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Why Prime Minister Narendra Modi has already won the demonetisation gambit

Discussion in 'National Politics' started by anant_s, Nov 18, 2016.

  1. anant_s

    anant_s Encyclopedia REGISTERED

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    Why Prime Minister Narendra Modi has already won the demonetisation gambit
    • Manu Joseph
    tuesday.jpg

    Courage is often a misunderstanding of suicide or gamble. It appears that Prime Minister Narendra Modi, whose devotees are celebrating his “boldness” for delegitimizing large bills, has in fact made a calculated gamble. And it is turning out to be an excellent move. He has already gotten away with it, only the extent of his rewards is unclear.

    This may not be apparent at first glance, especially if you are not very fond of him. There are communism-grade queues outside banks, which do not have enough cash to distribute. For the first time an Indian economic crisis is not about people being broke but about their inability to reach their sufficient or abundant money. There are stories of the old dying in the queues, the poor distraught, restaurants and malls bleeding, commercial sex workers unemployed.

    There is no doubt that the citizens are furious, but they will not punish Modi for it. He did suspect that. He may not have been so confident about inflicting demonetisation in the summer months when people, especially in north India are prone to violence.

    Even though people have suffered greatly, and many have lost portions of their hard-earned illicit money, it is hard to dispute that the government has performed a moral act. Surprisingly, the government has been able to communicate the reasonable message widely and deeply. It is rare for people to have an accommodating view of a sudden policy that only has long-term benefits, especially one that has hurt them. But there is observable evidence that the general public is with Modi on this.

    The hostile reactions to the cash crunch are understandable and worthy of respect, but some of the anger should amuse us. It reminds me of the men who used to burn the effigies of cricketers, including Sachin Tendulkar’s, after an Indian defeat. Journalists usually portrayed such extreme reactions as emotional outbursts of fans. In reality most of the effigy-burning was performed by bettors who had lost money on their emotional backing of India. Reactions to the demonetisation, too, contain the grief of hoarders clinging on to honourable reasons to be angry, reasons that they probably even believe to be true.

    An unknown portion of India’s unrecorded economy is run by politics. Parties receive cash through illegal means, which they then spend on illegitimate or nefarious activities, which include efforts to win elections. The important question is why does Modi’s BJP need less black money than other political parties? Is the party comparatively cleaner, or does it have more sophisticated systems in place, systems that a Putin would recognise? We will go there another day.

    One strand of the moral outrage against demonetisation has been led by the refined urban class that dislikes Modi. They are excited by any story that assures them that Modi has made a catastrophic mistake. The reason why the story about the new Rs2,000 notes bleeding colour received good play in the social media even after the government pointed out that the notes are meant to lose colour, and that if they don’t they are counterfeit.

    There is something clownish about the urban middle class. They keep whining about the state of the nation but when powerful solutions appear they reject them. They reject them because they are as corrupt and harmful as the aspects of the nation they despise.

    Not long ago they prayed for a clean, highly-educated politician who was not the genetic material of political dynasties; but when Arvind Kejriwal miraculously made an appearance they loved him only till he was a gadfly fast-until-orange-juice activist. When he turned out to be a sharp politician they suddenly wished to dismiss him as an “anarchist”. In Delhi they keep whining about pollution but they do not tolerate any inconvenience to their car travel. Their grumblings about demonetisation are in line. Their lament cloaks the immediate prospect of the policy as a highly effective and even popular measure.

    A war against cash hoarding and illicit cash flow is also a war against disorder and informality, which means it is a war against two central qualities of the Indian way of life. Such wars against the Indianness of Indians can be destructive to politicians who wage them. But there can be great rewards, too, to those who take a chance. Some people may have theorised that the Delhi Metro, which sought to ban Indians from spitting and littering, would be defeated by rampaging mobs. Instead, commuters ended up appreciating how the Metro constricted their exceptional freedoms as Indians. It is highly likely that Indians would exhibit such a capacity for appreciation for Modi’s attempt to end an economic disorder. Also, he knows how to spin every economic good news in the coming months as a consequence of demonetisation.

    http://www.hindustantimes.com/columns/why-prime-minister-narendra-modi-has-already-won-the-demonetisation-gambit/story-gD3gx4RgTLCUmKDo7nALGL.html
     
  2. anant_s

    anant_s Encyclopedia REGISTERED

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    I read a comment by @Levina that we as citizens of India are dishonest at times. So when event like demonetization occur, a lot of us are left clueless on how to react. Needless to say a lot of us are facing difficulties (some more than others), and therefore a lot of anger and frustration is justified. However this is a structural change that has been attempted (if it would succeed or not is anybody's guess) and therefore need to walk this road. If public life becomes a bit hasslefree, delivery of governance services by state improve, all the pain would become justified.
    However the question remains (& it is independent of which government took what decision), are we as Indian citizens hypocrites? Talking tall but never ready to walk that talk.

    @Joe Shearer @Austerlitz @Robinhood Pandey @PARIKRAMA @Abingdonboy @nair @SpArK @Hellfire @Nilgiri @thesolar65 @Ankit Kumar 001 @seiko @BlackOpsIndia @Darth Marr @vstol jockey @MilSpec @Gessler @Agent_47 @Bregs @everyone
     
    Last edited: Nov 18, 2016
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  3. Inactive

    Inactive Guest


    Yes we are. On topic, I have not had any problem, I am just lying low. Didn't use cash much, not using now also.
     
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  4. Ankit Kumar 001

    Ankit Kumar 001 Major REGISTERED

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    The path doesn't matter to me if at the end atleast 33% Indians start paying Income taxes. The business community especially , those working in private service sector , etc. A billion plus people nation won't survive on 5% paying taxes.
     
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  5. Darth Marr

    Darth Marr Captain FULL MEMBER

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    Depends really, no problems for me. People whom i talk to here are quiet happy with the move and are willing to go through the problems, Local barber, milkman . auto Wala...
     
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  6. BlackOpsIndia

    BlackOpsIndia Lieutenant FULL MEMBER

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    +1, my family is also trying to stay away from ATM and banks. Got two ATM machines at my home so I can withdraw at night without line but we withdraw the very day Modi made the announcement so dont need to visit ATM anytime soon, most payment are done by card.


    For a moment I thought the article is typical lutyen media article will twist and bash Modi and nothing else but in the end it was turn out to be a good objective article.

    Demonetization was a good effort but it is becoming intolerable in last 1 or 2 days decision. The idea of ink was good one, should have used it from day 1 but what follow later looks like abuse of power. I am talking strictly from village point of view, people are happy it happened, little uncomfortable with long queue at banks but the decision to reduce the limit of exchange from 4500 to 2000 is ridiculous. 2000 is very small amount to meet the household expenses for 2-3 weeks even in villages and when you combine it with only one time exchange allowed till 30 December it makes is more ridiculous. Most people in villages dont have bank account, come Jan dhan or whatever they dont have bank account and the reason is the lack of bank branches. My village is lucky to have a bank branch but there is no other village in nearby 10Km area to have a bank branch. People from far villages come to make banking transactions, as a result, its crowded all the time I cant possibly imagine what is the condition after demonetization.

    Due to this heavy crowd people cant open new account and make deposit and withdrawal, now limiting them to just 2000 per 1.5 months is inviting serious trouble and you will see a big problem in coming days if they dont reverse this decision.

    Second big problem, this is a common scenario, suppose I saved 1,00,000 per year from past 10 years, I was either paying income tax when I saved this money or was not able to reach the tax slab. Dont get stuck to the figures just try to get the concept. Now if I deposit this money to my saving account as I cant hold the old notes at home I have to pay tax twice!!! This is very scary situation, I didnt open a bank account before cuz it was not needed neither it was illegal to store savings and legit money at home but now after this I will be taxed twice! This is again misuse of trust and power, more like looting of resources. There is a solution to open multiple accounts in different name and make partial deposit below 2,50,000 in all of them but that again will require visiting bank and the crowd at bank is not going to go away anytime soon and what if I dont have any more family member? Just me alone or just 1 more person? In this case, the hard earned legal savings of a person will be illegally taxed.

    Third big problem with limiting withdrawal and exchange to 2,000 is serious scarcity of money in the market. This will reduce inflation but at a very big price, people will sell things as they will be rotten at lower prices. The money supply is directly proportional to the economic activity in country and by limiting it to this extent will lead to serious contraction of economy, so much so that Modi wont be able to fix it without hyper inflation. There is a reason RBI or other central banks reduce or increase interest rate so marginally after so many months so as not to destroy the economy.

    If by December 31 they are not able to normalize the liquidity in market economic data in coming month will be very unpleasant, November and December are already lost. They really need to work hard now or else they are going to get screwed big time, poltics may forgive them but economics wont.
     
  7. randomradio

    randomradio Colonel REGISTERED

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    The govt says they want people to use ATM for more withdrawals. The currency exchange is supposed to be only once for one person.

    Anyway, don't the villages have post offices? You can exchange there also.

    The govt won't bother about small amounts like even 3L. They will only question those who make much larger deposits. They will keep a tab on the 3L, but that's about it. If it's black money, all you can get out of that is 15k in taxes with the penalty.

    Agreed. Those who can should go completely cashless.
     
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  8. BlackOpsIndia

    BlackOpsIndia Lieutenant FULL MEMBER

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    Try finding a ATM in village :) or even a working ATM in nearby 15KM away Tier 5 or Tier 6 city.

    So why should a legit person be punished for keeping the legal savings? Was it illegal to keep money at home before? Do you read what is written over the note above RBI governor sign?

    If the government promised me legally that I can keep 50,000 at home in 500 Rs note, they are bound to exchange them all, I earned that money, legally. Target black money, great, fantastic but dont screw my little savings I earned with hard work legally.


    Yeah, one in multiple villages and about to be extinct in recent years. A very small room due to cost cutting as Indian post was struggling.

    There is income tax notice after 2.5 Lacs, and in case if you havent receive one yet I got many in recent years, they were mere acknowledgement type notices that they received my return but the language is so complex that it can make a well-educated person head spin. The stupid language they use 143 (a), Form this, 139 and bla bla bla.
    You are torturing a person for being honest, voting for you and trusting GoI promise written over every note, it is cruel.
     
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  9. Darth Marr

    Darth Marr Captain FULL MEMBER

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    Here in Kerala there are longer queues in the local alcohol shop than the Banks and ATM's, SBI still has reasonably long queues around 15- 20 people, ATM's far less around 10. The queues tend to disappear entirely at noon and re appear in the evening. I doubt this will continue for too long, i will give it a max 2 weeks until the entire situation is resolved..

    From what i heard from a friend who works at RBI, they were recirculating old bank notes of 100 denominations which were supposed to be destroyed. He did say the liquidity in the markets would normalize in 2 weeks. Lets wait and see. More than 70% of the traders in India use cash payments, it will be impossible to convert so much to cashless transactions over a period of 50 days...
     
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  10. nair

    nair Guest

    See one has to admire the patience of common man.... there is hardly any opposition in spite of the hardship everyone has to go thru....you should see the kind of queue in front of banks.... every business is affected... I am doing 40 to 55% of my actual business... but I feel it is ok....
     
  11. jha

    jha 2nd Lieutant FULL MEMBER

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    He has made 2019 a referendum on himself. Opposition is unaware of what has hit them.

    And BTW expect some kind of direct cash transfer to Jan-Dhan account of BPL people.
     
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  12. Nilgiri

    Nilgiri Lieutenant IDF NewBie

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    I am glad Modi went for this and we get to finally see a major litmus test for both Indian public (so far succeeding) and other Indian political parties (so far failing).

    The jobs, NPA/credit improvement and thus sustained genuine economic growth will only come with the administration of this bitter medicine I feel more and more.

    Political elite fought him tooth and nail for land acquisition bill, they only very narrowly let GST get through and chest thumped about how they were taming the Modi, that Modi was just another big talk rubber stamp.

    Now they truly realise their mistake, for the final time. Modi is very correct to stake everything on this and stick his neck out....he has no dynasty to protect and does not care about enshrining his legacy as another "good intentions but no action" PM.

    We will wait and see how this turns out, though I suspect the results may only genuinely come in after about a year of relative suffering. But that will be in time for LS 2019 at least when the benefits will be in full flow.

    If there is low economic growth next year in nominal terms like many predict, it will rebound quite immensely after that.....and more importantly it will be job-creating economic growth.
     
  13. Nilgiri

    Nilgiri Lieutenant IDF NewBie

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    [​IMG]
     
  14. Abingdonboy

    Abingdonboy Major IDF NewBie

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    It's hilarious that "big bang reforms" are paroted about and used as a measure to guage the success of a govt but when such a truly monumental step is taken there is this kind of rucas (within the poltical class, not so much the common man). India hasn't got time for incremental change, it needs to have these kind of gamechangers every 6 months for the next decade, Modi has been somewhat successful in delivering in this regard (by my reckoning he is on track this year with GST and demonetisation ticked off already).

    What many are missing is the vision that is being implemented, Modi did not simply come in and say on a whim that this move was to happen, instead over the past 2 years his Govt has ensured all those that want a bank account have one, 300-400 MILLION people have been brought into the formal banking sector and the most needy are to receive direct benefit transfers. Long term these plans are going to push for the ultimate anti-black money measure a truly cashless society and the requisite infrstructure is being set up now.

    The legacy Modi is going to leave behind will be truly revolutionary and he is already lining up to be India's most signifcant leader, ever.


    For all those opposing this move I feel they are on the wrong side of history and are exposing themselves badly, whatever motives they have to oppose the move they are NOT to benefit the common man. Either they are out to score cheap political points against Modi or they are out to protect their own black money and that of their criminal friends.
     
  15. Levina

    Levina Guest

    Corruption had become a part of our values. If not anything demonetisation will inspire the next gen to be more honest.

    Trust me i do want to know why are Indians so corrupt and greedy?
    If you look at our history, Indians have always cheated Indians to support outsiders. I've a theory but then this thread is not apt for it.

    BTW i didnt get any notification.
     
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