What India Has Done To Its Money Is Sickening And Immoral-- Steeve Frobes 12-25

Image credit : Shyam's Imagination Library


IN NOVEMBER India's government perpetrated an unprecedented act that is not only damaging its economy and threatening destitution to countless millions of its already poor citizens but also breathtaking in its immorality. Without any warning India abruptly scrapped 85% of its currency. That's right: Most of the country's cash ceased to be legal tender. Shocked citizens were given only a few weeks' notice to take their cash and turn it in at a bank for new bills.

The economic turmoil has been compounded by the fact that the government didn't print a sufficient amount of the new bills, lest word leak out as to what was about to take place. The new bills are also a different size than the old ones, creating a huge problem with ATMs. Even though India is a high-tech powerhouse, hundreds of millions of its people live in dire poverty. Many workers are leaving the cities to go back to their villages because so many businesses are closing. Countless companies are having difficulty meeting payroll, as they can't get the cash to do so. The real estate market has tanked.

India's economy is based mostly on cash. Moreover, much of it operates informally because of excessive rules and taxes. The government bureaucracy is notorious for its red tape, lethargy and corruption, forcing people to get by on their wits.

The World Bank's annual survey, Doing Business, measures how difficult it is to start and manage a business in 190 countries, using such metrics as what it takes to set up a legal business, obtain construction permits and get electricity. India ranks among the worst in the world in these areas.
Not since India's short-lived forced-sterilization program in the 1970s--this bout of Nazi-like eugenics was instituted to deal with the country's "overpopulation"--has the government engaged in something so immoral. It claims the move will fight corruption and tax evasion by allegedly flushing out illegal cash, crippling criminal enterprises and terrorists and force-marching India into a digitized credit system.

By stealing property, further impoverishing the least fortunate among its population and undermining social trust, thereby poisoning politics and hurting future investment, India has immorally and unnecessarily harmed its people, while setting a dreadful example for the rest of the world.

What India must do to fulfill its desire to become a global powerhouse is clear: slash income and business tax rates and simplify the whole tax structure; make the rupee as powerful as the Swiss franc; hack away at regulations, so that setting up a business can be done with no cost and in only a few minutes; and take a supersize buzz saw to all the rules that make each infrastructure project a 100-year undertaking.

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JNU professor Arun kumar on Demonetisation 12-14

S. Gurumurthy on Demonetisation 12-13

Notes ban will hurt economy: former chief economist of World Bank 12-10

“Demonetisation will cause the economy to run into great difficulties in the future. Declaring the old Rs500 notes legal again might minimise the damage majorly,” said Kaushik Basu, former chief economist, World Bank. Basu was delivering a lecture at the Indian Institute of Technology-Bombay (IIT-B) on Friday as part of the N R Kamath Chair Colloquium.

Talking about ‘the economics of corruption, black money and demonetisation’, Basu examined the statement made public by the finance ministry, a day after demonetisation was announced.
“The ministry said this move will help control the printing of fake currency in our country. However, what is happening instead is that people are exchanging their notes, fake or not, for fresh new notes. This is not solving the problem,” he said. He added that the government should focus on producing better quality currency. He said that instead of helping control inflation, this move might damage the economy further.

“Even the idea of walking towards a cashless society is a long stretch for India. Currently, close to 98% transactions take place through cash. Even the US would take 10-12 years to achieve this goal,” he said.

The total value of Rs500 and Rs1,000 notes stands at Rs 15 lakh crores, said Basu. He added that only Rs12 lakh crores has been deposited in banks so far. “New notes worth only Rs4 lakh crores have been circulated in the market and the Reserve Bank of India said this figure will reach Rs6 lakh crores by the end of December. The shortfall is a lot. The government needs to take serious steps to save the economy during the next financial year,” he said.

Comparing the current situation to a similar move orchestrated by the Indian government in 1978, when it banned Rs1,000 notes, Basu highlighted how the move damaged the country’s economy in 1979-80. He said the only way to save prevent intensive damage this time around was to scale back. “The government must accept its mistake and take responsibility. It must take a step back and reverse part of the decision. People will be angry, but this will help minimise the problem,” concluded Basu.


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With Such A Large Population, There'll Be Queues, Says Arun Jaitley 12-03

Finance minister Arun Jaitley

• With every passing day, remonetisation process will go on: Jaitley

• India always honestly tried to improve relations with Pakistan, current PM took a lot of initiatives: Jaitley

• I think our way of conducting economy was primarily responsible: Jaitley

• Finance minister says the way things are changing, we can’t defy technology and decision of demonetisation has only accelerated this

• If you look at the temperament of this country there is always a section which is reluctant to change: Jaitley

• Demonetisation will make political funding more transparent: Arun Jaitley 

• Once remonetisation process is completed and GST is implemented, it will have a huge impact on India’s businesses: Jaitley




• 300,000 people are picked up for tax return scrutiny every year: Jaitley

• We are still at the cusp of change and therefore many people in India are trying to beat the system. The battle between them and taxman will continue: Jaitley

• World’s largest democracy is very hush-hush when it comes to political funding, says Jaitley
• Long term effects of demonetisation are going to be huge: Jaitley

• India is at a stage that we’ve been the fastest growing economy in the world, says Finance Minister

• From a developing economy to a developed one, we have come a long way in 70 years: Jaitley

• We have 23 cr e-wallets in circulation, and it started only one-and-a-half years back: Jaitley

• 80 crore debit and credit cards in circulation out of which 45 crore are in circulation. Almost 20 crore-wallets: Jaitley

• The volume of formal trade, volume of business will grow in size: Jaitley

• One of the advantages of this exercise is that you will reduce the quantum of paper currency: Jaitley

• The country at large has welcomed the demonetisation decision, says Finance Minister Jaitley

• Demonetisation had to be a closely guarded secret, says Arun Jaitley

• If you need to replace 86% of a country’s cash currency, you have to have a substantial part ready: Arun Jaitley

• Finance minister Arun Jaitley and NDTV Consulting Editor Vikramchandra have taken the stage for the first HTLS session.

Liza Donnelly, staff cartoonist with the New Yorker, is live-cartooning the sessions during the summit.