India scraps its two largest rupee notes in shocking anti-corruption move

[Mugundan]

Mugu, points well taken but why isnt' there any mass hysteria? Why aren't people demonstrating on the streets?
A friend of mine that I was chatting to yesterday said something interesting. Quite a few people that are standing in the lines were doing it on behalf of the people that they work for (or getting paid for doing so). He also said for most part, things have been pretty normal. They seem to be pains but not "mega pains" like you are indicating. This is in Hyderabad.

Would be good to hear from Ashish (gvhgvh) who is in India right now (saw it on his FB post). He works (or used to) for one of the media outlets (Al Jazeera, I think) and would love to hear his views.

My parents are not tech savvy by any means (they wouldn't know what a digital wallet is) but they are getting creative with making payments like many other are.

There is no mass protest, which is surprising. As I have said earlier, people seem to be wary of criticizing the government. They either have no comments to offer (especially the middle class) or else say "I support Govt's decision to demonetize". May be some of the TV channels are being selective. People are also hoping perhaps that this would lead to a cleansing of the economy which should boom in a short time. Let's hope the economic boom actually happens. In Delhi I have seen the poor getting poorer only all these years. Even if they all get Rs 20,000 each into their Jan Dhan accounts now, what good that could be?

[Atithee]

Corruption stops with people paying it as much as people asking for it. For black money to not regenerate in like amounts, the same public should demand services for which they shouldn't be paying. It all starts and ends with police implementing the laws. If they do their jobs honestly, we will make huge progress quickly.

[jayakris]

Jay says the pain is fully worth it even if the govt gets only 0.5 lakh crore back (or even none at all) since he is of the opinion that the money that gets back into the system is accounted for and is in the banks.
Will this not mean that all the black money (cash) has been converted into white (bank deposits)? Was this then an exercise to help black money hoarders to convert illegitimate wealth into white, as had been alleged by some of the opposition parties, AAP in particular?

The answer would seem to be a yes, and that shouldn't be taken as a bad thing, in my opinion.

This is the crux of the question, on which I am just not seeing a good analysis by anybody. Our press quotes some of these economics experts like Amartya Sen and Pranab Bardhan, whose core expertise is not at all in such financial economics details (but in things like development economics - a totally different thing). The experts of their ilk make lazy comments, no better than the laymen's, to criticize the government. I am not seeing economists or other experts who directly study such topics comment much so far. I would love to hear, for instance, Raghurm Rajan talk about it, but he has been famously silent about the issue... As somebody who was pushed out by the Government, I would have expected him to say something in opposition to it, but his silence makes me feel that he may actually think that this was probably worth it, at least to some extent, and does not want to say something against what he feels.

But, getting back to the question from you, Mugu, let us assume that ALL of the black money in cash form gets back to bank and becomes white now. Let us also assume the "lazy comment" from a lot of people, even so-called economics experts - that the black money hoarders would have found ways to convert their money into property, gold and foreign accounts within 3 weeks. Not a single intelligent reporter or expert has given details on how this could have been done, so let us assume that such learned intelligent people in India simply don't know what the crooks know. Let's say the crooks to have executed it perfectly within three weeks on (let us say) about 2 to 4 lakh crore (trillion) Indian rupees, the amount that people seem to feel must have been the black money in cash form in India. In other words, let us assume that the crooks really used the government decision to convert their black into white without paying any penalty.

Next month, let us say I want to buy a 1 crore of land property in Kerala. Though I have never bought land there, I do know that almost anybody who sold land was getting at least 30% or whatever in black money which was moving to their purchase of some land later. By next month, I don't think any normal people can amass enough new currency to give as money, and could only sell land, asking for money that is in the bank. How does somebody sell property without showing the actual price of the property and paying tax on it? Are we saying that somehow some 2 to 4 lakh crore worth of gold will be used in such transactions or something? Is there enough gold to move around as black money in property transactions now? I think nobody can amass huge black money stacks with new currency any time soon (other than a rare case with bank officer involvement, in criminal theft). people just don't have new currency and it is only being dispersed in very small chunks around the country for quite a period from now on). How can black money be used in property transactions now? In any event, won't there be much more tax payments from now on on the money that is now accounted for (when GST etc comes in)? So, if we take steps for better enforcement in taxation from now on, and prevent a rebuilding of new currency black money stacks, isn't there massive payoff from that? (read - these steps were NOT possible unless all the currency were accounted for).

So, wasn't this an absolutely necessary first step to take, if were ever to do better enforcement of tax laws? Raghuram Rajan said in August when asked about demonetization in general, that he felt better enforcement is more effective. Absolutely, but whow do we ever do that unless the currency is all accounted for, in banks? So what is this bullcrap that a few of these "experts" say that demonetization is not the way but enforcement is? Unless I am missing something, quite a lot of 'experts" have been either missing the point altogether, or being downright disingenuous to criticize the government for criticism's sake.

Like I said earlier, if hoarders spread whatever black money stacks they had into others' bank accounts, that is a terrific thing in my opinion because I know they are not getting all of it back. No way. By and large, people won't do that (even the illiterate poor people would sense some risk) unless they see some benefits in helping out. A minimum average commission of 10% will effectively get back into the economy, in my opinion, like money that got taxed and sent back out by the government to people's bank accounts. I have no doubt that this will happen, as people will use the money for some urgent things for themselves and then say "I will return it later, but I really needed it now for my kid's school" or whatever. Indians know that game very well, and the original owner can't do much about it. In opinion, again, unless I am missing something, this has a huge wealth redistribution and economic stimulus effect. But I just don't see a single analyst out there talking about it. So far, the only real mechanism for saving liquid black money wealth (cash, that is) I have seen reported, is using others' accounts. Sorry, a lot of people aren't going to get a lot of that wealth back. Indians who helped move money around aren't dumb and will take a good chunk of it before giving it back. This is terrific, if you ask me!

Then there is the bribe angle. If nobody has black money currency stacks with them (they won't, for at least a year two, and probably for 3-4 years) how do they do big-time bribes for the immediate future? Do people think that all the black money hoarders who converted it to unaccounted gold will start paying bribes in gold? That wouldn't work with political party bribes because they can't use gold to pay party workers. There will be a very serious drag in bribe payments for a while, that will seriously reduce the ability of people to build their stacks back. There just isn't enough currency bills in the system, and won't be there for months.

The point is -- 86% of currency money went away and came back accounted for, even if no black money was identified in the end. So, from now on, it will be so much more difficult to generate black money. 40 years ago, had this been tried (and we did), there were no electronic accounts even in banks, and nobody changed their behavior. Perhaps only 10 or 20% of Indians had bank accounts then anyway, 60% or more have accounts now after Jan Dhan. It is electronic accounts. The black money built back up within a year or two in 1978. Now it is not that easy at all, now. It will take 5 or ten times longer now and quite probably will never really build up, as the reasons for that will largely disappear pretty soon.

So, this HAD to be done if we were to get anywhere in setting the nation straight. I don't care a hoot if the black money hoarders pay penalty or end up managing to convert all the black into white. The curse of black money will be MUCH less from now on. People will still take risks on not getting tax-audited, but some will start to pay for doing that, and many others will stop. That's how it works in all countries. I had never believed that Indians are innately more corrupt or anything. If the system lets them be corrupt, and actually forces them to be corrupt out of no choice, they will be corrupt like everybody else will be. Let us clean the system and put some law of the land into our country. The knee-jerk reaction that there is pain (which there is), and this "hey, look Modi let black money people convert it to white, ha ha ha" is completely missing the point.

This was the most significant step that we took to make India a law-abiding country since independence, period. It had to be taken,m and it took some intestinal fortitude by Modi to try this. That is what I feel now, unless I am missing something (I always say that when it comes to financial economics ) ....

Can there be a guarantee that black money would not be generated after this exercise? (Presuming that no black money has been unearthed and all money has come back into the banking system, let’s believe for a moment). What prevents people from creating fresh black money, income and black wealth? If someone goes around looking for a house/flat and is told it would cost Rs 1.5 crore if all transactions have to be white and Rs 1.25 crore if part of it could be in black (cash), what can happen? Can that buyer be expected to say “I am an honest citizen, I pay my taxes, I will give only in cheque”? (People have done that pre-Nov 8, 2016 as well but that is a different story since such exceptions could have been around one per cent or even less).
The person who receives cash for any big deal can continue to circulate that cash in similar deals with similar set of people and before long we will realize that the black money component is back to where it was.

Your questions were exactly what I had in mind too, as I said above, but your conclusion that it will build back up, isn't correct. I just don't see how, at least for the next year or two, any seller can say, "it would cost Rs 1.5 crore if it's all white and Rs 1.25 crore if part of it could be in black (cash)". Any seller would know that there is no point in saying it. The buyer will NOT have any black cash, and can possibly only give gold or something. Nobody HAS black money cash as of now; end of story! None. Nada. Zilch. That is a fact. From now on, what is the incentive for anybody to keep cash bundles. Any transaction will be in white for a while, and knowing that any reasonable transaction in white has a bank record, what is the incentive to hold black money except for those who simply want to take a risk with a tax audit. One can keep taking some cash out from ATMs or in small withdrawals and keep it to build it. But why should they?

Of course, tax cheats are there everywhere in the world, and that depends on the tax audit enforcement. I don't know if Tax-adit probability in India is substantially lower than at other places (I don't think so). There will be black money generation in India too, but that would be somewhat similar to what many other countries have. Actually, India doesn't have prohibitively high tax rates, and we tax less than many developed countries. So, I don't expect a much higher tax cheating probability in India, eventually. Tax auditors being corrupt etc, will continue for a while. But even he has the same lesser incentive to accept black money bribes (again, how much gold can move around?)... People's behavior takes time to change though, so I would expect it to take some time for the system to get cleaned. Maybe a decade or two. But this had to be done, to start it.

[prasen9]

Raghuram Rajan did not think that demonetization is the answer. Here were his thoughts some time ago on this. Rajan on demonetisation I think he does not want to get into political issues anymore having dealt with it for some time. He wants to do his work in peace now. That is my conjecture about why he is silent. In all honesty, I have not criticized this demonetization move either. I have tried to rebut comments that make Modi look like a saint that he is not. With respect to the efficacy of this move, maybe silence is the best policy for now --- of course, while pointing out the direct negatives that we see now. But, we cannot decide whether this thing was worth it or not now. So, I am not engaging in that argument. Like in a sports draft, it is possibly best to let things play out and evaluate it a few years later.

[jayakris]

Raghuram Rajan did not think that demonetization is the answer. Here were his thoughts some time ago on this. Rajan on demonetisation I think he does not want to get into political issues anymore having dealt with it for some time. He wants to do his work in peace now. That is my conjecture about why he is silent. In all honesty, I have not criticized this demonetization move either. I have tried to rebut comments that make Modi look like a saint that he is not. With respect to this issue, maybe silent is the best issue for now --- of course, pointing out the direct negatives that we see now. But, we cannot decide whether this thing was worth it or not now. So, I am not engaging in that argument. Like in a sports draft, it is possibly best to let things play out and evaluate it a few years later.

No, you are wrong on this. I had seen that piece, and referred to it above. he was EMAILED a general question in August, and he sent an email back, then. He was not talking about the kind of currency withdrawal we did, which had certain modalities (which currency was demonetized, how sudden and secretive it was, how much percentage, etc - the 86% money item was the key). Without such details, all Raghuramn Rajan could say was the general comment than demonetization in principle is not as useful as better enforcement. And he was right in what he said.

This was simply mischief by the press to make it look like he opposed what just happened. He has NOT opposed it. It has noting to do with him wanting to live in peace. I think it has got to do with what he knows, which is that the benefits, if this works, could be tremendous. He might not have agreed to do this, had Modi asked him. I wouldn't have agreed either, if I were him - knowing the extreme danger of what calamity it could've caused to the country and people, which I am surprised did not happen. Any RBI governor would have sleepless nights if asked to agree to a withdrawing of 86% of cash money from the economy, without much of replacement currency even printed. That doesn't mean that he isn't aware of the need to do something like this, if we had to make a fresh start on corruption in India. If he felt otherwise, you bet your bottom dollar that he would've voiced an opinion. I'm sure the press has hounded him for it. You are really clutching at straws now, prasen

True that you have not criticized the measure itself, prasen. By the same token, none of us is taking Modi to be a saint either. I only take him as a guy with extreme guts to try something that I am sure others like Manmohan Singh or Narasimha Rao or Vajpayee would have also perhaps thought of. I'm sure some of them were as "saintly" (or not) as Modi, and would have wished just like Modi that they could do something about corruption in India. But they were less risk-taking as PMs than Modi is. You're the one who brought in the "Modi is no saint" angle into it, thinking we are worshiping him. A good thing for the country is a good thing for the country, if we can get through it without insufferable pain. Let us cross our fingers and hope that the next few weeks would be no worse, and that we will tide through this. Then, it could prove to be something substantially beneficial.

[prasen9]

Strictly speaking, yes, I did say that Modi is no saint. I stand by it. But, I got into this thread, when I think Varma said that he is not corrupt. He is more corrupt than any of the other PMs we have ever had. While the primary sense of the word corrupt used to describe a politician is with respect to money, I checked several dictionaries and they all have a sense of the word where they pretty much say that doing dishonest things for the sake of power is also corruption.

George W. Bush was also bold when he sent troops into Iraq that his father had resisted. Bold, stupid actions are just foolhardy. I don't care about bold but stupid actions. Some in this forum are impressed by brash actions. Now, whether this action falls into that category, we will see. When the accounting is done, if this action has more benefits than costs, then I will be fine. If not, I will criticize it. At this point, I do not know. I know the tangible costs that I hear of. The benefits, we will see.

[Mugundan]

Can there be a guarantee that black money would not be generated after this exercise? (Presuming that no black money has been unearthed and all money has come back into the banking system, let’s believe for a moment). What prevents people from creating fresh black money, income and black wealth? If someone goes around looking for a house/flat and is told it would cost Rs 1.5 crore if all transactions have to be white and Rs 1.25 crore if part of it could be in black (cash), what can happen? Can that buyer be expected to say “I am an honest citizen, I pay my taxes, I will give only in cheque”? (People have done that pre-Nov 8, 2016 as well but that is a different story since such exceptions could have been around one per cent or even less).
The person who receives cash for any big deal can continue to circulate that cash in similar deals with similar set of people and before long we will realize that the black money component is back to where it was.

Your questions were exactly what I had in mind too, as I said above, but your conclusion that it will build back up, isn't correct. I just don't see how, at least for the next year or two, any seller can say, "it would cost Rs 1.5 crore if it's all white and Rs 1.25 crore if part of it could be in black (cash)". Any seller would know that there is no point in saying it. The buys will NOT have any black cash, and can possibly only give gold or something. Nobody HAS black money cash as of now, end of story! None. Nada. Zilch. That is a fact. From now on, what is the incentive for anybody to keep cash bundles. Any transaction will be in white for a while, and knowing that any reasonable transaction in white has a bank record, what is the incentive to hold black money except for those who simply want to take a risk with a tax audit. One can keep taking some cash out from ATMs or in small withdrawals and keep it to build it. But why should they?

Jay if you are planning to buy (or sell) a one crore rupee property in Kerala (or anywhere else in India) in the immediate future, yes there will be no cash left with anyone to manage "black money".
No one needs to have ''black cash". You take out your white money from bank and pay cash to the other guy along with a cheque (part payment). Though yours is ''white'', the moment it gets into the hands of the other party it becomes "black" (or let's say it can become black depending on the next step that other party would take).
In order to avoid taxes, the other party may continue to hide the ''black cash" (white from your bank and white when you gave it to the party) in his tax statements. Much of black money possibly might have been generated like this only in the past. People with "white money" who go to buy property are often told that they would need to pay some portion of it in cash. That practice can still continue provided sufficient cash comes into the system and the Govt is not going to restrict withdrawals forever. Let's say, after six months, drawing Rs 20 lakhs at one go might not be a problem. May be there could be certain problems for drawing a crore or a few crores. (Or there could be new restrictions by the Govt on withdrawals beyond a particular figure. I don't know what is the limit now for example. There could be I guess)
It is not beyond imagination that people who have to indulge in illegitimate means would easily manage crores of rupees even in the immediate future for shady deals even as we think that a few lakhs or even something like Rs 50,000 in new currency would be impossible now or a couple of months from now. Reports about crores being recovered from a few places indicate that the system is there to exploit for people who have the brains and are prepared to take risks. Bank managers have been caught having been involved in such rackets running into crores. That is within 20-odd days of demonetization. Just imagine what they can do in three months, six months and one year.
Yes, in the immediate future managing cash would be difficult. The best option would be to continue to starve people of cash (FM said yesterday that we should not think Govt would force people back into a fully cash economy so quickly having started to wean them away from cash. His observation was pertaining to bringing back currency equivalent to the money taken out of the system after Nov 8 through demonetization) but then the hardships (minor though they may be in the opinion of many) would continue.

[Mugundan]

Strictly speaking, yes, I did say that Modi is no saint. I stand by it. But, I got into this thread, when I think Varma said that he is not corrupt. He is more corrupt than any of the other PMs we have ever had. While the primary sense of the word corrupt used to describe a politician is with respect to money, I checked several dictionaries and they all have a sense of the word where they pretty much say that doing dishonest things for the sake of power is also corruption.

George W. Bush was also bold when he sent troops into Iraq that his father had resisted. Bold, stupid actions are just foolhardy. I don't care about bold but stupid actions. Some in this forum are impressed by brash actions. Now, whether this action falls into that category, we will see. When the accounting is done, if this action has more benefits than costs, then I will be fine. If not, I will criticize it. At this point, I do not know. I know the tangible costs that I hear of. The benefits, we will see.

Prasen I also don't know the costs that this exercise would end up with. No one of course knows what benefits there might be in the end unless one happens to be minister at the Centre or a BJP spokesperson.
My objection to this from around the second week (in the first week just like a lot of people I also thought this was going to bring in a sea-change in Indian economy and lives) had been about the complete mismanagement of all follow-up action. There was no point in saying "This you have to admit is a mammoth exercise". No one asked the Govt to undertake this mammoth exercise from Nov 8 or to plunge into it without having printed sufficient currency notes (may be even half of the 15 lakh crores worth of Rs 500 and Rs 1000). No one asked them not to circulate more of Rs 100 notes much in advance of releasing Rs 2000 notes. The whole argument about "secrecy" also sounded hollow in respect of new currency notes. In the past too RBI has printed new currency notes and no one ever thought that there was going to be demonetization.

[jayakris]

Strictly speaking, yes, I did say that Modi is no saint. I stand by it. But, I got into this thread, when I think Varma said that he is not corrupt. He is more corrupt than any of the other PMs we have ever had. While the primary sense of the word corrupt used to describe a politician is with respect to money, I checked several dictionaries and they all have a sense of the word where they pretty much say that doing dishonest things for the sake of power is also corruption.

Point taken, but Varma himself and others like me said that we were only talking about money corruption for personal gains, on which Modi is pretty damn clean and a near-saint. But so were at least 4 of our former PMs in the last 40 years, a surprisingly high number than most countries could ever hope to get. We've been lucky.

And I will say that regardless of dictionary definitions, when we talk of corruption by politicians, personal wealth-building is all that Indians think of. They don't think of machinations for amassing political power, as corruption. That is because people differ in the opinions on whether the machinations were dishonest or for larger good, or for revenge, etc. You would consider Babri Masjid demolition as a dishonest and corrupt move for building political power, but there are many out there who take it as "honest dharma" to have done that. Verma was only talking of corruption based on a non-subjective question - "how much illegal wealth did you manufacture?". I think you don't disagree that Modi is pretty clean on that, as far as we know.

But if you say that this was a "corrupt" move to get BJP more power and cut the Congress party's and others' wings, you are damn right it is! Modi is certainly no fool when it comes to doing things to cause hell to the parties on the other side. He is really good at it. I don't think that was the main reason why he took this massive risk, but I'm sure he saw it as a big part of the rewards from it, if it were to work. If you keep criticizing it for that kind of "corruption", all it would show is that you don't like Modi becoming powerful, and so, that you're an opposition supporter!

[jayakris]

Jay if you are planning to buy (or sell) a one crore rupee property in Kerala (or anywhere else in India) in the immediate future, yes there will be no cash left with anyone to manage "black money".
No one needs to have ''black cash". You take out your white money from bank and pay cash to the other guy along with a cheque (part payment). Though yours is ''white'', the moment it gets into the hands of the other party it becomes "black" (or let's say it can become black depending on the next step that other party would take).
In order to avoid taxes, the other party may continue to hide the ''black cash" (white from your bank and white when you gave it to the party) in his tax statements. Much of black money possibly might have been generated like this only in the past. People with "white money" who go to buy property are often told that they would need to pay some portion of it in cash.

Absolutely. Plain tax-cheating, that is. This happens in many countries. ALL countries, actually. It will be there in India too. But Indians are not particularly more dishonest or anything, so we will have similar black money as there is in Brasil or S. Korea or Italy.

The key difference is that there are only very few in India who have kept black money and transacted with it who were actually BUILDING it. They were caught in the system where you needed black money, and you could not transact without it. They were MAINTAINING it by letting it pass through them. So in a majority of cases, people were moving black money that got built elsewhere, while both parties had no choice. In the example you gave, it is the second party deciding to BUILD it. The fraction who will do that, taking the risk of a paper-trail in the bank (which will be there in the example you gave) will be MUCH fewer. This is a key difference. How much fewer, remains to be seen. My intuitive wild guess is no more than 25% of the people who have in the past had black money with them. The money got into banks with easily accessible electronic records. Taxman will find it much easier, and you can bet that the seller in your example will think hard about whether it is worth it. After all, he needs somebody else to ask for black money for him to even use it. Is the risk of the paper-trial worth it? [The same kind of logic applies to those who took bribes in the past mostly because they had no choice but to give bribes to their superiors or others]

Black money generation will be MUCH slower from now on, and it will take years/decades to build back to the levels we just had.

But like you wrote, we will keep hearing of all kinds of new stacks of crores of new currency being found, and about bank guys and taxmen colluding with cheaters. That happens everywhere in the world. It's nowhere near enough to build things up to the monumental levels we had till November 8th. The mechanisms have fundamentally changed, and it is not that reversible. You will see down the line. That's what electronic records do, once unaccounted wealth is all accounted for.

Now, there is a lot of unaccounted Gold in the Indian economy and that's it for liquid black wealth. How much it is, is anybody's guess. Gold being used for black money transactions is not very prevalent in India though, I believe. But we'll see how the government tackles that later. [But there is some 70 lakh crore worth of Gold in India, much of it in vast population's possession as jewelry though; but again, there is quite a bit of it unaccounted for]

Yes, in the immediate future managing cash would be difficult. The best option would be to continue to starve people of cash (FM said yesterday that we should not think Govt would force people back into a fully cash economy so quickly having started to wean them away from cash. His observation was pertaining to bringing back currency equivalent to the money taken out of the system after Nov 8 through demonetization) but then the hardships (minor though they may be in the opinion of many) would continue.

You're right that the Govt has this option, but I doubt they will go that route and deliberately choke new currency supply to delay re-creation of black money. Too risky for the national economy. We cannot choke economic activity for too long. They will need to relax the withdrawal limits and all that fairly soon. But even a few months of withdrawal limits (probably not for businesses, but for people) would force people to get used to more card transactions, but the Govt needs to be VERY careful in monitoring things and avoiding serious economic activity slow-down. A couple of months of increased card-use behavior may prove to cause a huge impact though. We'll see. Lots of variables involved in this experiment, and in my opinion the Givet work is only starting if they want to make this whole thing effective. But I laugh when the press focuses on lack of execution so far. The real execution has hardly started. And Modi could easily mess up the rest of it, too, over the next few months.

[jayakris]

No one asked the Govt to undertake this mammoth exercise from Nov 8 or to plunge into it without having printed sufficient currency notes (may be even half of the 15 lakh crores worth of Rs 500 and Rs 1000). No one asked them not to circulate more of Rs 100 notes much in advance of releasing Rs 2000 notes. The whole argument about "secrecy" also sounded hollow in respect of new currency notes. In the past too RBI has printed new currency notes and no one ever thought that there was going to be demonetization.

Printing new Rs. 2000 currency was not much of a problem as it was a new denomination being introduced. They had indeed printed it and have been printing it. That money started getting released immediately too. I got a Rs. 2000 note from a bank ATM in Chengannur, Kerala on Nov 12th itself, so it was not printed after the announcement. Like I said earlier, I talked to the father-in-0law of somebody who works in the government press who said that 2000s were being printed and they all knew it. None of them had a clue that it was a replacement for the Rs. 1000 notes, so nobody guessed that an unimaginable type of demonetization of 86% of the money was about to drop, out of the blue.

But printing massive amounts of new Rs.500 could not have been done before-hand because there is no better way to let out the secret than that. Yes, they had introduced newer bills earlier, but they were getting released too. But printing for months to come up to lakhs of crores on a denomination already in the market, and not releasing it to the market would have let out the secret instantly. The 500s could only be printed after the withdrawal announcement or near to it. So, I find the reason for this to be on very solid grounds, and understood immediately why only 2000s were available for the first couple of weeks before new 500s slowly started arriving.

Printing 500s quickly enough, mobilizing the printing presses to do 4 times the shifts to print (and even planning on that being possible only after the announcement or the word would leak from the presses), airlifting the money to every corner of India (again, planning possible only after the announcement), re-calibrating 2.25 lakhs of ATMs quickly, etc, were MASSIVE risks. If anything had got screwed up, India would have been in serious trouble, and people would starve to death. Make no mistakes about it. Modi has steely spherical objects.

[Atithee]

Steely spherical objects
Posterior orifice
Bull excrement

Three of Jay's original contributions to my lexicon.

[prasen9]

I agree with Jay's last post fully except the last line. On that, I would not like to make no more comments than to accept the move is brave. Whether it is wise, we will see.

[Tolamu]

For the last few days a specimen image of 1000 note is doing the rounds in the social media . Some say it might be a hoax because of the similarities to 2000 notes. But if it is real it will reduce the. demand on lower denominations.

[prasen9]

But Indians are not particularly more dishonest or anything ...

Sorry to say this, but, I believe Indians are more dishonest. Many more cops in India take bribes than in the West. I have found more students cheating in India than in the U.S. In the U.S., I have found the common man to be much more honest. The CEOs, etc., that is another matter. Now, there is possibly a reason for this. Poverty and huge competition among a large population for small number of resources make us try to do dishonest things to get ahead. Here is a study finding similar things. Dishonesty by country Critiques are welcome.