Showing posts with label demonetisation. Show all posts
Showing posts with label demonetisation. Show all posts

Sunday, November 12, 2017

Demonetization: A Year Later

How India Is Moving Toward a Digital-First Economy
On November 8, 2016, India’s government did something that no other government had attempted before at the same scale: It decided to remove 86% of the country’s currency notes by value from circulation. Over the months that followed, more than 1 billion people participated in a “reboot” of the country’s financial and monetary system. .......... a threshold moment in India’s digital transformation. .......... a government payment system created in 2016 that was processing 100,000 transactions per month in October of that year, prior to the sudden demonetization. A year later, after demonetization, the same system is processing 76 million transactions per month. ........ the country’s economy is operating with $45 billion less cash than it did prior to demonization ......... the largest-scale tax reform ever implemented at a single time: the replacement of a complex web of 17 different taxes with a single Goods and Services Tax (GST). ......... in the first month after the introduction of the GST, over 1 million businesses registered with the system. In only the first few weeks after implementation, the increased transparency and digital data availability that are integral to the GST began to open up new sources of lending to small and medium-size enterprises (SMEs). .......... the “India Stack.” ........ At the base of the stack — and thus at the beginning of India’s story of digital transformation — is a nationwide system of digital identity, generically termed the UID (Unique Identification) system, but more often in India referred to by its project name, Aadhaar. ........ Of the systems that have broken the 1-billion-user mark, many originated in the U.S. and are private-sector efforts — Facebook and Google being among the prominent examples. An exception is Aadhaar, which means “foundation” or “base” in a number of Indian languages, including Hindi. ........ Aadhaar is both the only non-U.S. technical system globally to have broken the 1-billion-user threshold and the only such system to have been developed by the public sector. ....... Aadhaar has the distinction of having reached 1 billion users the fastest; the services built on Aadhaar, through the interoperability that defines the India Stack have, in turn, built their own record of scale and scope. ......... India launched Aadhaar in 2009 with the then-improbable goal of giving every Indian a single digital identity in the form of a biometric authenticated 12-digit number. ....... a unique number based upon de-duplication of the applicants’ biometric information, their submitted iris scans and fingerprints. ....... the search for a “killer app” to prove the value of Aadhaar was elusive. While the ability to authenticate identity was now digital, bank accounts and payment systems were still paper-based — requiring separate and laborious Know Your Customer validation procedures that had the result of continuing to exclude a majority of people in India from accessing the benefits of banking. ........ Modi not only backed the system developed by the previous government but also dramatically increased its funding, broadened its scope, and — most important — amplified its impact. ........ Among the first actions the Modi government undertook was to launch the Pradhan Mantri Jan–Dhan Yojana (PMJDY, or Jan Dhan) financial inclusion program on August 28, 2014. On the very first day that Jan Dhan was implemented, the government created 10 million bank accounts using existing Aadhaar IDs in a paperless manner, at a fraction of the minimum previous customer acquisition costs. Since then, the government has created more than 300 million new, no-frills bank accounts. In additional to a free, zero-balance account, the Jan Dhan provides accident insurance coverage of 100,000 rupees (about US$1,500), along with an overdraft facility of 5,000 rupees (US$80) available for account holders — the point being to incentivize people to participate in the formal banking system. ......... Having a biometrically-verifiable identity number and a bank account created the potential for adding another layer to the service stack: mobile payments. With an identity to create a bank account, and a bank account to receive funds, the hundreds of millions of people eligible for the receipt of government services in India suddenly had a way to access those services digitally, from beginning to end. In India this digital infrastructure is nicknamed the “JAM” trinity, referring to innovative interlinking of Jan Dhan (low-cost bank accounts), Aadhaar (identity), and mobile numbers. The India Stack could now have four layers: an identity layer, a documents layer, a payments layer, and a transactions layer. ......... To understand the human impact of these changes, consider the plight of a mother in an Indian village who is eligible for a government subsidy to send her two daughters to school. Until less than two years ago, in order to avail herself of those funds she would have needed to fill out a form verifying her daughters’ attendance, get that form validated by the school, and bring that form to a government office. Assuming there were no impediments in the processing of the form — a big assumption — she would then have waited as the form traveled up the system to the point when a check would be issued to her in the amount of her benefits. To collect the check she would have needed to travel to a government office. If there turned out to be corruption in the office, she would have needed to produce a sum in cash equal to 15%–20% of the total amount before finally receiving the check. Then, of course, she would have needed to travel to a bank to cash the check. In the end, of the 2,000 rupees to which she was entitled, she would (in a good outcome) have received about 1,400 rupees, with the balance having gone to travel and corruption money........... If we consider this same situation using India Stack, the mother can use a tablet or smartphone to validate her identity using her Aadhaar number in the office of her daughters’ school. Her eligibility for the program is already in the system, and her Aadhaar number is now linked to the zero-balance bank account created for her under the Jan Dhan financial inclusion program. The workflow approves her request in a batch process. Within 24 to 48 hours she gets an alert on her phone that the full 2,000-rupee amount has been transferred to her bank account. ............ the India Stack is envisioned as new social infrastructure with the capacity to increase the resilience of Indian society to change, and thus to help propel India into the 21st-century digital economy. The deployment of the India Stack was one significant precondition for major structural reforms undertaken by the Modi government. This brings us back to demonetization and implementation of tax reforms. ........ The idea of accomplishing a dramatic shift in the nature of the economy with a set of suddenly implemented policies is not new. The “shock therapy” programs of the early 1990s, intended to accomplish the shift from socialist to market economies in Eastern Europe and the former Soviet Union, were based on a similar premise. However, where those programs created an environment in which a few powerful individuals were able to appropriate vast quantities of formerly government-held assets, India’s digital shock therapy has — measurably and verifiably — accomplished the opposite: It has eliminated vast concentrations of “off-the-books” wealth, resetting the clock of development at a more equitable starting point. ........... When India underwent demonetization, the India Stack was suddenly and dramatically thrown into action. India’s own payments corporation launched the BHIM application, a digital payments platform using the Universal Payments Interface underlying the JAM trinity. BHIM became one of fastest-downloaded financial payments applications in recent history. The Universal Payments Interface system is very inclusive, such that it serves both smartphone and non-smartphone users, so every Indian can access banking and make payments digitally. .......... the Indian economy is operating with about $45 billion less cash than if demonetization had not taken place. Banks have far greater liquidity, SME lending is at an all-time high, and digital transactions have multiplied 760 times over in some cases. ......... Prior to the introduction of the GST, companies of any size in India had to keep track of no fewer than 17 different categories of taxes on sales and transactions, including state-level value-added taxes and levies on the interstate transportation of goods. On July 1, 2017, all 17 of those taxes were subsumed into one tax: the GST. ......... an opaque and irrational system that had developed over decades, and that varied across states, was replaced by a simple, transparent system applicable nationwide. ........ India is adding almost 110 million smartphone users every year, and is on the verge of launching Aadhaar-compliant devices with biometric authentication built into phones and tablets. The power of the JAM trinity will come into full force when transactions are enabled using Aadhaar and biometric authentication, creating a system that is not only cashless but cardless. Already, a new entrant into telecommunications service in India has succeeded in using the India Stack to enroll 108 million consumers in 170 days with a totally paperless, mobile-centric manner — in the process achieving customer acquisition costs of less than $1 (USD) per customer, compared with the prior industry standard of $25. ......... India’s development was inequitable and inconsistent for far too long; the country still has a long way to go. The societal challenges created by digital disruption, challenges both expected and unintended, are real. They will be addressed only with a combination of administrative humility and entrepreneurial determination. But the long-term benefits are real. The reality is that India is moving into the future at an unprecedented rate. And the path it is taking to get there is digital.

Thursday, September 28, 2017

Modi's 2019: Contested And Won Already

Friday, March 10, 2017

Modi Is On A Roll

Modi is on a roll. अमरिका भी इसी तरह १०० डॉलर का नोट वापस ले ले तो दुनिया में जितने ड्रगलोर्डस हैं सब एक ही झटके में समाप्त। The most popular politician in the world is about to get even more popular.

If BJP wins Uttar Pradesh, get ready for more Modi crackdowns
As various exit polls showed on Thursday, the BJP can form a government in Uttarakhand, Goa, Manipur and, most importantly, Uttar Pradesh. ...... The BJP victory in Uttar Pardesh and other states will mean popular endorsement of demonetisation. This can embolden PM Modi and encourage him to take more such sudden and extreme steps. ...... victories in recent Assembly elections can encourage him to begin his next crackdown, and this could be on benami properties. ...... An idea that has been associated a lot with PM Modi's radical reforms is a banking transaction tax replacing the income tax entirely or partly. ....... Another measures he has spoken a lot about are holding Assembly and Lok Sabha elections simultaneously and state financing of elections.
पाँच साल में दो चुनाव काफी है। लोकल, राज्य और केंद्र सब मिला के पाँच साल में दो चुनाव।

Friday, December 30, 2016

Modi's BHIM App Is Tectonic

PM Narendra Modi launches Aadhaar based mobile payment app called BHIM

This is the most monumental step India has taken to date over my entire lifetime.

India has done a trailblazing super job of taking the biometric ID to all Indians. This has to be done for every human.

India should similarly get every business venture in the country registered, no matter how small. Make it digital, easy, fast and announce no taxation for businesses up to a certain size in annual revenue. Perhaps no taxation upto a million rupees in profits. This registration will open the doors for credit. Small businesses can take loans and create jobs. This is the most important sector of the economy.

Saturday, December 17, 2016

नोट, बेनामी प्रॉपर्टी और सोना

मोदी ने ऐसा कदम लिया जिसे जब बिल गेट्स माइक्रोसॉफ्ट चलाते थे तो कहते थे Bet The Company Move, यानि कि सारे के सारे कंपनी को दांव पर लगा दिया। मोदी के कदम से या तो वो २०१९ का चुनाव पुरे सफाया ही हो जाते या नहीं तो विपक्षी का पुरा सफाया। Demonetization सफल हुइ तो ममता केजरी सब का पत्ता साफ। नीतिश तो मैदान से निकल ही गए कि हम मुख्य मंत्री ही ठीक हैं।

केन्या कौन सा जर्मनी है। वहाँ तो डिजिटल पैसा बहुत पहले से चलता आ रहा है। M-Pesa बोलते हैं। नोटबंदी एक सुनहरा मौका है। पैसा digitization करने का।

मोदी ने बोल दिया अगला कदम है बेनामी प्रॉपर्टी। नहीं बोला होता तो demonetization फ्लॉप।

उसके बाद है सोना। काला धन से बड़ी समस्या है सफ़ेद सोना। लोग सोना रखते क्युं है। जितना बाहर विदेश से FDI आएगा उससे कई ज्यादा गुना पैसा तो देश के भितर है। सोना। भारत अभी भी सोने की चिड़िया है। सोना को पैसा बनाओ और बैंक में रखो। तो फिर देखो तरक्की।

१२ लाख करोड़ पैसा लोगो ने बैंक में रखा। अब ये अर्थतंत्र के काम आएगी।

नगद और सोना। यानि कि पुंजी की कमी।

दुनिया का सबसे पॉपुलर पॉलिटिशियन ने बहुत बड़ा कदम लिया। This shows he is decisive and a risk taker.

अमरिका १०० डॉलर का नोट इसी तरह वापस ले ले को दुनिया के सभी ड्रगलोर्ड समाप्त हो जायेंगे।

Tuesday, December 06, 2016

Done Right Demonetisation Will Prove Early Election

If the execution of the decision goes well it will be like Modi won the 2019 election before it was even held, with his opponents like Mamata and Kejri utterly vanquished.

It has been a big, bold move. It had to be done at some point if the Indian rupee was ever going to become a credible global currency, like the dollar, euro, yen.

12 lakh crores have been deposited into the banks. That is massive.

Gold is another major drag. And it is cultural. That is so much capital sucked out of the economy.

As for the anti corruption drive I am sure Modi knows this can only be the first step. Benaami property has to be one of his New Year resolutions.

T N Sheshan cleaned up elections in India. Modi is out to show corruption can be controlled across India.

Anti corruption moves are indispensable to robust economic growth rates. Done right this will catapult India to double digit growth rates early next decade.

The biggest concern of course is the cash crunch. I have noticed Ambani is giving three months free on his new data network. There ought to be a massive push for digital money. They do it in Kenya. It is called mPesa.

America should similarly recall the 100 dollar bill to empty the wallets of the druglords around the world.

Modi's Demonetisation: Differing Opinions

India's demonetisation: 'Modi didn't think of the poor' 

In a strong editorial, the Economist said Modi's "perceived need for secrecy (to take cash-hoarders by surprise) fed into the innate sense he has of his own infallibility and his misplaced faith in his technocratic skills."

Kaushik Basu, a former chief economist at the World Bank, said in an op-ed in the New York Times that demonetisation was likely to cause the economy to nosedive. "Demonetization may have been well-intentioned, but it was a major mistake," Basu wrote. "The government should reverse it."

Assessing the impact of demonetisation four weeks later, TN Ninan, the editor of the Business Standard, wrote that Modi's move "at this stage looks like a bad idea, badly executed on the basis of some half-baked notions."

Wednesday, November 30, 2016


This isn’t the first time a charismatic nationalist has used a simple, good-vs.-evil narrative to push a radical economic measure. In 1958, China’s Mao Zedong called upon millions of citizens to wipe out the country’s rats, sparrows, mosquitoes and flies to fight disease and prevent crop losses. And like Mao’s campaign, which engendered a plague of locusts by wiping out the sparrows that ate them, Modi’s strike against corruption has led to some unexpected and painful consequences.

Monday, November 21, 2016


Demonetisation result of power concentration in one man: Rahul Gandhi

Change PM, not notes: Arvind Kejriwal on demonetisation

Enemies couldn't have hurt rural India as demonetisation: Sitaram Yechury

Mamata Banerjee: Note ban hit lower class, traders, women the most

Opposing demonetisation against country's interest: Devendra Fadnavis

Demonetisation:Queues get shorter at banks; no respite at ATMs

Demonetisation has hit those seeking money for poll tickets: Modi

Anxiety due to cash crunch takes ministers to shrinks

Congress running away from discussion on demonetisation: Mukhtar Abbas Naqvi

Senior bureaucrats to visit states to assess demonetisation drive

Demonetisation: Mamata Banerjee, Arvind Kejriwal threaten intense protest

Demonetisation: Currency recall issue creates storm in Parliament

Demonetisation: Regulations changing faster than notes; banks stumped

Demonetisation move poorly executed: Ajay Maken

Demonetisation: A painful shift in rural economy, but all could be well by January.

Demonetisation will not address the problem of black money, say social activists.

Demonetisation: Banks get about Rs 5.44 lakh crore worth of old Rs 500/1000 notes.

Demonetisation: More important to address deeper problems in war against black money

Demonetisation seems like deflation for many people; danger signal for PM Modi

Demonetisation a 'bold move' to curb shadow economy: Bill Gates

Demonetisation: Modi should have gone after 8 lakh wealthy 'farmers', not common man

Rs 500, Rs 1,000 ban: Reaction to Modi's demonetisation move shows how it has upset upcoming elections

Saturday, November 19, 2016

Modi's Demonetisation Move

Demonetisation a make-or-break venture for PM Narendra Modi

Punjab National Bank collects Rs 47,000 crore deposits through demonetisation drive

Post-demonetisation, ICICI Bank got Rs 32K cr deposits: Chanda Kochhar

Rs 60,000 is the new Rs 1 lakh in UP realty market

Demonetisation: Decision-a-day betrays lack of preparedness

Demonetisation: PM Modi's decision's after-effects to last longer: Chidambaram

Demonetisation: PM wants BJP MPs to publicise benefits

Modi's cash drive could push India behind China

Crisis easing, could not have done better: Jaitley

How demonetisation has compromised 'rasgulla'

Rs 91 lac worth old notes found in Minister’s car

Narendra Modi faces threat to life, says Ramdev

मोदी ने ये बहुत बड़ा कदम लिया है। सब execution पर depend करता है। एक decisiveness तो दिखा है। अपने सरकार को सीधे दाव पर लगा दिया। बिल गेट्स जब Microsoft चला रहे थे तो कहते थे bet the company move । यानि कि सारी कम्पनी ही दाव पर लगा दिया। अर्थतंत्र को हानी नहीं पहुंचा तो भ्रष्टाचार की रीढ़ की हड्डी टूट गई। जिस तरह टी एन शेसन ने देश में चुनाव की सरसफाइ कर दिया। देश का कायापलट हो सकता है।

Friday, November 18, 2016

Is Demonetization Digitization?

If the demonetization push is a digitization of money push in India then it is as marvelous as India skipping landlines and going straight to wireless phones. But the long lines at the banks is a big problem. And if the reports that this push will bring the growth rate down a few points is hugely alarming. I am a little confused for lack of information.

Is it just a push to replace old cash with new so as to make invalid what is called "black money?"

This is a huge gamble. If the GDP growth rate is cut by one or two points because of this, Modi will pay the political price.

Demonetization in India: Who Will Pay the Price?
“Its impact could be even bigger than GST (the Goods and Services Tax which is still running the gauntlet of politicians).” Adds a report by Crisil, a global S&P company: “Tuesday’s move could change the face of the Indian economy, improve the government’s fiscal position and tax compliance. The size of the cash economy will shrink, as will black money generation avenues, because of the better cash-flow trail.” ..... “This [demonetization] is a step which will make a positive difference, if the transition challenges get handled well by the administration,” says Jitendra V. Singh, Wharton emeritus professor of management. ...... The International Monetary Fund (IMF) echoes those sentiments. “We support the measures to fight corruption and illicit financial flows in India,” said a spokesperson. “Of course, given the large role of cash in everyday transactions in India’s economy, the currency transition will have to be managed prudently to minimize possible disruption.” ..... as of March 2016 currency in circulation amounted to Rs16,415 billion. Of this, Rs500 notes accounted for 47.8% in value and Rs1,000 notes another 38.6%. Together, they were more than 86% of the value of the notes in circulation. That’s a whopping amount to be frozen in one fell swoop. ...... the “resulting disruption in the real economy stemming from this move is very significant and potentially fatal” for some vulnerable sections of society..... for sectors like real estate, a notorious hotbed for black money transactions, there will likely be disinflationary pressures short term, with prices being pushed downward ..... Real estate shares have plunged, in some cases by more than 30%. ....... Kar is the author of a report titled “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008.” The report estimates India lost a total of $213 billion due to illicit flows in that period. “The total value of illicit assets held abroad represents about 72% of the size of India’s underground economy which has been estimated at 50% of India’s GDP (or about $640 billion at end 2008),” says the report.
The Trouble With India’s Demonetization Gamble
Economists have argued that this move has left the biggest chunk of black money untouched – the stacks that lie in undisclosed accounts in Swiss Banks. ...... Economists have argued that this move has left the biggest chunk of black money untouched – the stacks that lie in undisclosed accounts in Swiss Banks. ...... Refugees who lack the requisite documents to create accounts are also now seeing months of savings potentially vanish, as they still lack mechanisms to access the banking sector. Socially ostracized communities who are again disproportionately cut off from the banking systems – like transgender communities and sex workers – are other immediate victims. This is in addition to the fact that reports indicate that the government may have over-estimated the existing levels of connectivity to banking. ...... While it is too soon to declare whether the long-term gains are indeed forthcoming, the “short term” sacrifices have been more than just significant. They have been immensely painful.
10 Reasons Why BJP's Demonetization Move Is An Unmitigated — And Politically Motivated — Disaster
India’s Strange Cash Problem
Fact vs Fiction: Busting rumours and myths about demonetization

Thursday, November 17, 2016

Modi's Demonetisation

If this has been a bad move Modi will lose both the UP election early next year and the big election in 2019.

Demonetisation is like Nasbandi drive of the 70s: Shankar Sharma

PM Modi, did you think about these unusual outcomes of note ban?

Is PM Modi's demonetisation move turning out to be a self goal for BJP in poll-bound UP?

From note ban, government eyes Rs 3 lakh crore windfall

Be ready to pay 50-70% tax on black money deposited in banks

You have been warned

Demonetisation politics unfolds as a vast morality play. Its imagination unleashes the state on you, in the name of protecting your own virtue.

It would be churlish not to recognise that it comes from the prime minister’s depth of conviction and sincerity. But that is exactly its danger. What it threatens to institutionalise is a new kind of politics. This is politics as a vast morality play whose three central elements are personification, puritanism and punitive imagination. A new state is emerging and it is not what you think it is.

It is manifested in this odd distinction between black and white money, forgetting the elementary fact that whether money is black or white depends on where it is at in the cycle of circulation. Hence they have perpetuated the illusion that we can extract the black, without hurting the chain of circulation of the white. It is not an accident that this measure will largely be a wealth tax on those not sophisticated enough to launder; those who have laundered will go unpunished.

be very wary of the institutional imagination that underlies it. It will again unleash the state on you, in the name of protecting your own virtue. What starts as a morality play will end in more statism.

Wednesday, November 16, 2016

Modi's Money Move: Lacking In Execution?

India's Great Rupee Fail 

What seemed at first to be a masterstroke by Prime Minister Narendra Modi now looks like a grave miscalculation.

Now that 86 percent of India’s currency is no longer valid, the central bank has struggled to print replacement denominations -- and the new notes are the wrong size for existing ATMs. Modi’s asked people to be patient for 50 days, but the process could take as long as four months.

India’s simply too big and complex for shock and awe. Large parts of the rural economy use cash for 80 percent of transactions and have been hard-hit. In seafood-mad West Bengal, for example, the fishing industry is in a state of near-collapse; in the wheat-growing states of the northwest, farmers halfway through the sowing season have run out of cash to buy seeds.

Even setting aside the painful adjustment, the long-term effects of this monetary shock on India’s informal economy could well be severe; a large proportion of marginal firms may not survive the loss of a fortnight of income. The informal financial sector -- unregistered moneylenders who provide loans to businesses worth 40 percent of total bank lending -- will be decimated.