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

As we had often come back to discussing economic benefits/impact of sports I thought it was about time for an economic discussion forum.
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Re: India scraps its two largest rupee notes in shocking anti-corruption move

Post by sameerph » Wed Sep 27, 2017 2:57 pm

GST will certainly help in the end and some sort of disruption was to be expected with it's implementation in a large country such as ours. Perhaps, disruption is more in certain sectors are more affected than others. But, I do not see large scale downturn in demand due to GST as of now.

Yeshwant Sinha has been a disgruntled person in this BJP regime since last 3 years as he wanted to be part of the government. He is thought to be from old Advani loyalists group who has been sidelined by current regime. So, his comments need to be viewed in that context.

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

Post by rajitghosh » Wed Sep 27, 2017 2:59 pm

jayakris wrote:
Wed Sep 27, 2017 1:22 pm
This opinion article I need to speak up now by Yashwant Sinha, and the harshness of it, surprised me. I didn't find the opinion piece too insightful, but the opposition is really running with this because it is a BJP man and former finance minister saying it.

Are we in for real trouble in the economy, like he says? Okay, he spoke up and pointed out that everything has gone wrong, but what is he really asking the government to do now? The only thing I found is a complaint that we are trying to scare people with tax enforcement, and maybe a hint that we should stop that. Not sure how that helps. Did he lose all his money due to demonetization or something?

Comments, people?
Yashwant Sinha has hit the nail on the head. We are facing these issues day in day out in our jobs.Demo and GST has been a double wammy. One of the biggest assumptions in both of this was that the unorganised sector would disappear and compliance would improve. The fact is those who were doing business on kuccha bills still want to do so. The software issues in GST implementation has further encouraged them to not fall in line. As a result, the Organized sector is dealing with the implementation issues and the unorganised sector is trying it's best to find new ways of evasion. The result is business has slowed considerably and de - stocking is happening. To address this no stimulus package would work. You have to wait patiently till genuine demand forces retailers to stock and sell. One way of generating demand can be a big interest cut but this is where demo is playing spoilsport. People who had cash and could afford to buy stuff and generate demand have money stuck in Jan Dhan accounts. So on paper while liquidity is high the people who can use the money don't have it. Naturally the fallout is capital goods companies are also not investing and things are at a stalemate.

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

Post by jayakris » Wed Sep 27, 2017 3:48 pm

Thanks, rajit. That does make some sense.
rajitghosh wrote:
Wed Sep 27, 2017 2:59 pm
People who had cash and could afford to buy stuff and generate demand have money stuck in Jan Dhan accounts.
So, is this pretty much widely accepted as what happened? There is a good 2-3 lakh crores sitting in these accounts, waiting to come out, and nobody knows or can predict when and how it will happen? To me, this has been the real story of demonetization, if this is true.

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

Post by jayakris » Wed Sep 27, 2017 3:54 pm

sameerph wrote:
Wed Sep 27, 2017 2:57 pm
Yeshwant Sinha has been a disgruntled person in this BJP regime since last 3 years as he wanted to be part of the government. He is thought to be from old Advani loyalists group who has been sidelined by current regime. So, his comments need to be viewed in that context.
Yeah, he is like the "establishment guy" who has rarely had much good to say about the Modi government. Still I found the harshness of his article rather striking. The fact that he gave no solutions and only criticism of what has already happened, showed that he just wanted to complain and nothing more. But then again, the criticisms are valid and others have been criticizing too. How we will move forward is a different matter. There, again, we may be at the worst point right now and hopefully it will only get better over the next 3-4 years. It may need to happen in a natural course and Modi and gang won't make anything worse. The end results of the deMon-GST double whammy is probably still good, in my opinion, but I am not that confident either...

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

Post by sameerph » Thu Sep 28, 2017 8:53 am

This is an article which I came across which gives counter arguments against Yeshwant Sinha's logic -

View: You are wrong Mr.Sinha! Bailouts are no way to revive economy

Still the concerns remain and it all depends how quick the recovery would be to judge if it was a temporary blip.

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

Post by jayakris » Fri Sep 29, 2017 4:40 pm

And here is Yashwant Sinha's son Jayant Sinha (an IIT Delhi and Harvard Business School grad, former finance minister and now civil aviations minister) disputing his father -- New economy for new India: Fundamental changes put in place for an open, transparent, competitive and innovation-driven economy

Quoting - "GST, demonetisation and digital payments are game-changing efforts to formalise India’s economy. Transactions that were taking place outside of the tax net and in the informal sector are now being brought into the formal sector. In the long term, formalisation will mean (a) tax collections go up and more resources are available to the state; (b) friction in the economy is reduced and GDP goes up; and (c) citizens are able to establish credit more effectively as transaction records are digitised."

I suppose he is giving (a) as the effect of demonetization, (b) as that of GST, and (c) as that of digitization. I had not paid attention to the third aspect (c). Is this a big enough deal, that would really help entrepreneurship, innovation etc?

I have to agree with him that the long-term effects are good, and I have to give credit to the government for doing things that helps in future, even if they did it thinking there would be immediate good effects too (and that backfired). Also, Jayant Singa gives some much better numbers (though on some relatively unrelated items) than I thought was the case, with things like rural electrification etc, which I thought had actually perhaps slowed down under Modi, despite all the talk/spin. Is he being correct? Need to investigate.

There have been 400 startups with IIT hostel addresses???

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

Post by jayakris » Sun Oct 01, 2017 2:16 pm

Here is something interesting. Sumanta (Omkara) had sent me by whatsapp the PDF of a research note from JP Morgan that made the case that a key aspect of what is going on in India - the slowed growth after deMon and GST - is the noted rise of imports since December. He couldn't upload it but it has come out in the newspapers today.

Is a strong import surge behind Indian economy’s slowdown? (Livemint)
Pause before you leap (Indian Express)
Supply reforms, not stimulus will revive economy: JP Morgan (Economic Times)

Interesting, if their thesis is right. Basically JP Morgan feels that all that has happened is that we imported a lot, all of a sudden, to take care of demand and there is no demand-slowdown due to money supply etc, in the long term. The manufacturers couldn't manufacture because they did not have cash to pay, and not because the consumers were unable to pay for things; so we just imported stuff which needed no cash supply (which is my simplistic understanding of it, as an economics-novice). Just a "supply shock" that has been handled by imports, and now it should correct itself with manufacturing picking up. So the government shouldn't do anything to make things worse, like a stimulus.

On the face of it, it makes perfect sense, if the data is correct. What do you all feel? I was surprised though that the economists with the Government wouldn't think of something as simple and fundamental as this...

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

Post by jaydeep » Wed Oct 04, 2017 3:32 am


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

Post by jayakris » Wed Oct 04, 2017 4:08 pm

jaydeep wrote:
Wed Oct 04, 2017 3:32 am
Different views in this article.8 Mistakes Of Modi Government Which Have Kept The Acche Din Away From Indians!
Just BS from a Modi-hater there. Some of it is true, but much of it is just opinions. I have to take serious issue with the crap about how bad it was to drop German and teach Sanskrit in schools. Angela Merkel talked to Modi about our HRD ministry the article says. The writer should be ashamed of herself. But then again, we learned a lot about a lot of people when they opined on that issue a couple of years ago. Spineless wonders who have no understanding of India or our history.

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

Post by Varma » Wed Oct 04, 2017 4:36 pm

She came up with the idea of teaching Sanskrit in IITs and replacing German with Sanskrit in the HRD Ministry run Kendriya Vidyalayas in October 2014. The furore was so massive that Germany’s chancellor Angela Merkel had to hold talks with Narendra Modi regarding the working of India’s HRD Ministry.
This has got to be one of the most hilarious jokes of recent times :D. If Angela aunty reads it, I bet she will be in splits too :p :p :p

- Varma

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

Post by jayakris » Wed Oct 04, 2017 5:01 pm

Actually it is true that Merkel did talk to Modi, but not in the form that this scribe described it as. Modi would have asked her to take a hike, if she tried to "hold talks about the working of the HRD ministry". She is smarter than that, and the Geramans (unlike the spineless "intellectuals" we have in India) of course know which language is closest to being the root of their language. None other than Sanskrit. Anyway, we agreed to teach German as an "additional language" in Kendriya Vidyalayas (where many had stopped teaching sanskrit in favor of German), and they will be teaching Sanskrit and Hindi in Germany too. Quite a different thing than what this worthless scribe wrote.

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

Post by Omkara » Wed Oct 04, 2017 5:08 pm

jayakris wrote:
Sun Oct 01, 2017 2:16 pm
Here is something interesting. Sumanta (Omkara) had sent me by whatsapp the PDF of a research note from JP Morgan that made the case that a key aspect of what is going on in India - the slowed growth after deMon and GST - is the noted rise of imports since December. He couldn't upload it but it has come out in the newspapers today.

Is a strong import surge behind Indian economy’s slowdown? (Livemint)
Pause before you leap (Indian Express)
Supply reforms, not stimulus will revive economy: JP Morgan (Economic Times)

Interesting, if their thesis is right. Basically JP Morgan feels that all that has happened is that we imported a lot, all of a sudden, to take care of demand and there is no demand-slowdown due to money supply etc, in the long term. The manufacturers couldn't manufacture because they did not have cash to pay, and not because the consumers were unable to pay for things; so we just imported stuff which needed no cash supply (which is my simplistic understanding of it, as an economics-novice). Just a "supply shock" that has been handled by imports, and now it should correct itself with manufacturing picking up. So the government shouldn't do anything to make things worse, like a stimulus.

On the face of it, it makes perfect sense, if the data is correct. What do you all feel? I was surprised though that the economists with the Government wouldn't think of something as simple and fundamental as this...
I did check for sales during navaratra. Very critical for Indian markets. People save to spend during Navaratra.

Bike/scooters up 10-15%, cars up10-12%, trucks up 5-10%. Exports to Africa slowly picking up. Demand for houses < 50 lacs holding up.

Its not awesome. There is slowdown but still not as major as what people think it is.

Job creation is a problem. Not enough good jobs being created. Thats a problem Modi needs to tackle before 2019 elections.

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

Post by prasen9 » Wed Oct 04, 2017 5:42 pm

I do think that I would have enjoyed it if I had Sanskrit as an option in my school instead of Hindi and I am not a Bhakt, I think. That would perhaps have made my knowledge of all Indian languages better. The three years of Hindi I took did not do much to improve what I had already learnt by being exposed songs and movies. :Offtopic: (Moderators please move this and the other language talk to an appropriate thread if you think this is too distracting here.)

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

Post by Varma » Wed Oct 04, 2017 8:27 pm

I studied saMskRtam when I was very young. It is very structured and extremely organized. More than being just a language, I feel that it enhances the students' ability to become more analytical. Unfortunately, anyone that tries to promote saMskRtam or Yoga immediately gets labelled. I wish every Indian realizes the value of these and takes pride in owning them. These are nothing to be ashamed of, and alienating them won't make one a liberal.

- Varma

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

Post by prasen9 » Wed Oct 04, 2017 10:02 pm

My political philosophy is possibly more closely aligned with the left than the right (although not a straight flush), but, you are very right. Samskrit and Yoga are a few of the jewels that came out of our ancestors. I am a big fan of both though I don't really know Samskit grammar (know a bit of vocabulary). They say that Sanskrit is the language that should be the easiest for computers to "understand".

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