Demonetisation: Can govt provide some numbers?

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Demonetisation: Can govt provide some numbers?

Post by truthbetold on Sun Dec 11, 2016 3:26 pm

30 plus days. Still long lines near banks and limitations on how much money can be withdrawn from an individual's own accounts. 

Modi requested 50 days from November 8.  Others suggested it will be Feb 1st or even March 1st to get back to normal currency circulation. 


Govt should publish useful metrics to help understand and plan for the coming weeks. Some of the metrics could be: Amount of newly released currency vs total amount to be released in near future, number of ATMs updated vs total ATMs, Amount allowed to be withdrawn from banks and/or ATMs, and avg line length at banks by region.  

Some of this data is available in public sphere but it would gain visibility if published by govt. If govt is not willing to do that, media should post that data and update regularly.  Once a week would be good. Daily updates would be better.

Media could also collect related job losses, auto sale losses, difficulties encountered  in daily life transactions, specific problems by state, urban vs rural problems, and any factual data on black money. 

Govt may ignore such suggestions as it may not be confident of meeting its goals. 

Media and opposition may not want to do the hard work of collecting data but blow hot air by making vague and politically motivated allegations hoping people will buy their lazy rhetoric.

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Re: Demonetisation: Can govt provide some numbers?

Post by confuzzled dude on Sun Dec 11, 2016 3:44 pm

Lazy rhetoric is what you generally espouse to. Why don't you read a bit rather than coming up with your own facts.

http://such.forumotion.com/t39979-negative-impact-of-demonetization#230316

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Re: Demonetisation: Can govt provide some numbers?

Post by confuzzled dude on Wed Dec 14, 2016 8:01 pm

An extrapolation of 2016 Reserve Bank of India (RBI) data on the capacity of Indian printing presses and currency distribution indicates that, at current rates, the Prime Minister’s deadline will not be met. Getting adequate money to banks and ATMs nationwide will depend on how many bank notes the government wants to put back into circulation.

If the government wants to introduce Rs 9 lakh crore ($135 billion)–or 35% less money than it pulled out–it will take up to May 2017, and if it wants to reintroduce the entire Rs 14 lakh crore ($210 billion) that it withdrew, that could take up to August 2017.

The crux of the problem is change, specifically the Rs 500 note, which India’s presses cannot, currently, print in adequate number.
As on November 30, 2016, less than 10 crore (100 million) Rs 500 notes were printed and ready (or two days worth of printing), according to an RBI source, quoted in Mint.

We arrive at the crux of the problem: India needs to print at least 681 crore (6.81 billion) Rs 500 notes. In Scenario 2, the Rs 500 requirement is for 1,181 crore (11.81 billion) notes. However, the peak printing capacity of the presses is 5.56 crore (55.6 million) notes a day–or 0.8% of what it should be.

At this rate, we will take anywhere between 122 days and 212 days to print enough Rs 500 notes. Given the fact that the RBI started printing Rs 500 notes in earnest after November 30, 2016, printing all the required 500s will be completed only on March 10, 2017 (Scenario 1), or July 8, 2017 (Scenario 2).

Taking into account the time taken for cash transportation and the speed at which banks can push out the money, calculations indicate that complete disbursal of Rs 9 lakh crore can happen in early April 2017.
http://www.hindustantimes.com/india-news/pm-modi-s-50-day-deadline-for-re-monetisation-set-to-fail-here-s-why/story-lgWC1VqQcPZl36Hbsaq09J.html

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Re: Demonetisation: Can govt provide some numbers?

Post by confuzzled dude on Tue Dec 27, 2016 10:57 pm

Demonetization is a colossal failure on two accounts

a. 90% of banned notes have been deposited as opposed to govt's expectation of 80% which would help purge black money.
b. The very fact that the Govt kept moving its goal post as to what was the goal of this move, apparently Modi has no clue of the intent of this move.

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Re: Demonetisation: Can govt provide some numbers?

Post by smArtha on Wed Dec 28, 2016 9:55 am

If they were able to purge 10% i.e. about 1.5 lakh crores that can be counted as acceptably successful scheme. They will reap tax revenue - one time on the now disclosed but prior undisclosed money and continuous one on the deposits and other investments made with the deposited amounts. My guesstimate is another Rs. 1-2 lakh crores from that. 

In any case, why should Govt provide any numbers now - before the deadline of Dec 30? The earliest any numbers should be expected is by end of Jan 1st week. It takes that long in India to collect all information through proper channels and consolidate.

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Re: Demonetisation: Can govt provide some numbers?

Post by Seva Lamberdar on Wed Dec 28, 2016 11:04 am

smArtha wrote:If they were able to purge 10% i.e. about 1.5 lakh crores that can be counted as acceptably successful scheme. They will reap tax revenue - one time on the now disclosed but prior undisclosed money and continuous one on the deposits and other investments made with the deposited amounts. My guesstimate is another Rs. 1-2 lakh crores from that. 

In any case, why should Govt provide any numbers now - before the deadline of Dec 30? The earliest any numbers should be expected is by end of Jan 1st week. It takes that long in India to collect all information through proper channels and consolidate.
Well said!  Btw demonetization in India this time is not a first time thing in the world. It had been done before in other countries too (including in the U.S., around Civil War time I think) to eradicate black money and fake currency etc. and had faced similar short term problems following the demonetization. So India (including the current problems faced by it following the demonetization_) is not unique in this respect.

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Re: Demonetisation: Can govt provide some numbers?

Post by garam-kuta on Wed Dec 28, 2016 1:16 pm

smArtha wrote:If they were able to purge 10% i.e. about 1.5 lakh crores that can be counted as acceptably successful scheme. They will reap tax revenue - one time on the now disclosed but prior undisclosed money and continuous one on the deposits and other investments made with the deposited amounts. My guesstimate is another Rs. 1-2 lakh crores from that. 

In any case, why should Govt provide any numbers now - before the deadline of Dec 30? The earliest any numbers should be expected is by end of Jan 1st week. It takes that long in India to collect all information through proper channels and consolidate.

this is turning out to be a colossal blunder. forget about your 10% (1.5 lakh cr) figure. it will be less than 50,000 cr and much less if the remaining marginal amount of black money comes back in the amnesty scheme. the govt will get only 50% of that money. so total benefit will not be even 50,000 cr in optimistic scenario. that's why the govt started shifting the goal post and talking about cash less society. it will not be surprising if the black money that is unearthed will be close to 0.

now, lets look at the costs. TN govt alone expects a loss of tax revenue of 3,000 crores. all the govts put together (states and central) are expected to lose 1 lakh crores in taxes (sales and VAT etc). assuming a 10% sales tax, the actual loss of economic activity means 10 times that. add the stock market losses and loss of productivity of people standing in queues at bank instead of working, the losses to the daily wage workers (the poor don't pay much in sales taxes so this loss is not reflected in tax losses to govts), the rupee losing its value against $ ever since this announced and the resulting loss to the economy, the foreign and domestic investors stepping back and postponing their investment decisions and all that this stupid move is going to cost the economy, upwards of 10lakh crores.
the cost is >>>>>>>>>>> any expected benefit in your most optimistic estimate.

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Re: Demonetisation: Can govt provide some numbers?

Post by smArtha on Wed Dec 28, 2016 5:52 pm

garam-kuta wrote:
smArtha wrote:If they were able to purge 10% i.e. about 1.5 lakh crores that can be counted as acceptably successful scheme. They will reap tax revenue - one time on the now disclosed but prior undisclosed money and continuous one on the deposits and other investments made with the deposited amounts. My guesstimate is another Rs. 1-2 lakh crores from that. 

In any case, why should Govt provide any numbers now - before the deadline of Dec 30? The earliest any numbers should be expected is by end of Jan 1st week. It takes that long in India to collect all information through proper channels and consolidate.

this is turning out to be a colossal blunder. forget about your 10% (1.5 lakh cr) figure. it will be less than 50,000 cr and much less if the remaining marginal amount of black money comes back in the amnesty scheme. the govt will get only 50% of that money. so total benefit will not be even 50,000 cr in optimistic scenario. that's why the govt started shifting the goal post and talking about cash less society. it will not be surprising if the black money that is unearthed will be close to 0.

now, lets look at the costs. TN govt alone expects a loss of tax revenue of 3,000 crores. all the govts put together (states and central) are expected to lose 1 lakh crores in taxes (sales and VAT etc). assuming a 10% sales tax, the actual loss of economic activity means 10 times that. add the stock market losses and loss of productivity of people standing in queues at bank instead of working, the losses to the daily wage workers (the poor don't pay much in sales taxes so this loss is not reflected in tax losses to govts), the rupee losing its value against $ ever since this announced and the resulting loss to the economy, the foreign and domestic investors  stepping back and postponing their investment decisions and all that this stupid move is going to cost the economy, upwards of 10lakh crores.
the cost is >>>>>>>>>>> any expected benefit in your most optimistic estimate.

There are many back of the envelope calculations going around. Let's wait for the official nos in January.

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Re: Demonetisation: Can govt provide some numbers?

Post by garam-kuta on Wed Dec 28, 2016 7:02 pm

smArtha wrote:
garam-kuta wrote:
smArtha wrote:If they were able to purge 10% i.e. about 1.5 lakh crores that can be counted as acceptably successful scheme. They will reap tax revenue - one time on the now disclosed but prior undisclosed money and continuous one on the deposits and other investments made with the deposited amounts. My guesstimate is another Rs. 1-2 lakh crores from that. 

In any case, why should Govt provide any numbers now - before the deadline of Dec 30? The earliest any numbers should be expected is by end of Jan 1st week. It takes that long in India to collect all information through proper channels and consolidate.

this is turning out to be a colossal blunder. forget about your 10% (1.5 lakh cr) figure. it will be less than 50,000 cr and much less if the remaining marginal amount of black money comes back in the amnesty scheme. the govt will get only 50% of that money. so total benefit will not be even 50,000 cr in optimistic scenario. that's why the govt started shifting the goal post and talking about cash less society. it will not be surprising if the black money that is unearthed will be close to 0.

now, lets look at the costs. TN govt alone expects a loss of tax revenue of 3,000 crores. all the govts put together (states and central) are expected to lose 1 lakh crores in taxes (sales and VAT etc). assuming a 10% sales tax, the actual loss of economic activity means 10 times that. add the stock market losses and loss of productivity of people standing in queues at bank instead of working, the losses to the daily wage workers (the poor don't pay much in sales taxes so this loss is not reflected in tax losses to govts), the rupee losing its value against $ ever since this announced and the resulting loss to the economy, the foreign and domestic investors  stepping back and postponing their investment decisions and all that this stupid move is going to cost the economy, upwards of 10lakh crores.
the cost is >>>>>>>>>>> any expected benefit in your most optimistic estimate.

There are many back of the envelope calculations going around. Let's wait for the official nos in January.
ven in the most optimistic scenario, the gain for govt cannot be more than 1.5 lakh crore. this no will only likely to decrease by jan. otherwise, the govt would've touted the benefits by now. the very fact that govt suddenly started talking about cashless economy is a clear indication that the benefits will be nowhere near the initial projections.
and the costs are already visible. it is a fact that rupee lost value and continuing to slide still and 70-72 is already being talked about.
and the stock market which is a forward looking mechanism is going down. and the revenue losses to state and central governments is also real only question how much lower they will go.
in best case scenario, the gain to govt from demonetization = the losses from taxes due to bad economy. and that is the best case.
in worst case, gain to govt is 50,000 cr ( less than they got thru amnesty scheme) and tax losses of 1.5 lakh crores.

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