INDIA: DEMONETIZATION, 2016

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Major Events

November 8, 2016: "Surgical Strike Against Black Money"

Prime Minister Modi went on National television and announced that currency notes in the Indian Rupee (INR) 500 and 1000 denominations were no longer legal tender. Old notes would be collected at banks and post offices, with proper identification and accounting of source.

YouTube Video of the announcement

These notes could be deposited into bank accounts or exchanged for new INR 2000 notes until December 30, 2016. Unfortunately INR2000 notes, were in short supply as production ramped up (rumor holds that the government's plan was leaked before the new notes were ready in sufficient supply). Meanwhile, currency withdrawals were limited to INR 4500 per individual per day. A few days later this was reduced to INR2000 per day temporarily due to a shortage of new notes.

Other known features of the rules:

Overseas residents were given until March 31 2017 to exchange the old notes.

Beyond the stated deadlines, notes would have to be exchaged at offices of the Reserve Bank of India, but only with signed declarations and identification

Several functions were given exemptions, such as airport ticket purchases, exchange transactions for incoming passengers, highway toll booths, emergency services, and holders of current accounts such as businesses that had to pay cash daily. On this fast-evolving situation, we will try to present news articles that appear to be valid, in addition to some opinion pieces. The reader can browse the Internet for the thousands of opinion and prediction pieces that have appeared. We will try to focus on the known facts and experiences.

11/15/2016: Formal Declaration Of War On Informality

"The fight against black money intersects with the country’s massive informal economy, which keeps the industrial base narrow and limits the tax-to-GDP ratio"

Supreme Court allows other courts to hear challenges to the move

"Cites serious issues faced in the implementation."

11/16/2016: Cash Crunch Knocks Down Real Estate Deals In Delh-NCR

"Given the cost of real estate in that region, the title leaves no room for doubt as to the nature of these deals - as in, why would anyone make such deals in cash?"

11/18/2016: Reserve Bank Governor quoted in FirstPost,

Opposing Point of View: "When people are suffering, how can you call it a good move?"

11/18/2016: Why PM Modi Has Already Won The Demonetization Gambit

Nov. 21: "By mid-January, transaction problems will be over"

Ministries Draw Plans to Go Cashless: November 27, 2016

 

 

Now for some personal experiences from fairly credible sources:

1. 11/27/2016: Postor "asgkhan":

"I deposited 1.5 lacs into my PPF a/c last week. Met the assistant over the counter and explained it was a large amount to deposit. I carried the following : 1. 1000 * 150 old denomination notes 2. My PPF passbook 3. My Pan card (xerox & original) 4. My Aadhar card (xerox & original) The assistant counted the money, filled the details, did not bother asking me for 3 & 4. So I got rid of all my old denominations."

 

2. 11/27/2016: Goa First State to Go Cashless From December 31

"One has to dial *99# from their mobile phone, not necessarily a smart phone, and follow the instructions to complete the transcation. This system is being introduced to transfer money to small vendors who do not have swipe machines. A drive to create awareness on how to operate the cashless transaction for vendors and small shops and the public will commence on Monday at Mapusa and Panaji, in Goa. Also, there will be no minimum limit on the cashless transfer of money. Chief minister Laxmikant Parsekar said no fees will be charged for any of these transactions over the mobile."