the end of financial year.

Adding some details. It's been revised to apply only to foreign transactions above 700k INR a year, which exempts the vast majority of people. I agree it's not great for those who spend above 700k INR abroad; but then again you get it back at the end of the year.

I have no idea why this non-story is getting so much attention.

Why is this a non-story?

Currency notes get aged out and withdrawn from circulation all the time.

The 2000 rupee notes were a stop gap measure to mitigate the fallout from the I'll conceived and badly executed demonetization exercise from 2016. No new 2000 rupee notes have been issued in years and aged notes are all being withdrawn now. They remain legal tender and the exchange limits are meant to avoid overburdening bank branches like what happened during demonetization.

This is a boring, routine exercise. People are projecting their wishful fantasies onto it. In this very thread, there are people claiming it will reduce corruption, promote digital payments and hit the electoral prospects of opposition parties. None of them make even a lick of sense.

Is it possible that may be you are not able to understand the issue at hand?

It's a story because it impact every Indian (or even non-Indian) who has a 2000 rupee note in his pocket.

Right, all those Indians who get their news from the Financial Times.

This is a boring, routine exercise. But the reporting around it has been breathless.

Sorry, not sure what issue are you trying to raise here. Are you against government banning the note, or are you against FT reporting on this?

I thought my comment was very clear.

The government isn't banning the note, they are being taken out of circulation in a boring, routine operation. At best it's of local interest and I am puzzled as to why this non-story is getting so much attention.

I would be equally surprised if a story about the UK pulling old notes out of circulation was covered by The Hindu Businessline and then made it to the front page of HN.

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