What are the loopholes in the Indian Government’s decision to demonetize higher denomination currencies, to fight black money and corruption?


Rattan N Whig, Observe, Learn, Repeat.
Written Nov 13
The entire demonetization is nothing else but a strategy to divert attention from the real issues.

Now, lets look at the facts. And also look at the reasons why this measure is simply not what it is being made out to be. Whenever any new populist measure is announced by any government, there are few beneficiaries who genuinely benefit from the measure. In case of a populist measure announced by a popular regime, which is equally corrupt though popular, there are people who work towards making themselves and others believe in the effectiveness of the new measure while ironically the cold facts point elsewhere.

Myth 1 : Demonetizing will help development of nation?

I am going to begin this by few numbers. According to a World Bank report, Bank account penetration in India increased from 35 per cent to 53 per cent between 2011 and 2014, but the country also suffers from high dormancy rates. Translated into absolute numbers, this growth in number of bank accounts means that 175 million in India became account holders between 2011 and 2014.

According to the World Bank, the rise in number of bank accounts was to a large extent due to government’s push for financial inclusion. The Modi government came to power in 2014, so that means that much of this financial inclusion took place when Congress was in power. Further after the launch of Pradhan Mantri Jan Dhan Yojana scheme for comprehensive financial inclusion, 125 million bank accounts were further opened uptill mid 2015. In total there are expected to be approximately 550 million bank accounts in India today.

Now, come back to current day. After the demonetization policy was introduced, banks are reporting that almost 200,000 crores have been deposited across the country. State bank of India alone has received more than 50,000 crore rupees.

But wait, that should be good for the economy, right? Well, sorry to disappoint you but that’s not the case as this money will be further used to fill industrialists’ coffers and turn in to bad debts. That’s how this money will be used.

The current gross NPAs of scheduled banks in India as of end of 2015 stood at approx. 341,000 crores or nearly 3 and half lac crore. In other words, the total money deposited from demonetization is approx. less than 2/3 of all scheduled bank’s NPAs. Let me quote an excerpt from a prominent report here.

Twenty months into the Modi government rule, it wouldn’t be an exaggeration to say that state-run banks are on the verge of a crisis due to their high NPAs, which constitute over 90 percent of the total bad loans of the industry. Many of them have reported losses on account of huge NPAs in the December quarter, surprising analysts. Investors are dumping shares of these banks while there is a sense of uncertainty prevailing on the extent of troubles in the banking sector.
From Rs 53,917 crore, Indian banks gross non-performing assets (GNPAs) in September 2008 (just before the 2008 global financial crisis broke out following the collapse of Lehman Brothers), the bad loans have now grown to Rs 3,41,641 crore in September 2015. In other words, the total GNPAs of banks, as a percentage of the total loans, has grown from 2.11 per cent to 5.08 percent

Nine out of 10 most stressed banks in the sector are government banks. The RBI has given a deadline of March 2017 for all banks to clean up their balance sheets, which also require these lenders to set aside huge chunk of capital in the form of provisions.

Source: Explained in 5 charts: How Indian banks’ big NPA problem evolved over years – Firstpost

Wait, thats not all the bad news. In the next 12 month period, The gross bad loans of public sector banks increased to 9.6 per cent as of March 2016, from about 6 per cent a year earlier, RBI data showed.

Here is a report:

Banking sector gross NPA at 7.6%, highest in 12 years; Expected to rise further to 8.5% by March 2017

Gross bad loans at commercial banks could increase to 8.5 per cent of total advances by March 2017, from 7.6 per cent in March 2016, according to a baseline scenario projection by the Reserve Bank of India (RBI) in its Financial Stability Report released on Tuesday. “The macro stress test suggests that under the baseline scenario, the gross NPA may rise to 8.5 per cent by March 2017,” the RBI noted in the report. “If the macro situation deteriorates in the future, the gross NPA ratio may increase further to 9.3 per cent by March 2017.”

There was an almost 80 per cent jump in gross bad loans in 2015-16, according to the report. Gross bad loans of Indian banks widened to 7.6 per cent from 5.1 per cent in September and from 4.6 per cent in March 2015. In 2004, gross bad loans in the Indian banking sector touched 7.8 per cent, while the ratio was 11.1 per cent in 2002. “The stress in the banking sector, which mirrors the stress in the corporate sector, has to be dealt with in order to revive credit growth,” RBI Governor Raghuram Rajan said in the report.

Source: Public sector banks’ bad loans close to 10%
So, if we look carefully, post removing all the layers, it is apparent that the biggest beneficiary of this move by Government are the banks who now have access to cheap public funds. These funds are cheap because by simply paying 4 – 6% the banks can lend the same capital at 12 – 15%. Furthermore, the government will not have to write off this huge amount and avoid any threat to Indian Banking system which could have the potential to derail the Indian economy. The government thereby saves an embarrassing write off of bad loans while also not having to admit any fiscal wrongdoings, hence continuing the mirage of ‘good days’.

The real questions are these:

What has government done to tackle highest ever level of NPAs?
Has government taken any concrete steps against industrialists who have defaulted on loans and thereby defrauded the nation?
Has government introduced any banking reforms to reduce the amount of bad loans?
Has government even acknowledged this problem, forget about tackling it?
But no, our intelligent and educated folks will not ask these questions as those are against the popular sentiments. The government wins, banks win, industrialist with bad loans win, Public Loses. But who cares.

Read this for the names of top 10 Loan defaulter companies

Top 10 Loan defaulters in India – EthicalPost

An additional benefit of this demonetization move is that public attention is diverted from genuine issues of NPAs and bringing black money stashed in foreign accounts back to India (ironically it was one of the key promises made by BJP government to come to power).

The fact : This is a brilliantly planned diversionary tactic, superbly executed with high drama, at the same time garnering more support from our educated masses who are content following popular sentiment without caring for either the facts or the data.

Myth 2 : Demonetizing will help fight corruption?

How? Do you expect a seasoned corrupt politician to turn honest simply because he has to accept more volume of the same amount of bribe money? Or do you expect a corrupt government official to shun his old ways simply because there are no higher denomination bills available? Or do you expect your local cops to turn honest simply because they are being paid in 100 rupee notes? Or will the local buildings inspector suddenly start honest audits? If evolution has taught us anything, it is this – people will find newer and better ways when faced with an adversity. There may be novel ideas introduced of taking bribe like accepting gold and silver coins. Or in case of large sums, asking for overseas bank account deposits directly. Or buying a flat in the name of a distant relative.

The fact : this measure will only cause a 15 or 3o day lag in corrupt practices during which the decisions to be made will be kept in abeyance till the time those officers who make decisions and those people who benefit from such decisions can resume their corrupt practices in newer versions.

Myth 3 : Demonetizing will help fight terrorism?

Ok, now the popular idea here is that terrorists receive their funding in fake or original 500 / 1000 rupee notes. Well then, what prevents them from receiving 100 rupee notes? Remember, terrorists have no agenda other than cause loss of life and spread chaos. They are not interested in making financial gains. They will simply burn those fake / original notes and move on.

The fact : there is absolutely no impact other than minor inconvenience of procuring new bills.

Myth 4 : Demonetizing will wipe out fake currency?

Yes, this move will wipe fake currency. But think about it again. The security features on Rs. 100 note are lesser than those on a 500 rupee note. So isnt that an incentive to counterfeiters to produce more 100 rupee notes. Ok, the profit on producing and infusing Rs. 100 note may be lesser, but during this time when these smaller bills are in great demand, isnt this move going to encourage infusion of more counterfeit currency than normal. There are also unconfirmed reports of fake Rs. 2000 bills. So much for security measures..

The fact : demonetizing will only wipe out the current stock of fake currency. How it benefits the economy and what other damages it may cause due to higher production of low denomination counterfeit currency is an unknown at this time.

Myth 5 : Demonetizing will curb black money in circulation in the economy?

Once again, this is a temporary factor. The amount of current stock of black money will be wiped out, yes. But then the problem of black money doesn’t go away at all. The transactions which account for black money are still intact. If anything, with introduction of higher denomination notes, the black money circulation will be greatly aided. The black money that is not put back in circulation is no one’s gain; it will be simply destroyed.

What most experts are not pointing out is that a vast amount of unaccounted money is generated from small purchases in small retail stores of all kinds around us. Almost all of these are standalone retail stores or very small chains. These include your neighborhood grocery stores, medical stores, hardware, electrical and other small stores, small restaurants etc. Most of the dealings at these outlets is in cash. While each individual store may not generate huge cash flow, yet put together the numbers can be very huge. It is unlikely that these stores will move to cards in place of cash, nor the demand from these stores is likely to come down. This is one sector of unaccounted money which will remain virtually unaffected. Do we expect these people to suddenly stop using cash and insist on card transactions? What will happen here?

One of the biggest beneficiaries of black money are political parties. Each political party receives hundreds of crores in black money each year which is paid exclusively in cash in smaller amounts of less than Rs. 20,000. It is an open secret that all political parties create these fake donation receipts to appropriate the black money paid to it by the industrialists, landlords and other rich people. A report on this subject has been prepared and has been shared with Finance Ministry which will obviously never be shared. BJP like other political parties is an equal offender like Congress and other parties. But who cares?

ADR Report: Political donations spike by 150%, BJP rakes in the most

Just check the below reports; BJP MPs are far ahead of others at least as per the latest reports.

In black money season, BJP has to crack whip at home: 35 MPs spent more than they got from party – Firstpost

The fact : Black money will remain what it is. Only a small setback to people for whom black money is just an undeclared asset. They have significant other assets for this to make any difference to their life.

What will also happen is that lot of unaccounted money that was still kept in India in past will now take flight. Or will be locked in to other assets like gold and real estate.

This money will eventually find its way back to India over a period of time.

Myth 6 : Short term inconvenience vs long term gain?

Oh well, what gain are we referring to? And whose gain? The only gain is for the industrialists who will continue availing loans and for the banks who will continue with NPAs without as much as a hiccup.

The fact : Black money will remain what it is. Only a small setback to people for whom black money is just an undeclared asset. They have significant other assets for this to make any difference to their life.

Almost certainly, there will be a deflation in the economy in the short run. This deflation will cause much hurt within the economy and may impact job creation and economic growth. A vicious cycle may begin which will be hard to end.
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Related QuestionsMore Answers Below

What do you think of the decision by the Indian Government to demonetize 500 and 1000 rupee notes?
Why did RBI choose to come out with a ₹2000 note instead of a newer ₹1000 note?
How would demonetizing 500 and 1000 rupee notes and introducing new 2000 rupee notes help curb black money and corruption?
What are the loopholes to convert illegal money into legal money in India after demonetization of 500 and 1000 currency?
Why has Govt. of India issued Rs 2000 currency if they really want to fight corruption against black money hoarders?
Divya Kumar Garg
Divya Kumar Garg, Indian Economy Enthusiast
Written Nov 8
With the social media and media fueled up with the appreciation of Government’s decision of introducing a bold measure, it is important for us to understand the implications of this move.

Is it a good decision? Indeed, it is.

Will it help in curbing black money? It obviously will.

Will it completely eradicate black money from the Indian economy? Possibly not.

Let us understand the move first:

The Central government has issued a notification through the Finance ministry of India and the RBI. Modiji, in a wonderful speech, to the nation has made clear that the currency notes of 500 and 1000 will be cease to be legal tender from 00:00 of 09/11/2016.
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Everything is not as simple as it looks on the face of it. Currency notes can suddenly not cease to be legal tenders of money. Government has a responsibility towards its people and it is important for us to understand what we can and are supposed to do rather than having another hour long conversation on Modi’s dexterity as the PM.
What can be done?

A. For getting rid of your notes

You can deposit your money to the bank account. You’ll need to go through the usual cash depositing process. However, you cannot deposit too much money straight into your account as banks will be under tight surveillance henceforth and every transaction will be done under the camera.
You can also exchange your 500 and 1000 rupees in a bank branch with notes of a lower denomination. You’ll need to provide a valid identity proof viz., PAN, AADHAR or Voter ID card for the same. The limit for this transaction will be 4000. You’ll not be able to exchange money worth more. However, how many such transactions can be made by an individual and how frequent such transactions can be made is not clear by the official notification issued. [1]
The notification also mentions that the 4000 limit will be reviewed in 15 days which indicates that there might be a chance that higher amount of money may be exchanged.
You will still be able to exchange notes of 500 and 1000 in Government Hospitals, Govt. Pharmacies and Govt. Petrol Pumps until 11th of November.
You can also deposit your money to another account provided that you have valid reasons for the same. There will be no limit on such transactions.

B. For getting cash

Withdrawal to the extent of Rs. 10000 are allowed from Bank branches until 24th November. The withdrawn money will be in the form of notes of lower denomination. In a week, the maximum amount withdrawn from the bank account will be Rs. 20000.
The ATM will be out of operation for the next couple of days. They will be filled with appropriate notes in two days and will resume operation from Friday, November 11th. The withdrawal limit will be Rs. 2000 until 18th November and will be raised to Rs. 4000 from 19th November.
So it’s not the panic as government has made enough provision for you to take care of money stuffed in your wallet.

Before we end this discussion and appreciate Narendra Modi to the extent of converting of our admiration into adulation, let us look at some other lesser looked aspects of the decisions.

This is clearly a political move. A master strategist has made another attempt at turning the media into his advertiser for the upcoming UP election. With Modi’s popularity hitting a low over the previous few months and the BJP regime being criticised and sometime being equated to Nazi Germany (for the recent ban on NDTV), this move comes right on time. I wonder has the move been over-sped at the cost of causing great inconvenience to the people?
If BJP wins UP election, it will get a fair number of seats in Rajya Sabha. Once NDA is in majority in Rajya Sabha as well, one can easily fathom the unilateral decisions that can be taken without a space of divergent opinions which are contradictory to the government’s stance.
News has started coming over from the entire country as to how businesses and shops have stopped accepting 500 and 1000 rupees notes. This will create a great havoc tomorrow. What will happen to a villager in emergency who can not got to a government hospital and do not have access to facilities for exchange?
The banks will be over-crowded on the next working day and there is a possibility of some major clashes in different parts of the country. When it comes to money, people will be prone to loose their temper.
There is a high degree of information asymmetry. With people not understanding the move clearly, there will always be a chance of people panicking and not taking the correct move within time. People will stored black money will take faster decisions than the common men. The efficacy will depend on the government mechanism in place.
Have someone thought about a student like me who lives away from home and only have a bank account in my own native city. Where will I go to exchange money? I am sure there will be many other cases.
Transacting at bank and getting your money sorted is going to be a painful experience for the next couple of days.
What will happen to the people who have stashed black money?

There is a common perception that all black money with the barons will be wiped out from the country in a sweep. It is however, not as simple, as it looks. How much money do you think does a minister or an IAS or for this matter someone else have in cash?

Most black money is either converted to a foreign currency, deposited in a Swiss Bank account or held in instruments other than money (diamonds, lands, titles etc.). Only a small part (hardly 10%) is actually kept in currency.

But is always better to do away with some evil rather than nothing.

Conclusion- The decision will be very helpful in the long run but it could’ve been better planned.
What’s next?

Mishaps occurring at different locations and celebrations at some other will be in media for the next few days.

[1] On a side note, it is important for us to understand the difference between exchanging and depositing the money in a bank branch. It is the same difference as we understand. However, many people might get confused reading the notification.
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Suyash Mal
Suyash Mal, CA Article.
Written Nov 12
For this master plan to work (effortlessly) , every adult Indian must have an Aadhaar number, a smartphone with high speed internet connectivity and a bank account.

This overhaul is insane. The consequences of demonetization are far-reaching, pervasive and revolutionary.

The intention of the Government to move towards a cashless society is pure and its resolve is commendable. We as citizens must do our best to cope up with short-term inconvenience and team up with government to fight social and economic evils such as black money, illegal terror financing, hawala transactions, corruption, counterfeit notes printed by our notorious neighbors etc. So sporadic loopholes and glitches can be plugged and corrected. But to make net positive change in the long run and to root out the problem of black money larger denomination notes need to be done away in entirety and banking and internet infrastructure must be strengthened from the core.

Imagine this improved new system to be a bugatti veyron.

The real hurdle is not the hindrance caused in the maintaining the vehicle.
but what if there is no Bugatti Veyron to be cleaned in the first place. What if you don’t even have a car!
Our current telecommunication, banking and educational infrastructure corresponds to a bicycle.

For the seamless proliferation of electronic transactions in a move towards a cashless economy— the internet connectivity of the country needs to be immensely strong and accessible to every individual who wish to transact electronically.
Internet users in India— stats. ( source— India Internet Users)

If you expect to radically change the way people transact, you have to provide requisite infra to support the idea and make sure that enough population is aware of the new methods. Majority of India is rural population and if you expect them to adopt cashless payments using NEFT/RTGS or even online wallets like Paytm Wallet for bill payments— Internet connectivity must be available to all at affordable prices and at all times.

34.8% isn’t even a decent percentage.

JIO stunt has certainly made the internet more accessible and affordable but still there is a need of a more centralised, official government policy aimed exclusive at extending internet infrastructure. Wifi at Railway stations are a welcome move to start with.
Countries by number of internet users. (Source— List of countries by number of Internet users – Wikipedia)

Going further backwards, a person needs to have a bank account to use it for electronic use. Even after a lot of ambitions moves by PMO, like Jan Dhan Yojana and the Financial Inclusion Endeavors of RBI to develop the banking infrastructure and to bring everyone under the ambit of banking— the reach and effectiveness of banking hasn’t reached acceptable levels to support such a major change.

The government promoting financial inclusion through the Jhan Dhan Yojana has led to over 200 million new bank accounts being opened. With the RBI giving licences to over 20 new banks, including small banks and payment banks, the competitive intensity of the sector is set to increase.

In India, not only account penetration is comparatively low, at 53 per cent, but so is the use of accounts for payments — mere 15 per cent of adults reported using an account to make or receive payments. [1]

53% penetration isn’t enough.

This is to make clear that I’m not against the move. I’m just pointing out the apparent weaknesses. This decision was meant to be taken, sooner or later. Simultaneous investment in internet and banking will decide its success.

The weaknesses in basic infrastructures are not lethal and will not lead to total disruption of the system but will merely cause resistance and reduce effectiveness. Government is constantly trying to make the move towards a cashless society smooth and quick.


A set of powerful open and programmable capabilities, that are collectively referred to as the “India Stack” by the think-tank iSPIRT, has been created over the last seven years. Aadhaar provides online authentication using one’s fingerprint or iris, which can be done from anywhere. This can make transactions “presence less”. The e-KYC (know your customer) feature of Aadhaar enables a bank account to be opened instantly, just by using the Aadhaar number and one’s biometric. The e-sign feature enables online documents to be digitally signed with Aadhaar. The “digital locker” system enables the storage of such electronic documents safely and securely. All this can make the entire banking process “paperless”.

The final two layers of the “India Stack” have great relevance to the future of banking. The Unified Payment Interface (UPI) layer, a product built by the National Payment Corporation of India (NPCI), a non-profit company collectively owned by banks and set up in 2009, will revolutionise payments and accelerate the move towards a “cashless” economy. So “pushing” or “pulling” money from a smartphone will be as easy as sending or receiving an email. This product from NPCI is the latest in several payment systems that they have developed, from the National Financial Switch, National Automated Clearing House, and RuPay cards, to the Aadhaar Payment Bridge, the Aadhaar-enabled Payment System and IMPS, a real-time payment system.

The move to a “cashless” economy will be accelerated by the Aadhaar-enabled biometric smartphones. So credential checking in banking will move from “proprietary” approaches (debit card and PIN) to “open” approaches (mobile phone and Aadhaar authentication). As such, the holy grail of one-click two-factor authentication, now available only to giants like Apple, will be available to kids in a garage to develop innovative solutions.

Finally, as India goes from being a data-poor to a data-rich economy in the next two to three years, the electronic consent layer of the “India Stack” will enable consumers and businesses to harness the power of their own data to get fast, convenient and affordable credit. Such a use of digital footprints will bring millions of consumers and small businesses (who are in the informal sector) to join the formal economy to avail affordable and reliable credit.

As data becomes the new currency, financial institutions will be willing to forego transaction fees to get rich digital information on their customers. The elimination of these fees will further accelerate the move to a cashless economy as merchant payments will also become digital. [2]

[1] World Bank report says number of bank accounts in India jumped to 53 cent, adding 175 million new bank accounts
[2] The coming revolution in Indian banking

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Suryateja Rokkam
Suryateja Rokkam, This still puzzles me
Written Nov 11
How can the black money holders possibly get away?

Conversion of cash into Gold
Investing the money in jewellery is one of the most common practices used to convert cash into assets. There were reports saying that gold prices went up to Rs. 48,000 per 10gm as opposed to the Rs. 30,000 official price in some localities of Mumbai yesterday.
The other method is buying jewellery with backdated bill.

Jewellers were accepting the notes last night as they could convert remaining gold carried from the Diwali stock. These can be shown as Diwali sales.

“People with unaccounted money to dispose rushed to purchase gold on Tuesday night as soon as the news broke. Whatever registered gold was available with limited jewellery houses was sold last night within couple of hours,” said president of Gems and Jewellery Trade Council of India (GJTCI), Shantibhai Patel PTI. Govt take steps to prevent conversion of black money to gold | Latest News & Updates at Daily News & Analysis

How is Govt going to tackle this issue?

Govt has issued instructions to the field authorities to check with all the jewellers to ensure that people buying jewellery has to provide the PAN details.

Action will be taken against those jewellers who fail to take PAN numbers from such buyers. When the cash deposits of the jewellers would be scrutinized against the sales made, whether they have taken the PAN number of the buyer or not will also be checked. – Revenue Secretary

Distributing money to trusted aides, employees and workers
This might work on a small scale but very difficult for higher amounts. I’m not sure how the Govt is going to tackle this problem.

Putting the money in different bank accounts of family members
Traditional Hawala System
Most of the above loopholes are difficult to exploit if someone is sitting on huge piles of illegal cash.

Interestingly the government’s decision to scrap Rs 500 and Rs 1000 notes has opened a window of opportunity for a few small vendors to make some good money. Since the government has set December 30 as deadline for people to exchange their high value notes in their nearest bank, these vendors are accepting currencies of these denominations on a certain margin. This will help to claim the full amount from the bank, while saving others the hassle of queuing up at the branch.

Developers with illegal cash are exchanging bulk of their cash (most of them 500s and 1000s) for a quarter or third of its value.

The agents are charging 30 per cent for Rs 1 crore and 25 per cent for amounts above Rs 10 crore. Also, the promised 100s will not be delivered before a week because there aren’t enough in circulation immediately. Rs 500, Rs 1000 notes discontinued: Rs 400 in exchange of 1,000 in Zaveri Bazaar – Mumbai Mirror –

But most of the illegal/unaccounted wealth is in the form of Gold, Property, front companies, and benami equity stakes, foreign curencies stashed away in foreign banks and tax havens. (The Benami Transactions (Prohibition) Amendment Act is the first step to curb the benami transactions)

This move I guess is mainly targeted at the counterfeit currency racket (allegedly run by Pak related organizations to weaken Indian economy and also to fund terror programs). It might trouble the people with black money in the form of cash but the big fish (also smart) will always be free. Nevertheless it’s a good start in the war against black money.

Edit: Made the answer to the point. Raj Kumar


Black money crackdown could hit jewellery sales

A Tax Expert Explains How Black Money Hoarders Could Get Around The Rs 500, 1000 Ban
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Ciril J Thundiyil
Ciril J Thundiyil, An Indian at heart and proud of it.
Updated Nov 18
Initially people welcomed demonetization as it is said to curb black money, but later developments and reports have changed the initial response for a vast majority, including me. Only time will say what is the real outcome.
Google images

Some of those news reports which contradicts with the claims of government.

Cash recovery has been less than 6% of the total undisclosed income seized from tax evaders, shows an HT analysis of data from tax raids from financial year 2012-13 onwards. In addition to cash a great deal of black money is converted into gold and jewellery, real estate including land, share holdings and so on. The present demonetization scheme does not have an impact on black money held in those forms which do not constitute cash holdings. Why govt’s demonetisation move may fail to win the war against black money
If the demonetization measure introduced by the government has to be successful it should result in immobilization of a large amount of black economy. The large volume of cash deposited by the public during the last few days in banks is actually white money.
More than NDA or UPA we believed in Raghuram Rajan(who was the RBI Governor till September 4th). He had said that demonetization may not help in rooting out black money. Here’s What Raghuram Rajan Thinks Of Currency Demonetisation
History of similar measures in various parts of the globe gives a different picture. A brief history of India pulling bank notes from circulation [Distrustful citizens and canny black marketeers: Lessons for India from the history of demonetisation]
It was said that the move will crush fake currency, it too is put to question. There were currency notes worth about Rs17 lakh crore in circulation across the country, and according to the RBI, about Rs400 crore of this was believed to be fake currency. So basically to destroy Rs400-crore fake currencies, the circulation of total Rs17 lakh crore was blocked. While the black money converted into white may come into the banking system, how much of the fake currency will get weeded out? If the fake currency is already in circulation, it only means that one or two of the notes that you or I deposit in the bank, will turn out fake. Who takes the hit in that case? The common man. ‘Counterfeit notes account for just Rs. 400 crore’’
The poor have become mules to turn the black money of the rich into white as they charge a premium to do so. Poor people become black money mules for rich
The super rich are left unscratched.The List: Who’s Who & How Much
It is said to be politically motivated. PM using it in election campaign almost confirms this fact. 10 Reasons Why BJP’s Demonetization Move Is An Unmitigated — And Politically Motivated — Disaster
There were reports that the currency had added security features which is said to be hoax. It was reported that the new magenta Rs. 2,000 notes have all been printed at a facility in India but, barring the design, the security features remain the same as the old Rs. 500 and Rs. 1,000 notes, a senior government official. No time to add new security features in notes says official
In January 2014. The Congress-led UPA government had announced that all currency notes issued before 2005 would be withdrawn by March 31 that year and must be exchanged for new notes with more safety features. The BJP’s Meenakshi Lekhi had ripped into then Finance Minister P Chidambaram.”The latest gimmick of finance ministry to demonetise the notes before 2005 is an attempt to obfuscate the issue of black money stashed outside the country… This measure is strongly anti-poor,” Ms Lekhi had then said.’Anti-Poor’ Said BJP When Congress Government Had Announced Note Ban

Google images

People are confused as they don’t know whom to believe, and what really awaits them. The sentimental approach by PM is not enough to address the concerns. It will be helpful if government is able to provide logical answers. Demonetization can not be undone; only option we have is to wait and hope that it somehow helps our economy.
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StanleyVan, Native Cantonese,Mandarins,EN speaker,have some understanding on FR and JP.
Written Nov 18
In fact the loophole here is “reality”.

Black money can not be curbed by simply demonetizing without dealing with the corruption within the Government systematically,as of India case, information asymmetry and the social class difference is also a great factor that needs to be taken into account.

As of what Modi administration had said, they aimed to deal with the “big black money holders”, and of course with great black money comes with great social-economic status and have a great web of connection between local officials, law enforcement and possibly bankers.

And this goodwill of the Modi administration may turn out to be the best chance for them to rob the lower classes of India.

Here’s one of the case that how those black money holders can exploit the policy:

November, for a ordinary Indian farmer in remote area, is a important month for him to purchase fertilizers, seeds and other farming apparatus.

And suddenly the demonetization comes in,his rupees become paper and he have to walk 20km every early morning just to queue up for 4hrs+ at local bank, just to find out the bank ran out of notes because reasons.

As farming is a really strict thing when it comes to seedling. The farmer in despair, resort to local landlord/loan-shark to(i) borrow new rupee in extremely high interest rate (ii) exchange old rupee with new rupee in 10:5 ratio.

And for the landlord/loan-sharks, what they are going to do is to bribe the local bank manager and local officials to (i)deliberately slow down the rupee exchange process and to (ii) exchange old rupee with new rupee in a 10:8 ratio while keeping the law enforcement in bay.

For the lower class who doesn’t have any cash cushion like gold and shares,this is going to be a disaster;either they give up their job to queue up for the whole day and to hope for the bank still got notes for exchange, or to perform the above and lost a great portion of their hard earned dollars to the “big black money holders” that Modi administration hopes to curb.

Not to mention due to the upper classes also got a great deal of resources,things like speculation can also take place too.

So in the end of the day, the Modi administration will become a worldwide laughingstock for their act of populism when it comes to economic policy making.

Lower Class in India:To be or not to be,that’s the question.

Upper Class and corrupted officials:Time to earn big bucks and wash that money white!

483 Views · View Upvotes
Biman Ghosh
Biman Ghosh, A wishful Indian
Updated Nov 21
Well, technically, it is not a scam but it is certainly an ill-thought, hypocrite and political step to fight against black money.

I’ ll explain how, but before that read this personal narrative of a Bank employee:
Now, I start.

Prima facie, the step may seem to be Mr. Prime Minister’s masterstroke against black money, but on deeper examination we observe that the step of demonitizing higher denomination currency is nothing, but a proven political gimmick in current scenario.

First, we all have to understand the prevailing difficulties in fight against black money. Curbing black money is not an easy task even when you are 100% dedicated. It needs multi- pronged sustained efforts as well as continuous economic and political reforms to realise the dream of zero unaccountable black money. Our government must recognise that the game is not going to be easy. They should place in a comprehensive action plan against the black money. Instead of giving knee- jerk reactions in form of doing some firefighting here and there, they need to tackle challenges forthrightly and sustainably.

But what our governments have been doing? It is true that none of our governments held the issue with high urgency in past. Reasons may vary across the political as well as apolitical lines. But one thing is crystal- clear that the current government leaves no stone unturned to exploit the issue politically to its maximum extent. It is hell bent on politicising the issue of black money and harvest national sentiments based on it.

Our honourable Prime Minister announced to scrap higher denomination and that too without giving much though on how it will affect common people! How it will shock the socio- economic structure and other societal affairs!

It’s been a week since the PM announced illegal status of higher denomination but neither he nor his government bothered to present a concrete action plan explaining how they are going to replace more than 85% of available liquidity in the market with differed denomination currency notes. The government certainly seems on backfoot when it comes to managing fallouts of this so called “surgical strike” against black money. Should we really believe that things would go normal within weeks? Should we really show solidarity with our government in its “honest” attempts to weed out black money? Questions are complex but the answers seem much more confusing and complicated.

Even the bigger question at hand is- should scrapping higher denomination be the correct way to strike against black money in the first place?

In my personal opinion, Certainly not!!

Prime Minister could be seen across the TV chamnels thumping his chest for his precise and bold dicision on black money but, unfortunately, neither it is precise nor bold.

Bold step would have been to impose financial restrictions on those countries which facilitates ‘ round tripping’ from India.

Bold step would have been to act decisively against those whose name have been enlisted by the task force committee against black money.

Bold step would have been to make real estate Regulation regime much more stricted.

Bold steps would have been to put the entire Enforcement Directorate (ED) to trace the benami transactions stakeholders.

In a country, where more than 80% of total transactions takes place in cash- based form ( i.e, informal type) scrapping higher denomination at once without adequate action plan is the bold step?

In a country, where more than 60% of people are informal daily labourers, making them to wait in bank queue for consecutive days just to exchange thier own hard earned money is the bold step?

In a country, where banks and other formal financial institutions are ill- equipped to handle large scale financial transactions, replacing 86% denomination currency notes without much thought is the bold step?

In a country, where Real Estate regulator is non- existing in its economic history, expecting funnling out the black money with one masterstroke is the bold step?

(Only recently, the government passed Real Estate Regulation Act (amendment), 2015 with provisions of mandatory registration of real estate projects.

I know, at this time, patriotism is running high all over the country and no one is really ready to hear against bold steps taken by our PM. But we also need to keep doing reality check. As Dr. Yatrohima, the chief commissioner of Fukushima Disaster commission had pointed out that the biggest mistake a nation can commit is failing to question authority, to follow this wise man, we should never fail to question the authority.

Why don’t government impose financial sanctions on countries known for round tripping’? Why don’t government go after persons whose black money has been unearthed by the task force? Because this will cause significant damage to the intra- party equations in BJP.

Dictating policies without adequate preparatiry measures is as much bad governance as it is to remain inactive. And in some cases, even worse.

No, Sir No! These are just “surgical tacticks” to win UP elections!

This is not governance! This is Anarchy!!
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Adarsh Ravi
Adarsh Ravi, A temporary Indian; A permanent human.
Updated Nov 11
Bogus Loan

Bogus Loan is one of the most commonly used practises for the mentioned purpose. Coincidentally, I had just gone through an article posted on Economic Times on the same topic. And before I start, let me also say that this is an illegal, risky and punishable offense. So, I’d rather not have anyone gain inspiration from this answer, only to get caught later.

So, this process seems to be in practise in various cities, and the entities involved include the Black Money holder (B) and money market brokers/firms with excessive cash spending (F).

I shall explain the Modus Operandi:-

Step 1 – B gives the money to F without anyone’s knowledge. F deposits the money in its bank account. No one would question because such cash short firms would have a lot of transactions going on.

Step 2 – F issues a cheque in favor of B. F states that it is a loan/advance for a property payment in favor of F.

Step 3 – It is a loan and thus, B pays it back. B writes a cheque in favor of F for the principal amount and the charges for the ‘Loan Services’.

Step 4 – Now, F returns back the money to B, and Voila. Your black money has turned white.

This is the link to the article from the Economic Times that will help you get a detailed read of the same.

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Alok Singh
Alok Singh, The Original Indian… Only some will get what I mean…..
Written Nov 9
What effect will it have on customers, banks and Indian Economy…
Why ban Rs 500 and Rs 1000 notes?

In two words: black money. Unaccounted money, often used in any form of corruption or illicit deals, usually takes the form of high-value notes, which in this case are the Rs 500 and Rs 1000 bills. In his speech, Modi specifically pointed out that these large-value notes were being used to finance corruption and fund terrorism.

The Financial Action Task Force, a global body that looks at the criminal use of the international financial system, notes that high-value bills are used in money laundering schemes, racketeering, and drug and people trafficking.

In India, the Rs 500 and Rs 1000 notes also constitute a huge percentage of the money spent by governments, political parties and candidates during general elections. A Centre for Media Studies report showed that nearly Rs 30,000 crore was spent during the 2014 general election, while official spending only accounted for Rs 7,000-Rs 8,000 crores.

This of course only scratches the surface: major industries such as real estate have historically been conduits of black money.

The most important fact, however, is that the share of large-value notes has only been increasing over the years. While some of this is no doubt due to the natural growth expansion of our economy, it also hints at the increasing size of our black money economy.

Modi’s decision to decommission Rs 500 and Rs 1000 notes should ideally not hurt most individuals in the long-term, although it will have a significant negative impact on the working class and small and rural businesses in the short-term. Economist’s back-of-the-envelope calculation shows that the highest face value in India should be around Rs. 250; simply put, Rs. 250 is the highest-value note that most Indian individuals should need.

On the other hand, what needs to be noted is that there’s no good estimate for how much of India’s black money is in forms other than currency/physical notes such as gold, jewelry, land or any other form of wealth. Therefore while banning 500/1000 rupee notes will tackle the black money that is in the form of hard cold cash, it won’t affect other forms of black money. On similar lines, this move will, obviously, have little effect on black money stashed away in foreign tax havens.

How is this going to impact urban consumers, small businesses, large businesses?

Over the next month, there will undoubtedly be a significant shortage in cash supply: not just Rs 500 and Rs 1000 bill, which are being taken out of circulation, but almost every other denomination as well.

Why? Firstly ATMs will be closed on November 9 (pan-India) and November 10 (in some places). This is being done in order to remove all existing Rs 500 and Rs 1000 notes from the ATMs and replace them with lower-value bills.

Multiple experts and government officials, however, have said that this process will likely take one to two weeks in urban and semi-urban areas and up to a month in remote and rural regions. In the meantime, long queues at ATM have already started. People are withdrawing smaller notes to stock up, so there will be shortage in the days and weeks ahead.

As a consumer, if you depend on small notes (which is the great majority of India) to pay for your groceries, household items – it could be difficult over the next one week to do so.

Small businesses, both in urban and rural areas, will find this move downright crippling in the short-term. These businesses are mostly run on cash: they use hard cash to receive payments for services and to make payments for inventory and goods. It’s unclear at the moment how quickly they will be given access to the new Rs 2000 notes that will be issued.

On the other hand, as analysts have noted, India’s larger and new-age companies will have no problems in making the switch to Rs 2,000 notes.

Traditional sectors, such as real estate or cement, where are politically controversial and where there is larger incidence of corruption and high-value cash transactions, will likely go through a tremendous amount of pain, chaos and restructuring in the next few weeks.

We have just witnessed a tremendous step towards increased transparency in the Indian real estate industry. The effects will be far-reaching and immediate, and shake up the sector in no uncertain way. Stricter measures against black money have for long been required to help bring about greater transparency, give the Indian real estate sector more credibility and make it more attractive for foreign investors.

The ripple effects of this cannot be understated. There are major industries in India thrive on a parallel economy funded by black money. How will this affect the more legitimate and normal economy? The weeks and months ahead will tell.

How will this impact the vast sections of India’s population who depend on cash?

This move deeply impacts the working sections of society: drivers, maids, cooks, electricians, plumbers. Anybody who provides services in the informal sector and depends on monthly or bi-monthly cash payments.

Why? One obvious example: if you had planned on paying your maid or cook tomorrow and you aren’t able to beat the ATM queues or have enough smaller-value notes lying around the house, they will have to wait to be paid until you can get your hands on some cash. If ATMs are not replenished quickly and often over the next two weeks this could be a very serious problem. The severity of this impact will depend on how easily and smoothly India’s banking system and the government executes the transition.

Stepping back, however, anybody in rural India who doesn’t have access to a bank account (roughly 200-300 million people at last estimate, although the number is likely higher) and depends on high-value cash transactions will be crippled until new notes come through. One argument is that with the Jan Dhan scheme and the UPI/digital payment stack, rural India shouldn’t have too much of a problem. However, it will be a long time before rural India moves to completely cashless transactions.

In the short-term, people in rural India who have a significant amount of Rs 500 and Rs 1000 notes, but no official form of identification will have a tough time in exchanging their notes.

How many 500 and 1000 rupee notes are floating around? How much will it cost to replace them?

The numbers and calculations for this are mind-boggling. According to the RBI press conference today, there are 16.5 billion ‘500-rupee’ notes and 6.7 billion ‘1000-rupee’ notes in circulation right now.

In addition to this, RBI data shows that the share of Rs.1000 notes in the stock of currency in circulation at the end of financial year 2014-15 was 39%. Rs. 500 notes accounted for a further 45% of currency stock.

Putting it simply, at the stroke of midnight, a little over 80% of the cash in India (by value) will be worthless pieces of paper.

How much will this decision cost us? Or more importantly, why will it cost us anything at all? Firstly, because the Rs 1000 note costs the least to produce as a proportion of face value. It costs India around Rs. 3 to print a Rs. 1000 note (0.32% of face value), while it costs 96 paise to print a Rs. 10 note (9.6% of face value).

One analysis has pointed out that the total cost of printing the value of Rs. 500 and Rs. 1000 notes issued in 2014-15 in the form of Rs. 100 notes would be around Rs. 11,900 crore. This doesn’t include the costs involved in increased replenishment and maintenance of ATMs, which would be required because of the usage of and withdrawal of smaller-value notes will be far greater.

The exact calculation as to how much this will cost has still not been made. It has been pointed out that any economic cost would be outweighed in terms of the benefit it would bring to India and the Indian economy.

What of the new Rs. 2,000 note? Why is this being issued at all, if we want to combat black money and corruption by removing large-value notes?

The Rs. 2,000-note has apparently been in the works for some time. It was mentionedalmost 3 weeks ago (October 21st, 2016) notes that Rs. 2,000 notes would be coming soon and that the RBI had already started being printed and that their dispatch from a printing press in Mysore was underway.

This, however, brings us to the larger question: Why do we need a Rs. 2,000 note and a new Rs. 500 note if the move is to abolish large-value bills and move towards a cashless society?

One potential answer is that there is still some need, especially among India Inc and small businesses to use cash and the Rs. 2000 note will help. It does seem a little puzzling however. The carefully noted that the central bank would cautiously “monitor and regulate the issuance of Rs. 2,000 notes in the future”. This means that it is unlikely that the Rs. 2,000 notes will be issued in large numbers.

The timing of when these notes will be issued has to be taken carefully into account. One market analyst pointed out to The Wire that if the new notes were released before January (December 31st being the last date by which all Rs. 500 and Rs. 1000 notes must be turned in), it would circumvent the whole point of demonetizing larger-value notes!

The new notes will also reportedly come with a more secure design, making them easier to track and tougher to counterfeit. Contrary to reports, there does not appear to be a “tracker” on the Rs. 2,000 note. However, more details on this are awaited.

Does India stand alone in banning large-value notes?

The idea is certainly not unique or new: It has for the past 5 years been proposed by a number of academic institutions, think-tanks and international bodies that look to crack down on tax evasion, corruption and terrorism-financing. In February this year, European Central Bank head Mario Draghi announced that they were considering abolishing the region’s most-valuable bank note (the 500 euro bill) in order to curb tax evasion and terrorism financing.

In the same month, US treasury recommended that the $100 bill be demonetized.

The US has done some interesting work regarding banning large-value notes as a means of cracking down on global crime and corruption. An introduction to this work can be found here.

Even within India, there have been some signs that this was in the offing. Two years ago for instance the RBI announced that it was phasing out and decommissioning all currency notes issued before 2005. While this was done mostly to weed out fake notes, multiple analysts point out that it was also an attempt at rooting out black money. People who didn’t come forward in the initial three-month exchange period would have to furnish tax and identification proof to exchange large numbers of pre-2005 currency.

The call to retire Rs. 1000 and Rs. 500 notes has also been made before within India as well by economists, think-tanks and even politicians.

Could this move have been timed better?

The timing of the announcement has been somewhat of a surprise. While the government has given a number of exemptions to stave off outright panic – Rs. 500 and Rs 1000 notes can still be used for the next 72 hours to pay at government hospitals or for train tickets for instance – it still puts quite a number of people in a pickle if supply of smaller notes are constrained in the days and weeks ahead.

The timing is also curious for other reasons: the UPI (unified payment interface) system is likely to be fully operationalized only by January 2017. Would it have not been better to wait until then, if this move was to also spur India’s shift towards a cashless economy?

On the other hand, if this had been announced in advance it could have been self-defeating in nature; allowing holders of black money to convert their cash for gold or other forms of wealth instead. The secrecy surrounding this decision – coming as it did as a shock to journalistic, policy and even most government circles – only reaffirms this.
2.5k Views · View Upvotes
Rahul Sharma
Rahul Sharma, Economist in making.
Updated Nov 12
Although, the decision to demonetise 500 and 1000 rupees is commendable and bold. It is also very well thought out move as first accounts were opened under “jan dhan yojana” and then people were asked to declare their Income under “Income declaration scheme” but the desired success could not be emulated against the black money. It will be naïve to say that there will be no potential downside to such decision. I will be focussing on some of the major downsides whose impact may be huge.

This particular decision is majorly based on the fact that whole Black money (the money on which the tax is not paid) is always used for wrong purposes which is impractical.
There is no deny of the fact that Indians are not highly financially educated and are only aware of the basic transactions like paying all kind of taxes (Direct and Indirect). It is also worth noting that most of them do not weigh in using net banking/credit cards (majority of them are 1990s businessmen) for day to day transactions even after they pay tax.
In India, Women have the habit of hiding money from their husbands and children. In their eyes it is their and their family’s future security. In my eyes it empowers them. With this move this art of saving money of Indian women will be taken away. In 2008–2010 recession period, when people lost their jobs, traditional Indian housewives run their houses with this saving (my personal experience). so, this saved money is recession proof.
Indians are generally very open hearted and hold the tendency to donate ( for now only do not consider the religious places in it) . This donation majorly covers up the govt. failure to implement its policies and reaching out to people through their policies. Now, after this move people will definitely hold themselves back and on the other side if degree of implementation do not go up, it will really cost poor.
In other case of donation i.e. at the religious places temple trusts will cut some of the jobs to make up the reduced donation (there are 10,8000 Hindu temples in India). Now, the question is do we really have any back-up plan to make up for the lost jobs?
Everyone would agree with the fact that when you have more money, one has tendency to spend it more (It is practical to assume that last one i.e. manufacturer pays the tax in India, if not the consumer who is creating the demand through Black money). This decision will prompt people to hold themselves back to spend more though comparatively. This will bring down the demand (consumption) ,and low demand will force the low supply and finally it will lead to low production and ultimately this will slow down the growth of manufacturing sector (or may be GDP). Keep in mind this effect will be for short term but probability of happening so is higher.
There is a point circulating in the media that it will boost credit growth for the banks. It is completely true to its core but in reality it will cancel out the efforts by previous RBI governor to restructuring the financial system through the recovery of NPAs which was also supposed to increase the credit growth of banks. Both the moves should go parallel for the better future of Indian economy.
All the points made above are right if seen in isolation and any financial damage (projected in above three points) will be made up through the money which will come out after this decision. So, It is really a nice decision by our govt. and people need to stay calm and optimist.

This decision is not new and has already been taken by PM morarji desai in 1978. It took 38 years to again take such a decision and sweep out all the that was collected in these years. There is absence of any back-end plan which can ensure the further collection of black money (after 8–10 good years).

This move ignores the inefficiency of Indian tax regime whether related to structure or Institution. A compulsory parallel need of tax reforms and strengthen the Institutions like Central vigilance commission, Reserve bank of India and income tax department will make the move successful and will show the farsightedness of present government.


Spiritual Website – Read Articles and Blogs related to Spirituality, Wellness, Lifestyle

Jan dhan yojana:- High-value notes demonetisation: Its 1978 redux! – The Economic Times

Income Declaration scheme 2016:- Income Declaration Scheme – 2016

1978 Demonetisation:- High-value notes demonetisation: Its 1978 redux! – The Economic Times

Sorry for bad English.
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Jugal Joshi
Jugal Joshi, Juugadu Dimag
Written Nov 10
I am a Middle Class Indian and My Answer might/will apply to Middle Class Families only. I would not start my answer by providing the background of what the case is as everyone is aware about the demonetization of ₹ 500/1000 Notes.

I am a law abiding tax paying citizen myself and would not recommend anyone to break laws and stash black money.
By this method each person can convert INR 1.6L . So a family of 5 can Convert around 8L Plus they can always deposit the official cash in hand which they have in their statements. Also in future the government is saying that the limit for withdrawal will be increased, So in that scenario more old currency can be converted to new currency.

A Few Questions that I have ..

If i have two or more bank account in the same name can i withdraw 20 thousand each ?
Is the 20 thousand limit over and above the ATM withdrawal of 2000 per day
In that scenario more amount can be converted

I am open to any suggestions/changes/edits that you can provide to improve this answer.
1.6k Views · View Upvotes
Yugantar Gupta
Yugantar Gupta, Rs 2000 instead of Rs 1000?
Written Dec 9
Demonetisation has not helped in any way in the fight against black money or corruption. The following facts prove it

Most of the demonetised currency has come back
There are still 3 weeks left for the deadline to end. 12 lakh crores out of 15.44 lakh crores have come back.

The government now feels that all the money is going to come back

Expect all demonetised money to come back to system: Revenue Secretary Hasmukh Adhia

There are apprehensions that there has been double counting

Double Counting? State Bank Has Doubts Over Rs 11.5 Lakh Crore In Old Note Deposits

No black money if expected to be purged

Where’s the black money? Government may be in for shock

All this means that all the black money has been successfully converted into white through various means, or that there was no black money in cash – as I have explained in point 3

2. Crores of money in new currency has been raided

http://Newslaundry.com has created a database of all the money in new currency that has been seized all over the country

Database of New Currency Stashers

The total here is Rs 100 Crores. This is the minimum that has been caught because not every report is included.

Most of these have been seized by Income Tax which have a severe manpower shortage. Income Tax is primarily a desk job. There would be at most 300–400 persons who would be involved in raids across the country.

So most of the new currency in wrong hands has not been seized.

Based on the 100 Crores that have been caught, the amount of black money in new currency could be anywhere between 10000 Crore and 50000 Crore

When Arvind Kejriwal said that there was home pick up and home delivery of new currency, no one believed him. Now it appears to be the closest to reality.

The people who are willing to pay the commission are getting any amount of new currency they order. The poor and the middle class continue to struggle for cash.

There has been a huge ‘change of hands’ of black money. From tax evading businessmen it has gone to hawala operators and some corrupt bank and government officials. But none of it has come to the government.

3. No one sensible stores black money in cash

Out of the black money recovered in IT raids only 6% is in the form of cash and gold/silver. Most of it is in real estate. The reason is very simple

There is a basic flaw in the logic that black money is stored in cash.

Let’s say a person has an income of Rs 100. Instead of declaring it, he hides that money under his mattress and declares 0 income.

After 3 or 4 years he will still have 100. On the contrary, if he declares it, he can invest Rs 70 in mutual funds and get a tax free return of at least 15%. Within 2.5 years he’ll have white income of Rs 100.

He also avoids the risk of that money being stolen or raided by I-T Department.

If anyone evades taxes, he does so only because he feels he can either spend it or invest it somewhere, like real estate or gold, in the next 6 months to 1 year.

So by demonetisation, you have destroyed at most 1 years worth of black money. The amount of inconvenience caused does not justify killing 1 years worth of black money

You have to attack the point of generation of black money not storing it. This brings us to the next point, that is, what is ‘black money’?

4. Black money is a flow concept not a stock concept

There are 2 types of concepts of figures in economics – stock and flow

Stock means something that is available physically with you. For example wealth. The balance sheet of an entity represents ‘stock’ of various items

Flow means something that is continuous. For example income. The Profit and Loss Account shows the ‘flow’ of various items.

Black money is flow. It is not stock. Black money will continue being generated because instead of Rs 1000 notes, people will simply use Rs 2000 notes for all purposes. There has been no systemic change that will stop the generation or flow of black money. In fact, it will be easier because Rs 2000 notes occupy half the space of Rs 1000 notes.

5. The cash is back in the market

As per RBI figures, around Rs 4 lakh crores of new currency has been disbursed. It has only been 1 month and 1/3rd of the currency has already been replaced. Even now there are cash shortages at several places. So we can expect this figure to keep on rising for the next few months. If the entire 15 lakh crores come back, what objective did we ultimately achieve?

There would be sufficient money to do all the black transactions as done before. As explained in point 4, cash is only a medium of transfer of black money and not a medium of storage.

There is already sufficient cash with all the wrong people for all the wrong deeds. This is evidenced by all the points I have mentioned above – new cash being found in raids, lot of new cash in circulation and shortage of cash in the hands of the honest public.

Another factor relevant here is the rise in non cash transactions. This proves that the honest actually have much less cash than they had previously and most of the 4 lakh crore is with the wrong people.

6. Fake currency

Some people believe this move will affect the Fake Indian Currency Notes (FICN). This is completely false. The effect is limited to the short span of time it takes to restart operations – which may be 6 months to 1 year. It may even be shorter because some FICN in new notes has already been found.

RBI has already clarified that there are no new security features in the notes. Even if there were, it wouldn’t have made a difference because hardly anyone checks the 14–15 different security features before accepting them for transactions.

There are 2 different types of new Rs 500 notes because of misprints. This has made counterfeiting easier because people will not know how exactly the notes look like

7. The Government has changed its own stand regarding the benefit of demonetisation

Earlier the objective was black money, money laundering and terrorist funding. Evidence has shown that none of these will be stopped. So they have changed the narrative towards Digitalisation and Cashless economy.


Cashless economy is certainly very desirable. But the state of Internet penetration, literacy and infrastructure is too poor for a completely Cashless economy. It is also relevant to note that there is no Cashless economy in the world. When the developed countries with full literacy, banking and Internet access couldn’t do it, it shows how difficult a task that is.

Moreover Cashless economy could have been promoted even without demonetisation. It would have been much more effective and much less painful.

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Subaash Viswanathan
Subaash Viswanathan, From India
Written Nov 8
Please note that my answer is out of context as it’s about implementation issues.

More than curbing domestic black money, I see this as a move towards cashless and digital economy.

Obviously there are some loopholes.

1. Not yet fully financially included

There are so many people out there without bank accounts.

2. Where’s the infrastructure?

When we discourage the cash transactions, we need to make sure that all the alternative channels are ready. Initiatives like UPI and payment banks are still in early stages.

3. Issuing the new 500 and 2000 rs notes

I’m afraid that this will result in a zero sum game.
6.9k Views · View Upvotes
Sudhir Jaiswal
Sudhir Jaiswal, ADAS
Written Nov 8
First of all,

I hope you are not one of them. 😉 🙂

The great measure of withdrawing top 2 Indian currency note taken by Indian Government will surely help in eradicating Black Money and circulation of fake note in market.

1. Turning them into 100 and other less currency note is not easy for black money as you will be needed to deposite in the bank account and you know if you are depositing more money than limited amount believe me The situation may be like this at your home on returning from Bank. Yes Income tax department will have All Ears in upcoming Days. 😉
You will be asked to submit your PAN No. For Tax Filing and the rest is upon INCOME TAX Department.

2. Yes, You can convert that money by buying Gold. Just think of a situation You and such people will be buying gold so demand increase and So the price of Gold. I believe that price gonna record high for gold and of course that will be down after this matter (after new currency is invaded) so you will lose money for that but it’s still profitable from the point of view of Black money.

This is the loophole where Black Money Holder can save themselves some how.

3. New currencies. Govt. is rolling out brand new 500 (Black) and 2000 (Pink ❤ ) rupee note . So here is the Picture(Deedar) of upcoming Note
For Rs 500 : https://www.rbi.org.in/scripts/i…

For Rs 2000 : https://www.rbi.org.in/Scripts/B…
See that Satellite image at the back of 2000 Rupee note and Text “Managalyaan” That’s the symbol of How much we achieved in Space Technology.

Man, We are entering in New Economy of India.

Let’s Join hands to keep it transparent and corruptionless.

Modi the Shivaji of “Shivaji The Boss” Movie.
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Nishank Garg
Nishank Garg, Practising humor
Written Nov 8
Firstly, The people, with hard earned legal money in 500 or 1000 denomination, need not to worry. Contact your bank and get your fund submitted. But if you have black money, Dear Sir/Ma’am, You are sitting on a pile of dust.

Let’s go into the recent past, Govt. of India came with Black Money declaration policy in order to combat the challenge of dead/black money issue. The scheme, however, did not turn out to be very effective. Hence, the Govt. of India found the other way out i.e to remove the paper currency which is in circulation.

Paper currency is the way to make anonymous transactions as it helps in concealing the individual’s identity. So it’s easy to avoid laws, taxes and regulations. It’s untraceable. Hence, this money is utilized for all wrong doings. Be it funding of terrorist organisations, inception of illegal activities or filling the bellies of big fishes, black money makes the ball roll.

Why this move?

Because it’s going to work. All the moves that we made so far, all the fight that we fought, and all the things that we did against corruption, did not address the root cause. The need was to attack on the roots, not cutting the branches. This move will certainly address the corruption issues at root level. Suppose, the guy that lives next door to you has 50 lacs in 500 or 1000 denominations. The money is dead and can only be utilized illegally. When govt. came with Black Money declaration scheme, this guy did not disclose his income as he had to pay almost half of his this money as penalty. So, he waited till the dust settled. Now, The Govt. of India came with the plan which will make his 50 lacs worth nothing but the dust. Now, he has two options,

Option 1: Submit the money with the bank and ring the door bell of Income Tax Department personally.

Option 2: Cry as hard as possible.

It’s a long term shot for the prosperous and corruption free India.

What would be the consequences of this move?

1. Stock Market would crash – People without having a clear idea about the situation would try to save their fortunes and would start pulling out their money from the stocks that are going to be hit by this storm.

2. People with huge piles of paper currency are going to lose their calm – The day will start with Trade unions and other such unions coming together to protest and do marches.

3. Money’ll be sucked out of the market. – In coming weeks or months, there would be so much decline in trade and commerce.

4. Decline in the GDP – Initially, the GDP of India would see a decline but this is going to be temporary.

5. Lots of Millionaire would become Chillionaires. – Next Door Sharmaji, who used to mock you about his affluence, might become speechless from tomorrow onwards.

On the positive side.

6. Funding of terrorist would be banned – At last, this is going to be a huge step against Combating Home grown terrorism as well as terrorism from across the border. Pakistan prints Indian currency and circulates them via Nepal and Dubai in order to fuel his terrorism campaign. This will end from midnight. Some Big terrorists would see a huge decline in their net worth.

7. No more tax evasion – No more Hawala and other money laundering scams.

8. No dead money – It’s better to burn that buried cash or deposit it with Bank as you don’t have a third choice.

9. Increase in usage of plastic currency – Credit and Debit card transaction would see sharp increase in usage. People would have to resort to plastic currency as it’ll a while for the new currency notes to be available easily.

10. Demand for chartered Accountants would touch the sky – Firms and institutions would hunt for smart CAs. You already know what I mean.

11. The Black money would be turned to dust – You do not need to buy toilet paper anymore. If you’re sitting on Black Money and can not declare it with the bank, use it as toilet paper.

12 . After an year or so, the economy will be back on track with robust and sound future. Economy could have grown without this move but that would have been a hollow one that could have been shattered by s slight blow.

13. Long term GDP growth rate will be much higher than current rate.

We all should appreciate our government for this bold step. This is India entering big leagues. You should embrace it.
8.1k Views · View Upvotes
Adv. Aditya
Adv. Aditya, Lawyer, Philosopher, Political thinker
Written Nov 8
Yes there is.

Politicians from party in power launching the 500 and 2000 rupee notes can print 1000 currency notes while only circulating 10 currency notes. Being party in power nobody can/will question them.

So actually, it can turn into a major scam. You should know that the richest political party in India is Bharatiya Janata Party (BJP) and 73 percent of its party fund comes from unknown sources.

You can read the status of other political parties too in the following website:

Financial Information (Donation & Income-Expenditure)

Actually politicians who are affiliated with the party in power will be biggest gainers from this move.

Moreover, it will cause great losses to the nation. Printing costs of new currency will be borne by the people of India. Imagine, how many 500 Rupees and 1000 Rupee currencies which were printed by the RBI this year itself, and they would be destroyed for this.

The government is making stupid move when people with most black money don’t use domestic and local currencies.

“They use bitcoins and other untraceable virtual currencies.”
2.6k Views · View Upvotes
Asit Dhal
Asit Dhal, Indian
Written Nov 12
It’s a temporary solution to crippling grass root corruption.

Once new ₹ 2000.00 notes are available, low level corruption will start again. People using high denomination notes will find a new notes to use. Eventually we will be back to square one.
493 Views · View Upvotes
Dev Sinha
Dev Sinha, Entrepreneur. Dreamer.
Written Dec 18

In last few days there has been quite a lot of debate on demonetization- one of the biggest criticisms being that the implementation has been quite poor and has caused a lot of inconvenience to the common man. While it is hard to say what exactly transpired in the corridors of power in the run up to demonitization, I’m sure certain tradeoffs had to be made between keeping the secrecy of the mission vs. consulting all stakeholders and creating a full proof implementation plan. And some of this shows as we see the execution challenges in the last few weeks.

Having said that, I also have another contrarian point of view. Why should all the burden lie on the government. Shouldn’t all of us as citizens have a role to play? To educate others on digital payments, to take our household help to bank and open their accounts, to convince our parents/ relatives to have all transactions in ‘white’ and pay taxes in full. The performance by citizens of India has been better than average in terms of maintaining peace and order, respecting the new rules etc. But I’m afraid that may not be sufficient. We, especially the educated lot, need to do a lot more to make sure the objective of a cashless society gets realised. Here is a small way in which you can do so – enabling a literacy mission on digital payments (Paytm Seekho ).

Imagine when every sabjiwallah, doodhwalla can use digital payments, and people can no longer use ‘cash’ transactions as a way of massive tax evasion, what all benefits can accrue to the country. Imagine the development spending that the government can do with all the additional tax collections – spending that ensures that we are in line with any other developed country in the world.

Here’s hoping that day comes soon. And this time there are no execution challenges.

Jai Hind!
Pradeep Kumar Alugurthi
Pradeep Kumar Alugurthi, One of 2% Tax payers from India
Written Nov 8
I don’t think there are any loopholes as far as now .but I can say big shots need not worry about this step.they invested their black money in dollars which can be exchanged at any time.

Apart from this business people will get affected

Public will start using cashless transactions such that businessman has to pay more tax
Real estate and stamp duty corruption will get affected
Govt officials will take less Money as bribe as they can’t carry bundles 😀
2.8k Views · View Upvotes
Praveen Parihar
Praveen Parihar, Pursuing Masters in Power Systems Engineering from MBM, Jodhpur, Rajasthan
Written Nov 8
This is surely a BOLD decision. It will surely help in curbing out the black money.

But we have to analyse its impact?
Everybody know that big businessmen work on Credits via banks, or their payments are done online. So will they be affected? I guess NO.

None of the businessmen like Ambani, Adani, Tata, Birla keep money with them while doing a deal. Not even a local businessman. All works on credit accounts.

So, if we see this, the whole scheme will affect only those who keep hard cash in their homes… To take an example, people like engineers on govt dept, or clerks, or some other lower and middle level officers. They will now deposit the amount in banks, and might get caught.

Everybody know, the majority of black money is either with the corporates or the politicians. The decision taken today was under review since past many months (as said by the RBI Governor) and a few people from various departments were involved in this.
What is the guarantee that this information was not leaked before by some defaulter? When the images of the Rs.2000 note were there on social media before they were even launched, the secrecy of this decision comes under question.

If there has been any such thing happened, then its for sure that the one who were informed might have already deposited their undisclosed incomes in various accounts, so as to protect themselves from any problem in the future.

They also might have deposited their huge wealth in the name of temples and trusts. And hence, protecting them from ill effects.

Another adverse impact will be on daily wagers. For the next 50 days, people will be able to withdraw only Rs.4000 from ATMs. What will happen to the people having some constructions going on?? How will they pay to the workers? How will they manage all things in just Rs4000 per day?
Moreover, this will lead to slower flow of money into the market, as the market is dominated by the Rs500 and Rs1000 notes, and everybody will be holding lesser money in cash as the per day spending of a person will be restricted to just Rs.4000.

For me, the decision is very good and I think it will surely help to put brakes on corruption and black money, obviously at LOWER LEVELS, but its credibility is questionable.
2.5k Views · View Upvotes
Shrawan Salarpuria
Shrawan Salarpuria, Dating LiFe since 1993 🙂
Written Nov 9
Loopholes for coverting your existing 500/1000 rupees notes into 100 without involvement of bank.

Since railways are taking existing 500/1000 notes for 72 hours. Why cant one take this as an advantage.

Book the tickets of first class AC trains for maximum journey possible. Yes i am talking about window tickets. Book your tickets for maximum fare possible with different location on different dates (for next 1 month to 3 months) . After one month or before the date of journey cancel all the tickets . Indian Government will return back your money with Rs.100 notes. Obviously they will charge some clerical charge but this is for those who hold money from unanswerable source.

[Note:- I am not sure if there is any rule regarding limitation on booking of tickets]

However you can book your tickets for your family on seats available with maximum fare for different routes, like Delhi to kolkata, then next day kolkata to mumbai, then munbai to Sikkim and so on.

I think by this way one can save atleast 1–2 lakhs liquid currency without disclosing it Bank.

Happy Journey 😉
964 Views · View Upvotes
Sagar Kanse
Sagar Kanse, I have a small understanding of economics & black money
Written Nov 9
I will explain this in shortest manner…

Firstly converting the money into gold is practically impossible as the shop owner will not take the cash note of 500 & 1000 rupees.

Second important thing is if they try to convert 500 and 1000 rupees note into 100 rupees, again that is impossible bcz bank have a limitation in converting to 100 rs ( 4k is the limit ) though the limit will increase after few days…

Now people having lakhs and crores of black money practically can’t do anything rather than declaring to government.
1.8k Views · View Upvotes
Written Nov 9
Exactly, people answered everything except the original question. May be the question got edited. I can think of one way.

Government today announced that any transaction about 2.5L would be scrutinized by the Income tax department. Under that amount is okay.

If someone has black money, simply let say INR 1 Crore in 500 and 1000 denomination, they can make use of crowdsourcing.

Find 50 really poor people, distribute them 2 lacs or something each. Send them to bank and ask them to convert. There is a limit to conversion of 4,000 each day so essentially in next 50 odd days you can convert 50 * 4000 = 2lac per person without them having to deposit anything to their bank account.

These mercenaries bring back INR 100 or so currency notes. You give each of them a percent cut. At this point one should be able to give a large % cut. This will motivate people to do it. At 2.0 * 30% =60,000 income sitting home. I am sure a very poor person will be willing to do this. About 350 million people (~US population) in India lives below poverty line which is about $2.4 per day ~= INR 57,000 per year. So basically if a person accepts this offer, they make an year load of buck in half an hour.

Now this would be an easy way for someone who has 5–10 crore in black money. They can do this by Dec 30 without being noticed. For larger amount, this won’t work as organized syndicate for such crowd sourcing could be easily traced (a rat might expose by blackmailing original owner of black money).

Note: In no way I support this. This decision by the government is awesome and I wrote this answer just for logic purpose. Their might be some catch in following this way.

Going Anonymous just in case 🙂

EDIT 1- based on questions regarding what happens if the mercenaries runs away with their share.

The only catch here is that what if the guy runs away with your money, you cannot explicitly take him to court or police. For this to happen either you need muscle power or you need collateral in some sort.

Also we can think that if 20% such mercenaries actually run away or don’t return the amount lose will be cost of doing business in this case. In our example 10 people out of 50 dont give our money back. So 20 lac is gone out of 1 crore plus 60,000 * 50 = 30 lac. So total 50 lac/100 is gone. You basically still convert black to white by paying 50% fine. Government is asking 200% and also legal trouble.

The way to reduce 20% or whatever risk is to find very poor people who will do it without any issue for 60,000. Good thing in this case is that each mercenary only has 2 lac of your total so total disk is diversified.
2.5k Views · View Upvotes
Anil Parmar
Anil Parmar, Co-Founder – http://www.ekhaliyan.com
Written Nov 18
The decision have not been appreciated by Indian public so far. The nation seems quite angry and frustated with PMs decision of demonetisation of the indian currency .

Demonetisation is no doubt the burning topic of the entire nation but the post demonetisation results are quite horrifying to observe. 10 days ago Prime minister addressed the entire nation and banned the notes of 500 and 1000 Rs. The ruling government believes that this step is going to end the black money from the country. As far as the intention to eliminate the black money is concerned we believe in the Government but recent incidents have shown that the policy was implemented very badly without even planning. People all over the country are facing extreme hardships in dealing with their own money. People are standing in a queue waiting for their turn, crying, Protesting and even dying. The thing is the nation can’t live like this anymore they want the Government to take some crucial steps to resolves this crisis.

To read about the implications please visit :

5 Better Ways the Government Must Use to Handle the Demonetization Crisis
Benedict Joseph
Benedict Joseph, Frugality with a Purpose: Lifestyle changes – For Artistic Beautiful Life
Written Nov 13
Demonetization is not a good way to Curb Black Money. India was not the first country to do so. It has already been tried by few countries before and it failed to put an end to Black Money Hoarders. In actual Economics its used for other good purposes: such as Free Trade: e.g Euro.

Time, Duration and Population

Those countries which tried before had 2 things on their side. Time and Population They tried during 1970s and the Population was much lesser. But our Population is the largest in the world next to china and we are trying this in 2016.

The Failed System

Though we have Technology, but still India is a Cash Driven country and most day to day expenses of civilians depend on Cash and not on Banks.


It is still considered by many as a Political drive based on UPA elections rather than genuine Motives. We cannot say..but the timing makes people to have such doubts.

Worm’s Eye view than a Bird’s Eye view

Demonetization is a worm’s eye view method… starting from the destiny rather than the source. If flowing water is the Problem we should shut the Dam.. rather than collecting the water in buckets.. how much one can collect.

The IT department has all the data and knows which Politicians, which business men, which celebrities, which Drug dealers, Hawala Hoarders are causing this flood of Black money. They can give criminal action against on them without bail… and put an end to all corruption. But they want the entire India to go through this Physical drill to say: we collected all the Black money. That kind of approach is going to hurt them also.. so they left the Bird’s eye view.

Will Higher denomination rs 2000 note a solution to put end for Black Money?

Wherever Demonetization happened they remove the Higher denomination note. But here we removed the 1000rs note and introduced 2000rs note. This raises doubts as it gives more liberation for the Black hoarders to save i more easily. Ideally they should have removed 1000 rs note and introduced only 500 rs note. Now adding to this: people find difficulties to change the 2000rs note which might be a temporary problem

Need to carefully deal: otherwise it leads to Deflation

If you want to kill the pest, you can kill it with pesticide. You don’t have to burn the entire house. This is a bold step by the Government. Agreed. But they have to be very careful otherwise economy will fall. Few countries have fallen due to Demonetization: eg Tanzania.

Demonetization causes negative Inflation too: which is dangerous to Economy: How?

Demonetization should be handled very carefully: even a small mistake will collapse the Economy.

Business cannot run —→ if they don’t have money people can’t Buy ———→ After they receive the Money: A psychological purchasing behavior sets in: that is people will tend to buy what is necessary and not anything else: so they stop shopping and other things ——-> This is due to Future fear of losing their money ———-> Since people do not buy or sell: there is no local business ————→ Since there is slow business employers cannot pay their employees their salaries ——→ So Employees are downsized..losing jobs ———→ These Employees and people without any money depend on their savings in Bank account until they get a job ———→In the worst scenario which is rare: Banks loose all their deposit money…because people depend on it and failed Credits and loans. So Banks collapse. Hence Economy Collapses.

The chain of issues

I can give my own example: My Mom has a driver: I am not sure how i am going to pay his monthly salary at the end of Nov if this condition doesn’t change. He doesn’t have Bank account. Even if he has one: its still the same he has to go to ATM and get it. It is month end i can expect a same crowd because all salaried would be standing there too. If i get it in ATM: will it give rs 2000 or 1000s or 500s. Can he go and make change of it. I can tell him to wait for 10 days or so if i am not able to withdraw in 10 days. But he has a small Loan to Pay.. and rent to pay for this house in Native.. where his aged mom and wife lives..none of them are employed. The worst hit is not my family or my immediately ones: but the ones who are in lower income group: our servant maids, our drivers…and so on. This is temporary, but such small issue can be chaos of many families.

Government is asking to deposit all the Money in banks..for which tax is deducted.. and this Tax money..if it comes back to public welfare well and good. But historically in our country only 20%-30% comes to public rest all goes into cabinet ministers and politicians pocket in the name of Funds.

Hopefully this is temporary. If its not getting recovered of this anarchy then its going to be badly Hit.

Being said that: The Movement might curb 10%-15% black money: but don’t expect more: India is a large country with more invested in real estates and Gold.

Other doubts

The removal of Raghuram Rajan and the newly appointed RBI Urjit Patel who had served major positions with Reliance raises serious doubts: whether it is planned attempt of Business and BJP to use people for other motives: say Market study or making everyone digital for their own business and so on.

My answer is only to this question and in context to my perspective and nothing else.

Urjit Patel – Wikipedia
273 Views · View Upvotes
Akash, CA student
Written Nov 8
Yes it does have following loopholes.

₹500 and ₹1000 notes will cease to be legal tender, but there is no way they can stop people from transacting with those currency. This will be helpful in converting black to white.
People with black money will exchange small amounts of black money for white money or product or service. For example a labour contractor may pay his labours ₹500 instead of say ₹450. Then the labour will deposit it in the bank. The black money holder will only lose a fraction of his black money this way. In fact it’s a great opportunity to convert black into white.
Introduction of ₹2000 notes will help in big black money transactions.
Of course there are many advantages, like curbing fake money and terrorism. But overall impact on black money is really low. Because those who can make crores of black money can definitely come up with ideas to convert them.
1k Views · View Upvotes
Ridam Dhawan
Ridam Dhawan, A proud Indian.
Written Nov 9
There are no outright loopholes in the Indian government’s plan to demonetize the existing ₹500 and ₹ 1000 notes. Although, India has great minds and they will eventually come up with a way to minimize their losses.

Some of the ideas that struck me were,

We need to see that people store black money in various forms, be it in offshore assets, real estate, gold and bonds. The people who have invested in real estate would also face a severe shock as the real estate market is going to crash as it majorly operates with Black money. The ones having offshore assets are relatively save as there is no cash involved here. The ones who have invested a lot in gold are on a very safe side, the probably have a minor risk of losing any money as gold prices are expected to go up due to the election of Donald Trump as the U.S President.

The aim of curbing the problem of Dirty Money can be assumed to be fully accomplished.

All those who have acquired huge cash stacks from the trade of illegal items like drugs and will be hit the hardest. The terrorist organizations that operate on illegal money in India, the illegal refugees who don’t have an Indian identity would also be struck very bad. The people who trade in counterfeit notes, are absolutely gone.

Talking more about Dirty money, the Havala system of trading is also destroyed. The transactions that involve crores of rupees in illegal trade are worth nothing, not even a single penny. The people who trade in illegal items have huge amount of cash, and if they want to save it, they’ll have to declare it which would further probe investigation.

I’ll further talk about how the problem of Black Money would be curbed and how people with black money will try to evade this problem.The problem of black money gets solved in the way that people who have huge stacks of cash hidden in homes, godowns, farm houses and pretty much anywhere and everywhere will not be able to convert it into real money.

People store money in various forms ,be it in offshore assets, real estate, gold or bonds. The people who have invested in real estate would also face a severe shock as the real estate market is going to crash as it majorly operates on Black money. The ones having offshore assets are relatively safe as there is no cash involved here. The ones who have invested a lot in gold are on a very safe side, they probably have a minor risk of losing any money as gold prices are expected to go up due to the election of Donald Trump as the U.S President.

What we also need to look at is how people would react in order to minimize their losses. There are some ways in people could save their black money from turning into ash. The first idea that struck my mind was that people can spread their black money among other people who are not that rich, these people in turn deposit the amount in their name. As soon as the new notes come into circulation, these people withdraw the money, deduct a commission and return it to the original black money holders. This process would be quite tedious and dangerous as there is no safety of return.

One more way people can utilise this money, is by spending where it is still valid to do so. Someone needs to come up with an idea to invest their money into petrol or medical services. The exact procedure of doing this is something difficult to explain.

The third way the businessmen can escape is by printing fake post dated bills, which would let them deposit the amount in banks. The money would turn into white, the people pay tax and take away the rest with them. This process also would require a lot of skill as to how to print new bills and at the same time still be able to hide it from the government. I don’t see any other way people would be able to tackle this.

The arrangement of Jan Dhan Yojna, followed by the Income Declaration Scheme and now the declaration of notes as illegal tender. This makes it quite clear how serious the government is about curbing the problem of black money.
774 Views · View Upvotes
Sandy Reddy
Sandy Reddy, Past 4 years Playing with Web Design, SEO, SMO in Realtime and Results Oriented
Written Nov 18
Hi friends iam an indian i love my country. This is not for to change your black money but there is lot of loop holes

Money exchange : there is no id registered with it so you can go upto 50 banks with same proof gey 50*2 = 1 lakh per day.
Atm you can get 2500 per day. Iam having 10 atms per day 25000 rupees per day. Now you can use micro atms at petrol bunks also
Withdraw amount 24000 per day from ten accounts = 240000 rupees
Go for petrol bunks exchange money on commission based
Important thing. You can shop upto 1lakh per card . So get a current accouny of your firm . Use multiple cards and Tranfer to your account upto 10 lakhs as white money.
Technchal thing. Use a own ecommerce website and pay with online cards get tranfered to your account.
International. Tranfer your money to PayPal
Buy bform real estate properties there is no tax or registration for this
Buy second hand cars and bikes establish a firm.there is a good resale value
Buy platinum no one will identify platinum.
So the things iam identified these loopholes and how to fix it.

Use a single account cancel all accounts immediate ly per head. No problem of hacking bcoz of single account we can catch them no fake accounts and many accounts. Provide one international account for business persons with monitoring
Make adhar as standard give authority to ec to handle adhar data. SO no pan,voterid,ration card. Only passport and dl extra.
Register all properties link with adhar by registraion services with: gold, houses, cars, bank balances. No chance of fake properties. Just Tranfer from one person to another.
Improve the bank times limit the time period to one week accept only deposits
HI This is sandy

There are many ways to change your black money. Just give it as a loan to all people with zero interest people like me paying full salary as interest to loan amounts. So My dear Friends Give at as loan to middle class salary employed against a cheque.

Iam also Looking for instant rupees 5 lakhs loan. I will return in 2 months. Please give me loan without interest contact me
Vamshi Lade
Vamshi Lade, I am a business consultant and have close to 8 years in this field.
Written Nov 13
Demonetization of higher valued leagal tenders of 500 and 1000 Rupee Notes is always a welcome call as it is expected to crub the black money menace in country.

But as always happens post “Cheers” comes “Criticism”, the major loopholes as per me are:

Planning: This move was a master stroke for black money horders. But the financial institutions were not ready for this at all. We can argue that the whole point of “surgical strike” on black marketers could have gone wrong if the decision was made public. But atleast some level of preparation and planning could have been made considering the fact that the legal tenders being banned conteibute close to 70% of the currency market.
Small banks in India ran out of cash within the first few hours of public business. They were good to deposit money but not to exchange tenders.
ATM machine calibrations. There are 2.5 lakh atm machines in the country and caliberating them to give new tenders of 500 and 2000 rupee notes is definitely going to take time. This could have been avoided in advance planning. Now the fact is any ATM machine can have a maximum of 80 lakh rupees in full loaded capacity. (Considering only 1000 rupee notes are there). Now the atm machines are giving only 100 rupee denominations. The point here is there is no way the number of notea can be increased. So due to lower denomination the value has come down.
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About janamejayan

A Viraat Hindu dedicated to spread the message of Paramacharya of Kanchi
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