Ghaziabad - 500/1000 note ban - experiences

DE-MONETISATION. It is a mixed bag of fortunes, anticipations, projections and perceptions - seemingly aimed at eradicating and eliminating black money stocked AS UN-ACCOUNTED in form of 500 and 1000 currency bills. When banned, the two (Rs.500 and Rs.1000 notes) ruled 86% economy of currency notes, thus leaving a huge void in circulation. Though it was impossible for lesser currency (Rs.100, 50 and 20/10) to substitute the void and deficit so created by note ban, as it meant 10-times enhanced production by RBI factories, with manifold increase in producion costs (say Rs.3 approx. for 500/1000 note to Rs.15-18 for 100/50 note), yet banks initially pumped 100 currency notes in circulation alongwith Rs.2000 new notes. Gradually, as 100 rupee currency distribution by banks faded, expectedly new 2000 currency notes were pumped up in circulation, although had new 500 currency notes been stepped up, it would have helped people much more to run a 500 note in market rather than 2000 note that is hard to accept by traders and shopkeepers for `difficulty in returning change against`. Interestingly, Rs.100 currency seems extremely dear in market as everyone continues to run after it, saving it miserly if one has some, else looking for desperate opportunities to get 100 currency in change against shelling out new 2000 notes. No wonder, that suddenly 100 currency note has gone into a `Pseudo-hiding phenomenon` with everyone saving it for harder and harsher times ahead. Real purpose of demonetisation, that is to extricate stash 500/1000 currency notes, shall perhaps be foreseen more clearly only after the deadline of 30th Dec 2016, when banks stop taking deposits of banned currency notes, and one has no option but to line up at RBI doors for exchange (albeit with valid explanation). Till then we may continue to hear stashed banned currency being illegally exchanged for new currency thru black-marketing OR being abandoned by the feary and more desperate ones as `unclaimed forbidden destitute`. As many of us are beginning to realise, the 50-odd day transition phase from 8th nov to 30 dec 2016, is government`s `master-stroke` to deal firstly with black-money stocked in past as un-accounted income by rendering it `un-usable legal tender in indian market`, and secondly, by taking certain calculated measures to ensure seasoned black-marketeers do not stock cash currency a fresh in furture times to come. The second plan of government seems less evident to common man as it is perhaps the underlying essential purpose of government to curb black-money in country. How government plans to do it in form of planned controlled measures is attempted in following explanation : a. It will take some time for 2000/500 new currency notes to replace banned 1000/500 currency notes in market, say 6-8 months. b. This period of 6-8 months would be used for converting a large portion of `Cash-transactions` into digital or `virtual-cash` transations thru modes of mobile and debit/credit card payments for low value purchase and net-banking options for higher value sale-purchase. c. Thus, by `shifting economy from cash-currency to digital-cash/virtual cash` where more and more people `switch-over` to using less cash and more digital modes of payment, gradually society`s dependency on cash currency would tend to `reduce in near future`, though a large chunk of common man would need to be `sufficiently educated and enabled` to start using digital payment modes rather than traditional practice of payment in cash currency. d. As more and more population switches to digital payment mode, there would be lesser need for cash currency, hence lesser cash demand in circulation, this in turn would drift economy positively towards `more cash-less and more virtual digital-cash economy. How things would un-fold in next 6-8 months would depend on how effectively government carries out implementation of step-wise measures. Few questions to ponder till then for common man : 1. Will cash-deficit in market drive people to change their traditional habit of replacing cash payments with digital payment modes, say mobile apps like Paytm or debit card ? (One may even start thinking whether the Cash deficit in market in banks and ATMs is a calculated government measure to `Enforce and Drive` people to abandon cash payments by and large and instead adopt digital payment modes, in face of severe cash-crunch being faced by literally every person in rural and urban India. 2. Assuming that in next 6-8 months 40-45% urban population and say 20-25% rural population shift to digital payment mode and that many percentage adopt to new habit of digital payments for day-to-day small purchases also like grocery and vegetables (Such asssumtion would rest on the effective measures taken by RBI and banking sector to `educate and enable people and masses to become digital-payment friendly), THEN can one say the Indian economy will have a siginificantly shrunk Cash-currency friendly market from current 95% to say more desirable digital virtual-cash market of say 30-35 % with sizeable population (both rural and urban) using mobile payment apps and debit/credit cards as well as net-banking payments. 3. Reducing Cash-component in economy and replacing it with digital-cash component will definitely `reduce black-money and NEED to stock un-accounted cash` but that must be coupled by significantly reducing/minimising or partly eliminating the tax practices in country, as most common motive of black-money and un-accounted cash is to `Avoid Tax`. 4. Lastly, Demonetisation only hits at Black-money stocked as un-accounted CASH, but government also needs to zero-in on the black-money already converted into movable and immovable property, as unlike traditional practices those indulging in black-money prefer to convert cash component into un-accounted property. more  

Read in recent article posted by Local Circles Manager : Quote ....... `As many of you may already know, 78% LocalCircles members supported the 500/1000 currency change campaign conducted Oct 31 - Nov 7, 2016.` Unquote Question : What Currency change campaign Oct 31 - Nov 7, 2016 ? DID LOCAL CIRCLES KNEW IN ADVANCE ABOUT BAN ON Rs.500/1000 CURRENCY, AND HENCE HAD CONDUCTED CURRENCY CHANGE CAMPAIGN IN THE WEEK PRECEDING 8TH NOV 2016, I.E THE DAY PM ANNOUNCED THE DEMONETISATION OF 500/1000 CURRENCY ? will the local circles manager clarify on his above statement ? regards Pratyush Srivastava more  

This is very good move by Indian Government.... It will definitely curb the black money in India..... atleast the blocked money will come in the market which is good sign for any economy..... more  

I heartily welcome this move. Our PM should have announced after 10PM so that the hoarders could not have bought GOLD also. more  

देख तेरे भारत की हालत क्या हो गयी भगवान अंतर (कोई स्ट्राईक, हमला, .. नही) : लाल बहादुर शास्त्री ने देशवाशियों से कहा धन चाहिए, परिणाम देशवाशियों ने अपने काले + सफेद धन के साथ साथ आधा भोजन भी दे दिया था और आज क्या और क्यों नहीं?? more