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As a foreigner visiting India with the demonetisation is also not the most pleasant experience, I had landed on the day that happened. A lot of places luckily a

by impy 10y ago

As a foreigner visiting India with the demonetisation is also not the most pleasant experience, I had landed on the day that happened. A lot of places luckily accepted credit cards, though in a few cases the authorisation failed (which can also occur at the ATM's, so be careful when queuing) and they don't always have the best infrastructure either (http://imgur.com/a/iJDfw http://imgur.com/a/iJDfw). PayTM isn't an alternative as a foreigner, since you can only charge your account with Indian issued debit or credit cards.

wyager 10y ago
The whole "demonetization" argument seemed blatantly propagandistic to me. The stated goal was to repatriate "black money" (theoretically large untaxed cash reserves held by rich Indians). Let's assume that "black money" is a real problem and not an overstated political bogeyman. Let's ignore the fact that the last thing anyone with serious money is going to store wealth in is cash (especially not Rupees). So you get rid of your largest denominations and what do these theoretical rich people do? They sell their cash at a slight loss for lower denominations. Poor (but still identified and banked) people can make a quick buck by trading all their cash for slightly more cash at the soon-to-be-useless denominations and trading them at a bank (under the allowed daily trade limits). On the other hand, anyone disconnected enough not to have an ID or a bank account but wealthy enough to have a few high-denomination bills gets screwed because changing money at the bank requires you to have an ID or an account. They can also sell their cash on the black market, but they get a worse deal because they're trying to hawk a couple bills, not the large bulk transfers that wealthy people are doing. And, of course, this move decreases the fungibility of Rupees and increases our expectation that the Indian government will do something similarly inconvenient in the future. If the Rupee ever hopes to be a strong currency, this probably didn't help. I suspect a secondary goal of this move was to initiate a migration away from cash. Once you get rid of cash and make all legal money banked, you can do all sorts of fun stuff like impose negative interest rates. The ECB, Denmark, Sweden, Switzerland, and Japan have already experimented with negative interest rates; I expect to see other nations make moves towards it as well. It's an effective way of doing things like propping up property values, as long as you can force people into it.
- DaiPlusPlus 10y ago
  I believe the aim was not to repatriate cash, but to help tackle corruption in India, which is endemic, and often takes the form of literally under-the-table cash payments to public and local officials, policemen, and the like. By eliminating high-value cash it means these illegal transactions become less practical: illegal participants must either use larger amounts of less-valuable currency (passing bricks of notes isn't exactly subtle) or use foreign currency (harder to launder). The hope is that people would find it easier just to keep things above-board because all transactions become electronic, logged, and auditable. Though I'm sure some enterprising folks will find way to electronically launder bribe money somehow - I expect a lot of people to suddenly inherit money from long-lost foreign relatives.
  - entropyneur 10y ago
    High value cash wasn't eliminated. In fact, quite the opposite: previously the highest value note was Rs1000, now it's Rs2000. Although calling $30 high value is a bit of stretch.
    - brianwawok 10y ago
      Average salary in India is RS18k.. so RS2k is 1/9th of that. US average salary is ~50k.. so it would be equivalent with a $6,250 note.. which to me sure seems like a high value note.
      - deleted 10y ago
        [deleted]
  - _nedR 10y ago
    How many government employees were arrested since Modi took over? Don't see the corruption angle. The measure was primarily to improve governments tax receipts and to eliminate the cash economy (thereby increasing governments control over the economy). Right now it seems that every measure seems to be to increase governments control over the masses and to reduce their corruption, without any measure to increase governments transparency or reduce government's corruption. Trickle down economics and trickle up anti-corruption measures.

by impy 10y ago

wyager 10y ago

The whole "demonetization" argument seemed blatantly propagandistic to me. The stated goal was to repatriate "black money" (theoretically large untaxed cash reserves held by rich Indians). Let's assume that "black money" is a real problem and not an overstated political bogeyman. Let's ignore the fact that the last thing anyone with serious money is going to store wealth in is cash (especially not Rupees). So you get rid of your largest denominations and what do these theoretical rich people do? They sell their cash at a slight loss for lower denominations. Poor (but still identified and banked) people can make a quick buck by trading all their cash for slightly more cash at the soon-to-be-useless denominations and trading them at a bank (under the allowed daily trade limits). On the other hand, anyone disconnected enough not to have an ID or a bank account but wealthy enough to have a few high-denomination bills gets screwed because changing money at the bank requires you to have an ID or an account. They can also sell their cash on the black market, but they get a worse deal because they're trying to hawk a couple bills, not the large bulk transfers that wealthy people are doing. And, of course, this move decreases the fungibility of Rupees and increases our expectation that the Indian government will do something similarly inconvenient in the future. If the Rupee ever hopes to be a strong currency, this probably didn't help. I suspect a secondary goal of this move was to initiate a migration away from cash. Once you get rid of cash and make all legal money banked, you can do all sorts of fun stuff like impose negative interest rates. The ECB, Denmark, Sweden, Switzerland, and Japan have already experimented with negative interest rates; I expect to see other nations make moves towards it as well. It's an effective way of doing things like propping up property values, as long as you can force people into it.

DaiPlusPlus 10y ago
I believe the aim was not to repatriate cash, but to help tackle corruption in India, which is endemic, and often takes the form of literally under-the-table cash payments to public and local officials, policemen, and the like. By eliminating high-value cash it means these illegal transactions become less practical: illegal participants must either use larger amounts of less-valuable currency (passing bricks of notes isn't exactly subtle) or use foreign currency (harder to launder). The hope is that people would find it easier just to keep things above-board because all transactions become electronic, logged, and auditable. Though I'm sure some enterprising folks will find way to electronically launder bribe money somehow - I expect a lot of people to suddenly inherit money from long-lost foreign relatives.
- entropyneur 10y ago
  High value cash wasn't eliminated. In fact, quite the opposite: previously the highest value note was Rs1000, now it's Rs2000. Although calling $30 high value is a bit of stretch.
  - brianwawok 10y ago
    Average salary in India is RS18k.. so RS2k is 1/9th of that. US average salary is ~50k.. so it would be equivalent with a $6,250 note.. which to me sure seems like a high value note.
    - deleted 10y ago
      [deleted]
- _nedR 10y ago
  How many government employees were arrested since Modi took over? Don't see the corruption angle. The measure was primarily to improve governments tax receipts and to eliminate the cash economy (thereby increasing governments control over the economy). Right now it seems that every measure seems to be to increase governments control over the masses and to reduce their corruption, without any measure to increase governments transparency or reduce government's corruption. Trickle down economics and trickle up anti-corruption measures.