Friday, December 16, 2016

Today AIBOC TN demonstration @ Chennai, Near State Guest house Chepak.
DEMANDING adequate cash supply to Public Sector BANKS from RBI to reduce the sufferings of General Public and Bank Staff.






Thursday, December 1, 2016




MEERUT/BAREILLY/AGRA/PILIBHIT:
Traffic blockades, stone pelting and varying degrees of violence reflected the growing impatience among population in Uttar Pradesh as banks once again couldn't dispense cash on Wednesday.
In Meerut, hundreds of irate customers resorted to violence when a Syndicate Bank branch on Hapur Road announced that it was left with no cash to dispense. Sensing danger, bank staff locked themselves inside the premises as crowd went on rampage damaging vehicles and blocking traffic. They also burnt an effigy of PM Modi.
When police teams arrived on the spot, protesters indulged in stone pelting that left circle officer (Civil Lines) Arvind Kumar injured. Later, police had to resort to mild lathi-charge to disperse the crowd. In Agra too, police had to use lathis to scatter an angry crowd outside Oriental Bank of Commerce's Kagrol branch in Kheragarh block of the district on Wednesday afternoon.
In Doghat village of Baghpat district, the situation turned serious when bank officials had to run out of the branch building and take refuge in a local police station.
In Pilibhit, farmers protested against lack of cash in BoB branches by blocking the highway and burning effigy of the branch manager. They also staged a dharna outside the bank branch. Reports of uproarious scenes were received from other branches of the bank in the district too.
Meerut senior superintendent of police J Ravindra Goud said, "We are on alert for Thursday and have summoned our reserve forces as well. We have made elaborate plans to keep tempers in check. We, too, are hoping that cash arrives in banks by Thursday morning."





Off the black mark

Demonetisation won’t hurt ‘kala dhan’ — it will only damage economic growth.

Written by Ajay Chhibber | Published:November 28, 2016 12:04 am
demonetisation, Rs 500, Rs 1000, black money, Pm Modi on black money, currency notes, demonetised currency notes, news, latest news, India news, national newsIt might have been better to go after real estate transactions, the movie industry, gold, weddings, election financing and benami transactions.
The Modi government’s hit on black money may go down as one of India’s biggest economic blunders — or greatest achievements. Whether one agrees with the move or not, its implementation has been bungled and the collateral damage is likely to be heavy. Where did this idea originate? Surely the PM’s key economic advisors would not have recommended it.
Demonetisation is usually associated with decrepit economies and hyperinflation, such as Zimbabwe recently and Argentina in the past. The Argentine government demonetised several times in the last century; it even changed its currency’s name from peso to austral, then back to the peso — each time, it further reduced confidence in the currency. Myanmar, Ghana, the former Soviet Union, Nigeria and Zaire also demonetised, leading to devastating economic consequences. In all cases, often done by military dictatorships, demonetisation eroded confidence in the currency. It is therefore surprising that a reform-minded, popular, democratically elected prime minister has resorted to demonetisation. Even Arthakranti, the Pune NGO from where the idea ostensibly emanated, is distancing itself from a ham-handed plan to withdraw 85 per cent of the country’s currency overnight.
There is likely to be a one-time stock effect on those who held black wealth or kala dhan in cash. But much of it sits in gold, real estate or is offshore. Estimates of kala dhan vary; the most commonly accepted is around 25 per cent of GDP. Demonetisation only affects black money — not kala dhan. Estimates from previous raids show cash is 5-6 per cent of kala dhan. Cash is easily transactable but because it’s bulky, it’s hard to hoard too much kala dhan in cash. So, about 1-1.5 per cent of GDP is held in black money. If the government nets half of it through demonetisation, it’s around 0.5-0.75 per cent of GDP. This still leaves the bulk of kala dhan untouched. The flow of resources into kala dhan is unlikely to be affected by demonetisation. In fact, over time, even less will be held in cash, more in gold, real estate or shifted offshore.
The collateral damage from this move could be huge, economically and politically. The poor are already suffering, especially those without easy access to banks, post offices, even information on what to do. More long-lasting damage could be to trade in sectors where much business is conducted in cash — especially the informal sector and rural areas comprising about 40 per cent of GDP. The non-bank financial sector, on which many SMEs rely for short-term finance, has also been hit. As a result, the effect on economic growth in 2016-17 could be as high as one per cent of GDP — which will neutralise the one-time gain from demonetisation.
It is claimed India’s cash to GDP ratio, at around 11-12 per cent of GDP, is too high. But comparisons are made with countries at much higher levels of development, with much smaller, rural, un-banked populations. China has a cash to GDP ratio of around 9.5 per cent of GDP, Germany at 8 per cent of GDP and the US at around 7.5 per cent of GDP. There appears no correlation between corruption and the cash to GDP deposit ratio. Nigeria, widely regarded as one of the most corrupt countries, has a cash to GDP ratio of only 3 per cent of GDP as faith in the currency has eroded.
To weed out black money, more comprehensive reform is needed. It might have been better to go after real estate transactions, the movie industry, gold, weddings, election financing and benami transactions. Without tackling the reasons for black wealth, just demonetising won’t address corruption or eliminate the black economy. The Modi government should focus on achieving genuine economic recovery and ensuring job creation. More poorly conceptualised, badly implemented and moralistic policy prescriptions will take us back to the Hindu growth rate of 3-4 per cent of the 1970s and 1980s. We thought we were done with that.
The writer is distinguished visiting professor at the National Institute of Public Finance and Policy, (NIPFP) and former DG, independent evaluation office, government of India.





Demonetisation: Currency recall could cost India a massive Rs 1.28 lakh crore

The transaction cost of the government's demonetisation exercise is projected to be about Rs 1.28 lakh crore during the 50-day window till December 30, 2016, according to CMIE estimates.

By:  | Updated: November 30, 2016 10:59 AM
12% share of households, that stand in queues to exchange theor old currency notes with new ones, in the total demonetisation transaction cost. They stand to lose Rs 15,000 crore.12% share of households, that stand in queues to exchange theor old currency notes with new ones, in the total demonetisation transaction cost. They stand to lose Rs 15,000 crore.
The transaction cost of the government’s demonetisation exercise is projected to be about Rs 1.28 lakh crore during the 50-day window till December 30, 2016, according to Centre for Monitoring Indian Economy (CMIE) estimates. According to Mahesh Vyas, the managing director and chief economist of CMIE, the exercise can only be considered worth if the government is able to unearth unaccounted cash worth at least the transaction cost. “If the government succeeds in unearthing even Rs.4 trillion unaccounted cash, then the transaction cost of this exercise would be about 26 per cent. It would be over 43 per cent if the unearthed cash is Rs.3 trillion,” Vyas said in his research note.
Though welcomed by many across the country, the government’s decision to demonetise higher currencies has left many in the lurch and utter state of confusion. The study also warned the impact of the rudimentary step could impact the economy over a longer period.
The cost of Demonetisation:
12% share of households, that stand in queues to exchange theor old currency notes with new ones, in the total demonetisation transaction cost. They stand to lose Rs 15,000 crore.
The government and the RBI are estimated to bear a cost of Rs 16,800 crore. This is largely because of printing of new currency and transportation of new currency to bank branches, ATMs and post offices.
Enterprises stand to pay the biggest price for this transaction, by way of loss of business. According to estimates, companies will witness a direct impact on business in terms of the drop in discretionary spending by households. This alone adds up to more than half of trillion rupees during the 50-day period till the end of December. Enterprise stands to lose Rs 61,500 crore or 48% of the total transaction cost of this exercise of demonetisation.
All estimates are limited to the 50-day window. However, the impact of low liquidity, broken supply chains and loss of confidence in consumers is likely to impact the economy over a longer period. Therefore, the transaction cost of this exercise is likely to be more than the estimated amount.