Sunday, 8 January 2017

Taking Stock

As two months get over since announcement of demonetization , it is time to take stock of the situation

Here is a brief list of OBJECTIVES ( some stated at the outset and a few invented as time passed ) , and actual ACHIEVEMENTS :


To unearth all BLACK MONEY and suck it into the Banking System ( viz: Rs 500 / 1000 notes )

Achievement  :

Although there is no finality as to the VALUE of old notes that have returned , it does appear that , by and large , this OLD STOCK of " Black Money in CASH " , has been extinguished ( or got cleverly converted into WHITE , if your friendly bankers obliged you for just 30 % ! )

I wonder what Shri Arun Jaitleyji meant by saying yesterday :

" Black Money did not change its color merely by getting deposited in bank "

He has very little supporting evidence to prove in a court that Rs 4 lakh*crore, deposited by individuals, in 60 lakh bank accounts each , was indeed  BLACK  before getting deposited !

Through 1138 searches and issue of 5184 notices , what has the government " achieved " in past 2 months ?

Seizure of Rs 200 crore worth of NEW notes and jewellery ! And referring 526 cases to CBI / ED !

Even as people have forgotten 5 / 15 years old, ongoing court cases , involving corruption  of thousands of crores of rupees , in case of A Raja / Kanimozi / Dayanidhi Maran / Subroto Sahara / Suresh Kalmadi / Lalu Yadav / Coal Scam / Telgi Scam / Bofors Scam etc  !

Going by this history , how many " decades " will CBI / ED take to file 526 FIRs ?

Then there is, a somewhat belated realization that much of the OLD STOCK was in the form of Gold / Jewellery / Land / Benami Property etc , which , just cannot be " demonetized " in short term . 


To permanently STOP future generation of BLACK MONEY

Achievement :

Total failure !

If anything , with introduction of Rs 2000 note , this has been made twice as easy !

There is only ONE WAY . Implement,

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To move India to a LESS CASH economy , through an aggressively marketed system of DIGITAL PAYMENTS ( Cards / ATM / Wallets / Electronic Clearances / UPI etc )

Achievement :

This objective is ON TRACK , and likely to take us to 50 % Non-Cash transaction Economy , by 2020

This has come about due to :

*  MSME / Ordinary consumers had NO OTHER ALTERNATIVE ( but go digital ) , in order to
   survive ! ( much like a child learning to swim by thrashing hands / legs , when thrown
   into water , or risk drowning ! )

Mobile Wallet companies / Banks / FinTech Companies / E Commerce firms , saw a huge
   opportunity for making tons of money by aggressively marketing their digital products !
   Of course , with plenty of help from the Government , offering pittance of " discounts "
   and sundry " prizes " !

  Notwithstanding all of this push to GO DIGITAL , our day-to-day payments will slide back
  to CASH, as soon as there is plenty of supply of Rs 500 notes( no getting away from that )


Interest Rates will come down

    Sure , with a huge influx of funds , most banks have cut their interest rates by 60-80 basis points for lending of loans but so far , there are few takers !
And banks will reduce the interest payable on Savings Accounts , if not already done

Direct tax collection will go up

   It is hoped that 6 million Black Money holders who have deposited Rs 7 lakh*crores  into their bank accounts , will come forward to declare their ( so far ) hidden incomes under PMGKY and pay up 50 % tax .

If last Undisclosed Assets Declaration Scheme is any indication, do not expect more than Rs 40,000 crores to get declared , yielding Rs 20,000 cr by way of taxes

Billions  of  Rupees will get invested in Infrastructure Projects

   Sure , most of those Rs 7 lakh*cr deposited in banks could get invested in Infra SPVs, if :

   *  No questions are asked as to the source of those deposits ( SPV specific Amnesty
      Scheme )

   *  SPVs cannot declare dividends for 10 years

   *  Investments can be withdrawn after 10 years ( along with accrued dividends ) by
      paying prevailing tax rates

      In fact , such an announcement can bring in a further Rs 70 lakh*crores of fresh
      deposits into banks by Black Money holders liquidating their Gold / Jewellery / Land etc

Dear Shri Jaitleyji :

It is still not too late to ,

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09  Jan  2017 / blogs

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