The man who claimed credit for Modi’s demonetisation move is now unhappy with how it has turned out

[endyashainin]

http://qz.com/843490/anil-bokil-the...s-demonetisation-move-is-now-unhappy-with-it/

The man who claimed credit for Modi’s demonetisation move is now unhappy with how it has turned out
Written by
Manu Balachandran
THE SMILE IS GONE

All gone haywire? (EPA/Raminder Pal Singh)

Anil Bokil has gone from elation to disappointment in just two weeks.

Just a few days ago, Arthakranti Pratishthan, the Pune-based economic think-tank Bokil heads, had claimed credit for influencing prime minister Narendra Modi into taking his most disruptive economic step since gaining power in 2014: the demonetisation of high-value currency notes.

While some experts have hailed the move to crack down on black money and corruption, others have slammed its shoddy implementation and the inconvenience it has caused to millions in India’s cash-based economy. Modi’s gamble had made 86% of India’s currency (by value) in circulation invalid. Since then, there have been serpentine queues at India’s ATMs and banks.

“This is not what we proposed,” Bokil told The Economic Times on Nov. 21. “The government has only taken one part of our five-point plan… We had a proper transition plan from large currency denominations to smaller ones.”

A mechanical engineer by profession, Bokil gave a presentation to Modi earlier this year, detailing his proposal.

He suggested a five-point action plan that included scrapping all 56 taxes, including the income tax, recalling and scrapping the high-denomination currency notes of Rs1,000, Rs500, and Rs100. He also proposed that all high-value transactions be made only through the banking system using cheques or via e-payments. The government must introduce a banking transaction tax to compensate for losses incurred due to the scrapping of other taxes, he said.

“If you ban the entire lot in one go, how will you manage the flow of currencies?” Bokil now asks. “They’ve lost the transition plot completely. They should’ve stuck to our transition plan at least.”

He now wants the government to make the Rs50 currency the highest denomination in circulation in India. There is speculation that the government may use some of Arthakranti Pratishthan’s proposals in the upcoming budget. In its election manifesto, Modi’s Bharatiya Janata Party had promised to weed out black money—unaccounted wealth—that is estimated to make up 20% of India’s GDP.

“We are not saying we go completely cashless. Some cash will have to be there, but we need to set the bar at Rs50. For a country like us where 70% of the population survives on just $2 per day, why do we need currency notes upwards of Rs100?” Bokil told the Mint newspaper. The 55-year-old also reckons that the transition to lower denomination currencies would only take about 18 months.

 

[TimePass]

What is Arthakranti Proposal and who has given the proposal?

“Arthakranti Proposal” has been given by a Pune (Maharashtra) based “Arthakranti Sansthan” which is an Economic Advisory body constituted by a group of Chartered Accountants and Engineers. This funda has been patented by the Sansthan

Arthakranti Proposal is an effective and guaranteed solution of Black Money Generation, Price rise and Inflation, Corruption, Fiscal Deficit, Unemployment, Ransom, GDP and industrial growth, terrorism and good governance

What is in the Proposal ?

“Arthakranti Proposal has FIVE point of actions simultaneously

(1) Scrap all 56 Taxes including income tax excluding import duty

(2) Recall and scrap high denomination currencies of 1000, 500 and 100 rupees

(3) All high value transaction to be made only through banking system like cheque, DD, online and electronic

(4) Fix limit of cash transaction and no taxing on cash transaction

(5) For Govt. revenue collection introduce single point tax system through banking system – Banking Transaction Tax (2% to 0.7%) on only Credit Amount

Important Points to note:

(1) As on today total banking transaction is more than 2.7 lakh crores per day say more than 800 lakh crores annually

(2) Less than 20% transaction is made through banking system as on today and more than 80% transaction made in cash only, which is not traceable

(3) 78% of Indian population spend less than 20/- rupees daily why they need 1000/- rupee note

What will happen if All FIFTY SIX Taxes including income tax scrapped :

(1) Salaried people will bring home more money which will increase purchasing power of the family

(2) All commodities including Petrol, Diesel, FMCG will become cheaper by 35% to 52%

(3) No question of Tax evasion so no black money generation

(4) Business sector will get boosted. So self employment

What will happen if 1000/ 500/ 100 Rupees currency notes recalled and scrapped :

(1) Corruption through cash will stopped 100%

(2) Black money will be either converted to white or will vanish as billions of 1000/500/100 currency notes hidden in bags without use will become simple pieces of papers

(3) Unaccounted hidden huge cash is skyrocketing the prices of properties, land, houses, jewellery etc and hard earned money is loosing its value; this trend will stop immediately

(4) Kidnapping and ransom, “Supari killing” will stop

(5) Terrorism supported by cash transaction will stop

(6) Cannot buy high value property in cash showing very less registry prices

(7) Circulation of “Fake Currency” will stop because fake currency printing for less value notes will not be viable

What will happen when Banking Transaction Tax (2% to 0.7%) is implemented :

(1) As on today if BTT is implemented govt can fetch 800 x 2% = 16 lakh crore where as current taxing system is generating less than 14 lakh crore revenue

(2) When 50% of total transaction will be covered by BTT sizing 2000 to 2500 lakh crores, Govt will need to fix BTT as low as 1% to 0.7% and this will boost again banking transaction many fold

(3) No separate machinery like income tax department will be needed and tax amount will directly deposited in State/Central/District administration account immediately

(4) As transaction tax amount will be very less, public will prefer it instead paying huge amount against directly/indirectly FIFTY SIX taxes

(5) There will be no tax evasion and govt will get huge revenue for development and employment generation

(6) For any special revenue for special projects, govt can slightly raise BTT say from 1% to 1.2% and this 0.2% increase will generate 4,00,000 crores additional fund

Effect if implemented today :

(1) Prices of all things will come down

(2) Salaried people will get more cash in hand

(3) Purchasing power of Society will increase

(4) Demand will boost, so will production and industrialisation and ultimately more employment opportunity for youth

(5) Surplus revenue to the govt for effective health/ education/ infrastructure/ security/ social works

(6) Cheaper and easy loans from banks, interest rate will come down

(7) Tendency of society will changes from scarcity to quantity

(8) Spare money for political system for clean politics,

(9) Prices of land/ property will come down,

(10) No need to export beef to cover up trade deficit

(11) Sufficient funds for research and development

(12) Society will be free from “Bad elements”

 

[TimePass]

 

[Joe Shearer]

@TimePass

I beg you, stop reproducing this clap-trap and work things out for yourself.

1. Out of 13 million Indians who enter the age of employment each year, only 5 million get work;
2. Of the 5 million, about 10% get regular jobs according to the labour laws. The balance do odd jobs: they drive delivery vans, wait in shops, wait in eating establishments, become beauticians, work as plumbers, electricians and carpenters, work as contract labour on construction sites or road-building, or in plantations. Many more are in the underemployed agricultural sector. Forest dwellers, the tribals, live in a subsistence economy.
3. A significant portion work in commerce, owning and managing shops and businesses; they employ people in their shops, but are themselves relatively well off;
4. Of the regularly employed, the bulk get jobs in government and public sectors, including the Railways and Defence services. Only a minority are employed by the private sector;
5. Now take out the upper echelons: take out those in government service, those in the organised private sector and the trading classes. Less than 500,000 a year are eliminated. About 4,500,000 have some sort of organised earnings, a frightening 8 million are underemployed or unemployed;
6. Think about it: only those in government, organised private sector, and in positions of ownership in trade and commerce monopolise the bulk of the 500 and 1,000 rupee notes. The others manage with 100, 50, 20 and 10 rupee notes;
7. Once the higher denomination notes were banned, all the lower denomination notes were sucked up by the privileged. Some did it through having bank accounts and using that route to extract the available cash; others did it by availing of electronic transfers and cashless transactions;
8. Bokil and his friends are absolute idiots. They had no idea of what impact this panic demonetisation would have on the cash economy, which constituted the overwhelming bulk of the money exchanges, and they had never ever bargained for the choke points in disbursal, the low capacity of the printing presses, the poor coverage of ATMs, and the inability to issue enough cards to substitute for the missing currency.

Please stop thinking of Modinomics and look at the very real damage that has been done.

 

[TimePass]

@TimePass

I beg you, stop reproducing this clap-trap and work things out for yourself.

1. Out of 13 million Indians who enter the age of employment each year, only 5 million get work;
2. Of the 5 million, about 10% get regular jobs according to the labour laws. The balance do odd jobs: they drive delivery vans, wait in shops, wait in eating establishments, become beauticians, work as plumbers, electricians and carpenters, work as contract labour on construction sites or road-building, or in plantations. Many more are in the underemployed agricultural sector. Forest dwellers, the tribals, live in a subsistence economy.
3. A significant portion work in commerce, owning and managing shops and businesses; they employ people in their shops, but are themselves relatively well off;
4. Of the regularly employed, the bulk get jobs in government and public sectors, including the Railways and Defence services. Only a minority are employed by the private sector;
5. Now take out the upper echelons: take out those in government service, those in the organised private sector and the trading classes. Less than 500,000 a year are eliminated. About 4,500,000 have some sort of organised earnings, a frightening 8 million are underemployed or unemployed;
6. Think about it: only those in government, organised private sector, and in positions of ownership in trade and commerce monopolise the bulk of the 500 and 1,000 rupee notes. The others manage with 100, 50, 20 and 10 rupee notes;
7. Once the higher denomination notes were banned, all the lower denomination notes were sucked up by the privileged. Some did it through having bank accounts and using that route to extract the available cash; others did it by availing of electronic transfers and cashless transactions;
8. Bokil and his friends are absolute idiots. They had no idea of what impact this panic demonetisation would have on the cash economy, which constituted the overwhelming bulk of the money exchanges, and they had never ever bargained for the choke points in disbursal, the low capacity of the printing presses, the poor coverage of ATMs, and the inability to issue enough cards to substitute for the missing currency.

Please stop thinking of Modinomics and look at the very real damage that has been done.

Your only point is that lower denomination was sucked out of the system leaving a huge gap between demand and supply.

Even if that is true, Necessity is the mother of invention.

People will find a way around the problem as long as they have faith in the system and the man leading the change. If not, there will be Riots.

In absence of any riots, I will choose to believe that people are able to cope with this drastic change. As long as the govt. remains responsive towards the people's needs, the matter will be contained.


Beyond that I am not interested in your personal opinion of either Modi or Bokil. So do not ever think you can share those with me.

 

[Joe Shearer]

Your only point is that lower denomination was sucked out of the system leaving a huge gap between demand and supply.

Even if that is true, Necessity is the mother of invention.

People will find a way around the problem as long as they have faith in the system and the man leading the change. If not, there will be Riots.

In absence of any riots, I will choose to believe that people are able to cope with this drastic change. As long as the govt. remains responsive towards the people's needs, the matter will be contained.


Beyond that I am not interested in your personal opinion of either Modi or Bokil. So do not ever think you can share those with me.

I owed it to myself to try. I did, and I failed. Good enough.

 

[911]

Think about it: only those in government, organised private sector, and in positions of ownership in trade and commerce monopolise the bulk of the 500 and 1,000 rupee notes. The others manage with 100, 50, 20 and 10 rupee notes

Those working in organised private sector and government get salaries in their bank accounts. Most of them keep their money in banks.

Once the higher denomination notes were banned, all the lower denomination notes were sucked up by the privileged. Some did it through having bank accounts and using that route to extract the available cash; others did it by availing of electronic transfers and cashless transactions;

According to you, only the privileged monopolise bulk of 500 and 1000 notes. After high denomination notes were banned, how can these privileged class suck up lower denomination notes through bank accounts when there is a limit to withdraw cash from banks, ATMs?

 

[TimePass]

Those working in organised private sector and government get salaries in their bank accounts. Most of them keep their money in banks.
According to you, only the privileged monopolise bulk of 500 and 1000 notes. After high denomination notes were banned, how can these privileged class suck up lower denomination notes through bank accounts when there is a limit to withdraw cash from banks, ATMs?

Its a Red herring which is why I did not bother to refute it point by point.

The Currency is always in CIRCULATION, and even when they are "sucked up", they end up being spent and they come back into circulation.

Its foolish to think that black money hoarders is now going to hoard currency in 10's, 20's, 50's and 100's .

If anyone choose to believe that, there is nothing you can say that will convince him otherwise.

 

[911]

Its a Red herring which is why I did not bother to refute it point by point.

The Currency is always in CIRCULATION, and even when they are "sucked up", they end up being spent and they come back into circulation.

Its foolish to think that black money hoarders is now going to hoard currency in 10's, 20's, 50's and 100's .

If anyone choose to believe that, there is nothing you can say that will convince him otherwise.

No one is going to hoard lower denomination notes due to limitations on withdrawal. Its spent as soon as the person gets their hands on it.

 

[TimePass]

No one is going to hoard lower denomination notes due to limitations on withdrawal. Its spent as soon as the person gets their hands on it.

Precisely my point.

There will be a temporary short fall, but even then human ingenuity will find a way.

 

[Joe Shearer]

Those working in organised private sector and government get salaries in their bank accounts. Most of them keep their money in banks.

Sure, they do. But they spend that money as well. Their savings are not 100%. The ability to withdraw money, even legitimate wage earnings, has been restricted. What do they do?

According to you, only the privileged monopolise bulk of 500 and 1000 notes. After high denomination notes were banned, how can these privileged class suck up lower denomination notes through bank accounts when there is a limit to withdraw cash from banks, ATMs?

After the poor spend their lower denomination notes, where do they go? Into the hands of traders, and into rackets like old 500s being exchanged for three or four 100 rupee notes. Only those who are spending get change and this change goes steadily upward, not downward.

Its a Red herring which is why I did not bother to refute it point by point.

The Currency is always in CIRCULATION, and even when they are "sucked up", they end up being spent and they come back into circulation.

Its foolish to think that black money hoarders is now going to hoard currency in 10's, 20's, 50's and 100's .

If anyone choose to believe that, there is nothing you can say that will convince him otherwise.

That is precisely the point. It is not black money hoarders who are hanging on to currency; it's those who need it for daily transactions.

If you choose to defend the indefensible, nothing that anyone can say will convince you otherwise.

No one is going to hoard lower denomination notes due to limitations on withdrawal. Its spent as soon as the person gets their hands on it.

Yes, it is spent. By those who get their hands on it, not by the poor, by the middle class. The rich couldn't care less.

Precisely my point.

There will be a temporary short fall, but even then human ingenuity will find a way.

You refuse to face it, isn't it?

It shouldn't have to come to this. It should be the responsibility of the RBI and the Finance Minister, and there should never have been a need for human ingenuity.

You are essentially saying, so what if the system has failed? People will find ways of staying alive.

What a sad reflection on the botching of an entire economy.

 

[TimePass]

Sure, they do. But they spend that money as well. Their savings are not 100%. The ability to withdraw money, even legitimate wage earnings, has been restricted. What do they do?

After the poor spend their lower denomination notes, where do they go? Into the hands of traders, and into rackets like old 500s being exchanged for three or four 100 rupee notes. Only those who are spending get change and this change goes steadily upward, not downward.

Even when old currency is sold for discounted rates, those who purchase the old currency will run out of lower denomination currency to trade in and will loose business.

Its not a win win situation. Eventually he will decide that its better to do honest trade than swipe currency for old notes.

That is precisely the point. It is not black money hoarders who are hanging on to currency; it's those who need it for daily transactions.

If you choose to defend the indefensible, nothing that anyone can say will convince you otherwise.

It shouldn't have to come to this. It should be the responsibility of the RBI and the Finance Minister, and there should never have been a need for human ingenuity.

You are essentially saying, so what if the system has failed? People will find ways of staying alive.

What a sad reflection on the botching of an entire economy.

There is no perfect solution, so its pointless to expect one.

What can be demanded and expected is for the govt. to be responsive to the needs to the people and react fast to changing scenario.

No one expected this to be painless, the question is how long the pain lasts. The GoI has the responsibility to make the pain last for the shortest possible duration. They have asked for 50 days and that is what I shall give them.

I am not going to measure the pain, but the duration of the pain to see if the system has failed or not. Same being true for the economy.

 

[el che]

It will be upto the income tax department to examine the bank accounts and raise tax demand in the cases. It is a very difficult and humongous task. The department does not have enough assessing officers to even check 5 percent of the cases.

But I am happy about the courage of the govt. to take such step without bothering about political implications. There will be some gains. People will think twice before keeping cash, people were forced to learn to transact without cash, a cleanup of the fake notes. Significant amount has also not returned so that is income for the RBI and this can be pumped to improve capital of the ailing PSU banks.

Such govt gives us hope that our country may take decisions, without bothering for the fallout, which can wreck havoc on our western neighbours like Abrogation of Indus Water Treaty and Article 370.

 

[hussain0216]

its probably a good idea

just implemented very poorly

 

[Joe Shearer]

Even when old currency is sold for discounted rates, those who purchase the old currency will run out of lower denomination currency to trade in and will loose business.

Its not a win win situation. Eventually he will decide that its better to do honest trade than swipe currency for old notes.




There is no perfect solution, so its pointless to expect one.

What can be demanded and expected is for the govt. to be responsive to the needs to the people and react fast to changing scenario.

No one expected this to be painless, the question is how long the pain lasts. The GoI has the responsibility to make the pain last for the shortest possible duration. They have asked for 50 days and that is what I shall give them.

I am not going to measure the pain, but the duration of the pain to see if the system has failed or not. Same being true for the economy.

Have you at all got the point being made? That it is unreasonable to ask for 50 days. That it is possible to have done this far more efficiently, one, by not setting a pointless deadline that helps nobody and hurts everybody; and two, by having things in place, including notes designed to fit the existing ATMs, instead of finding that they don't work and need modifications in the field. If GoI cannot do simple things like build up a stockpile of notes before taking the plunge, why punish the people? Three, which idiot decided to put 2000 rupee notes ahead of 500, and 500 rupee notes ahead of printing 10 times more 100 rupee notes? Is anyone thinking these through?

Feel free to measure the pain or time the duration of the pain or whatever else monkey tricks you want to play, but my point is simply that this should have been done intelligently. It was not done intelligently. And that is a reflection on the temper and tone of this administration.