Failed objectives: Six years after demonetisation, cash is still king, black money is very much around and counterfeit notes are on the rise

[kasi]

1 hour ago, Vaampire said:

Implementation could have been much better. Lot of people who were working as cashiers in banks complained about the weird smells while counting the cash during those days. 
banking fees, limits on withdrawals and so many other things destroyed the purpose. 
 

good objective with failed implementation 

where was his finger before he started counting 

 

[Starblazer]

1 hour ago, Vaampire said:

Implementation could have been much better. Lot of people who were working as cashiers in banks complained about the weird smells while counting the cash during those days. 
banking fees, limits on withdrawals and so many other things destroyed the purpose. 
 

good objective with failed implementation 

exactly... evadiko sketch vesi fail ainatlu anipinchindi.

midnight announce chesi next day implement cheyatam pedda nuisance. at least 6 months time teesukuni alternative currency release chesi implement cheyalsindi.

ee sari 5k & 10k notes release cheyyali. it'll reduce costs of transportation and handling to a great extent. appudu demonetization laantivi chesina common people peddaga suffer avvaru.

[Vaampire]

1 hour ago, Picheshwar said:

anthe ga

good initiative, great intention ani pogidi

last ki failed execution due to govt employyes ano leka indian people don't deserve any toseyyadam

Rofl.

failed implementation antey janani blame chesinatta lol.  Anthey ley manaki nachinattu thisukovachu

[Vaampire]

5 minutes ago, Starblazer said:

exactly... evadiko sketch vesi fail ainatlu anipinchindi.

midnight announce chesi next day implement cheyatam pedda nuisance. at least 6 months time teesukuni alternative currency release chesi implement cheyalsindi.

ee sari 5k & 10k notes release cheyyali. it'll reduce costs of transportation and handling to a great extent. appudu demonetization laantivi chesina common people peddaga suffer avvaru.

Govt could have handled it much better. Actually govt failed in handling it. 
Atm's lo money levu sarigga 1-2 years varaku. 

Bank fees rediculous assalu.  Evo Evo fees baney cut chesthunnaru money account nunchi. 

An amazing opportunity for migrating to digital transactions is wasted big time

[Picheshwar]

4 minutes ago, Vaampire said:

Rofl.

failed implementation antey janani blame chesinatta lol.  Anthey ley manaki nachinattu thisukovachu

kada... tuglak gani lekka ardha ratri lesi ban cheyyadam.

daniki tv meeda vachi edho ghanakaryam chesinattu cutting 10gadam

japan ki velli beti ki shadi hai bank mein paisa nahi ani sadism choopinchadam ivanni kanapadan manaku.

[Vaampire]

13 minutes ago, kasi said:

where was his finger before he started counting 

 

Lol

Appatlo social media lo pictures circulate ayyayi.  Ee db lo kooda posts paddayi. 

[Telugodura456]

Idi thalkayi formalize chesedhi/

Does anyone know why retail stores in prime urban areas mostly opened by marwaris ?

why only 1-2 castes do agri commodity training ?

A govt which does not expose how these networks act is not serious about formalization.

[kasi]

5 hours ago, Vaampire said:

Govt could have handled it much better. Actually govt failed in handling it. 
Atm's lo money levu sarigga 1-2 years varaku. 

Bank fees rediculous assalu.  Evo Evo fees baney cut chesthunnaru money account nunchi. 

An amazing opportunity for migrating to digital transactions is wasted big time

I'm not understanding what are you trying to say here

Tea stalls are using phonepay, and love the adaptation.....faster adaptation than any western nation.....and who did it???? How fast could have migrated???

Unless big whales and larger transactions most of it is no cash...I was able to transfer 75,000 using phonepay......is there room to improve, hell ya.....but going in the right direction 

 

Yes about banks, they are following western trends towards a capitalistic society

[kasi]

5 hours ago, Vaampire said:

Lol

Appatlo social media lo pictures circulate ayyayi.  Ee db lo kooda posts paddayi. 

Mariiiiiiiiiii....vaduleaa, photo about bills having a smell

[kasi]

5 hours ago, Telugodura456 said:

Idi thalkayi formalize chesedhi/

Does anyone know why retail stores in prime urban areas mostly opened by marwaris ?

why only 1-2 castes do agri commodity training ?

A govt which does not expose how these networks act is not serious about formalization.

Mari OS is mainly owned by Microsoft/apple vallu ea caste......koncham 🧠 vadu...untea

 

 

[Telugodura456]

2 hours ago, kasi said:

Mari OS is mainly owned by Microsoft/apple vallu ea caste......koncham 🧠 vadu...untea

 

 

re medhaleni maalokam..micrsoft/apple are owned by shareholders - mostly institutional investors from several countries. Twitter largest owner used to be an arab sheik.

Vaagedhi sollu ...aina antha confidence ekkadninchi vasthadhira ..brain images ..gaadidhi guddu.

[telugu_fan]

9 hours ago, Kool_SRG said:

The Modi government expected demonetisation to extinguish at least Rs 3-4 lakh crore of black money. However, RBI data show that 99% of the money that was invalidated came back into the banking system. Meanwhile, fresh seizures of black money continue.

On November 8, 2016, Prime Minister Narendra Modi appeared on national television and said that all Rs 500 and Rs 1,000 banknotes would become invalid at the stroke of midnight. The announcement at 8 pm, aimed at flushing out black money—funds hidden from the taxman—led to nearly 86 percent of the currency in circulation becoming invalid four hours later.

Modi’s decision surprised some economists, who argued that only about 5 percent of back money is stashed in the form of currency. The remainder is in the form of other assets such as real estate and gold, they argued.

 

There were three economic objectives that were offered as the rationale behind demonetisation—wiping out black money, eradicating fake currency notes and creating a cashless economy by pushing digital transactions. Among those targets, the biggest one was tackling black money. Black money refers to cash that is not accounted for in the banking system or cash on which tax has not been paid to the state.

Six years after the demonetisation move, has India achieved any of the stated targets? Let us take a look with available data.

Black money hunt—a failure

Did demonetisation achieve the target of ending the killing black money economy? According to Reserve Bank of India (RBI) data, almost the entire chunk of money (more than 99 percent) that was invalidated came back into the banking system. Of the notes worth Rs 15.41 lakh crore that were invalidated, notes worth Rs 15.31 lakh crore returned.

How much black money has been recovered since the note-ban exercise? This is difficult to assess as there are no recent estimates of how much black money was recovered since demonetisation.

But in February 2019, then finance minister Piyush Goyal had told Parliament that Rs 1.3 lakh crore in black money had been recovered through various anti-black money measures, including demonetisation.

In his book I do what I do, former RBI governor Raghuram Rajan disclosed that he never supported the idea of a note ban and felt that the short-term impact of the exercise could outweigh the long-term gains.

 

Remember, the government had originally expected that at least Rs 3-4 lakh crore in black money would get extinguished outside the banking system due to demonetisation alone. Thus, data suggests that demonetisation was a failure in unearthing black money in the system. Meanwhile, instances of black money seizures continue.

In August this year, the Income-tax department said it detected black income of more than Rs 150 crore after it raided several business groups who run hospitals in Haryana and Delhi-NCR. Similarly, the department detected undisclosed income of more than Rs 250 crore during searches against two business groups involved in silk sarees trade and chit fund in Tamil Nadu. There are several such instances across the country.

Counterfeit notes on the rise

A second objective of the exercise, that of tackling forged banknotes, also seems to have come a cropper. Counterfeit Indian currency notes increased 10.7 percent in the financial year ended March, the Reserve Bank of India (RBI) said in its annual report released on May 27 . The central bank detected a 101.93 percent rise in fake notes of Rs 500 denomination, while fake notes of Rs 2,000 increased more than 54 percent.

The RBI report showed that there was an increase of 16.45 and 16.48 percent in counterfeit notes of Rs 10 and Rs 20, respectively in FY22. Fake Rs 200 notes rose 11.7 percent. Counterfeit notes detected in denominations of Rs 50 and Rs 100 declined 28.65 and 16.71 percent, respectively, the report showed. Of those, 6.9 percent were detected at the RBI with the rest 93.1 percent at other banks.

In 2016, the year when demonetisation was launched, 6.32 lakh counterfeit pieces were seized across the country. In the next four years, a total of 18.87 lakh fake notes were seized across the country in various denominations, according to RBI data.

Most fake currency notes seized in the post-demonetisation years were in the Rs 100 denomination—1.7 lakh pieces in 2019-20, 2.2 lakh in 2018-19 and 2.4 lakh pieces in 2017-18. Compared to previous years, there was an increase of 144.6 percent in fake Rs 10 notes, 28.7 percent in Rs 50 notes, 151.2 percent in Rs 200 notes and 37.5 percent in fake notes of Rs 500 [Mahatma Gandhi New Series] denomination, the RBI data showed.

Cash is king

Later, the creation of a cashless economy was pitched as another major target of demonetisation. How has this picked up? Cash has proved that it remains king in the post-note-ban years. As per RBI data, currency with the public increased to Rs30.88 lakh crore as on October 21, 2022, from Rs17.7 lakh crore on November 4, 2016.

At Rs 30.88 lakh crore, currency with the public is 71.84 percent higher than the level for the fortnight ended November 4, 2016.

Digital payments jump, though..

To be sure, digital payments have risen. According to RBI data, transactions through the Unified Payments Interface (UPI) touched a new high of Rs 12.11 lakh crore in October , six months after it crossed the Rs 10-lakh-crore milestone in May. In terms of volumes, UPI has hit a record of 730 crore transactions in October. In September, UPI transactions hit 678 crore in volume terms breaking the Rs 11-lakh-crore mark.

In the financial year 2022, around 71 billion digital payments were recorded across India. This was a significant increase compared to the previous three years. UPI recorded strong gains, both in numbers and in value, since 2015.

So, what is the takeaway here?

The biggest stated goals of demonetisation—eliminating black money, curbing fake currency and creating a cashless economy—are yet to be achieved. People still prefer to deal in cash to a large extent, even though there is an increase in digital transactions, the last largely driven by convenience and the surge in online transactions that was in turn driven by the COVID-19 pandemic and ensuing lockdowns. This perhaps indicates that digital channels would have picked up even without the highly disruptive economic move.

Debates still rage about whether the note ban was a prudent step in the Indian economic context. While there certainly has been a discernible uptick in digital payments, it is doubtful whether the elaborate exercise to unearth black money—the stated and primary goal of demonetisation—was worth it.

There are a few points missed in the list above. i will try to list a few of them if i can. Money demonetization had few stated and unstated objectives and not all were successful if you go by eye reports presented by the ones above.

1. It took aim at black money. It could have been true that govt was looking at the black money not coming back, but it came back due to the ability to exchange notes. People who remember will know of the long lines in the bank for exchanging the notes. Most of these were done by brokers or intermediaries who took a 20-40% cut depending on the money involved and the people coming in.

a. the bankers had complained of seeing the same faces for exchange of money which led to suspicions of money changing hands, but most of their and the govt recommendations came to a naught. one of them that i still remember was to use something like the electoral ink to stop people coming in multiple times in a day to exchange notes which was shot down by the court and the election commission. 

b. The other way the black money changed hands was buying of gold at 30-40% premium. This 30-40% was used for paying tax to the govt for selling the gold by jewellers. In a way the tax on it was paid to the govt. So the black money turned white atleast with mega gold buying then.
 

continued

[telugu_fan]

2. coming to fake notes - the ability to curb fake notes is about able to identify them and the 500 and 1000 notes were becoming more in number and also difficult to identify coming from Pakistan.

https://news.rediff.com/report/2009/sep/08/how-isi-masterminds-fake-currency-racket.htm

Putting conspiracy theories aside it says in the above link that Pakistan had gotten hold of templates for indian currency printing. this is a report from 2009, so not about what BJP or Congress are fighting about.

This is another link in 2013 and jan 2014 (before the NDA govt came to power)

https://economictimes.indiatimes.com/news/politics-and-nation/fake-currency-notes-from-pakistan-being-routed-to-india-govt/articleshow/21651807.cms

https://www.indiatoday.in/india/north/story/nia-fake-indian-currency-notes-pakistan-216536-2013-11-05

If you see the numbers the amount of currency that was caught in 2012 and the 2013 time frame was increasing from the 2009 level and this is only that was caught. Also the fake currency was progressively getting better and difficult to identify unless you employ special measures. .

People who are crying about poor people don't say anything when the same poor person or common man has a fake note and if it is caught when he goes to deposit in the bank what is he going to do with his earnings.

When there was demonetization, the incidence of stone pelting in kashmir went down as the pelters were also paid money to do so and everyone was busy trying to exchange the older notes.

 

 

[pakeer_saab]

8 hours ago, Starblazer said:

exactly... evadiko sketch vesi fail ainatlu anipinchindi.

midnight announce chesi next day implement cheyatam pedda nuisance. at least 6 months time teesukuni alternative currency release chesi implement cheyalsindi.

ee sari 5k & 10k notes release cheyyali. it'll reduce costs of transportation and handling to a great extent. appudu demonetization laantivi chesina common people peddaga suffer avvaru.

nothing happens in india if they doesnt have to, I am sure it was done to counter something major hit to financial system

black money was the reason given to make people cooperate, but there is another reason that govt could have never tell to general public, NPA's were so bad the deposits were getting lower than bare min reserves

so, it served 2 purposes, liquidate the system without raising new debt/printing. second, moved towards digital economy

BTW, 30 lakhs crores ani number is fake or it doesnt server purpose, one should see proportion of total trasnactions prior and after demo

any moron who doesnt know what financial reforms were carried after demo should go and get their brain checked, because no one can explain them ddue to lack of their IQ

 

[telugu_fan]

3. The digitization of the economy is one of the side affect of the said demonetization as it helps in tracing of the money. Money that comes into banks can be tracked, black money is just parallel economy that has very little to no oversight. All the money collected in the banks were not checked for fake currency based on what RBI said then and were destroyed apparently.

The digital economy received a boost then and then went into overdrive with UPI during corona. you sometimes need a nudge to adopt something. When computers were introduced people fought against it and said it will cause job losses and there were many strikes especially from banking unions and govt employee unions. But after opening economy in the 90's and with the digitization barely any work gets done without them now. Corona also did something similar.

Irrespective of corona the govt wanted people to use formal banking system irrespective of how you do it. cards and checks and then UPI got a boost.

Also one aspect not mentioned is the demonetization impact on GST. GST works on input credits and tax credits are linked from the initial source to the end route. (there are still leaks but that comes in form of improvement). If people had cash then the roll out of GST itself would have been an issue as people would have dealt with cash bypassing the credit system and GST itself would have failed. 

And people complaining of banning cash has caused companies just say as a gospel of truth. Any amount deposited over 2 lakhs then might have needed a tax return. Even if companies dealing with cash were paying taxes then can still go ahead and deposit the cash in the bank and give out checks. Afterall everyone is impacted not just the said company. The amount deposited itself tells the story and the people not willing to share their income details.

Also with the news reports constantly speaking of job losses and economy destroyed don't mention how the tax files have risen if the economy collapsed. these are the holes in their argument/logic.

People should see what is the size of cash in the economy with respect to the size of the economy not just absolute value. It is similar to the tax to GDP ratio or deficit with respect to GDP and not just absolute numbers.

Things can always be better, but saying things completely failed by following one-sided logic is not advisable.