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RE: The War on Cash Rages On in India and Venezuela

in #money8 years ago (edited)

Hi,

. India has now banned 500 and 1000 rupee notes, though the government has also assured the public it would print a 2000 rupee note to replace the smaller denominations. Unfortunately, that has yet to happen and – given India’s track-record – may not happen.

This statement is incorrect and somewhat misleading. The ground level situation is different. Rs.2000 notes have been produced and supplied in many cities including mine (I live in a smaller tier-2 city) from the time this policy came into place. Withdrawing cash from atms isn't hard at all. But there is a daily limit imposed on ATM withdrawals and weekly limits on cash withdrawals from the bank. Which I hope will be lifted soon.

Production of the new Rs. 500 note has been ramped up and the short supply should fade away in the next few weeks. There is a cash crunch in ATMs in the metro cities but things have improved a lot and as with any major change, there will be some chaos initially. This was also due to the fact that new notes are of a smaller size and every ATM needs manual re-calibration to accept new notes-delaying the supply and redistribution aspects of it.

The implementation has not been in-line with public expectation unfortunately and the supply could have been ramped up to build a bigger buffer prior to the announcement but to say the government is off-track would be going too far!

There are pros and cons to such a move. Given the population of my country it will take some time for things to settle down. Because, India has always had a HUGE parallel cash economy or black economy.

Cash crunch resulting in demonetisation has certainly helped fight crime, especially reduce instances of rioting which in the past was funded largely by those in power hoarding vast sums of unaccounted Black money to be spent at their whim and fancy.

Although there are ways to get around this cash crunch for some people and ways to convert black money into white etc. It's not a major issue right now. Personally I think the implementation needed to be better and daily wage labourers, business that run on cash and many amongst the poorer classes would suffer or have suffered from lack of availability of larger denominations and those without access or knowledge of modern banking, especially in some rural areas.

But the government is ramping up efforts and so are the bankers to reach out to the rural areas and improve banking there. Things are improving at a good pace and in urban areas you won't need cash to get about your daily needs if you have a debit or credit card-which we all do, multiple cards and bank accounts are quite common!

I came back to India on the 1st of December, and it was only yesterday I needed cash to pay a local business owner who only accepted cash. I've withdrawn a total of 4000 Rupees from an ATM which is roughly 59 USD in the last 16 days I've been home.

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I was on holiday in India during the demonetization announcement. I think you are espousing the typical middle class Indian's thoughts on this. Frankly, they're the most insular, unsympathetic people I have ever met(many of which are my family members). If as you say, there isn't much of a problem why are there still queues at the banks? Why have people changed their spending habits? And have you actually tried spending a 2000rs note? According to people I know there and from what I saw when I was there, many vendors still won't accept it! Outside malls and hotels, it is almost impossible to spend on card - that will obviously change but in the short term the problems with a cashless society arise.

As for corruption and crime, they have gone up since the announcement! To get large amounts of money deposited into banks, backhanders have been placed. In short, I think this move will turn out to be a disaster and you've got your head in the sand, think of the average man in this scenario.

I wrote about my experiences and the potential problems here:

https://steemit.com/bitcoin/@drkarl/in-the-midst-of-indian-demonetization

A resteem of the article would be nice @dollarvigilante :)

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That sounds overly harsh on you personally @firepower. It was never intended to be that way, accept my apologies.

Please accept mine too! Cheers!

That sounds overly harsh on you personally @firepower. It was never intended to be that way, accept my apologies.

Gentlemen, I've just had the pleasure of enjoying a fair and rational discussion (thanks to both of you) regarding a situation which I have followed for the last month and a half. A situation from which I am far displaced and wholly reliant on anecdotal reports and sensationalized click bait targeted at financial geeks like myself.
Polite, erudite, and revealing, I feel privileged to be a witness to your exchange.
My sincere thanks going out to each of you.
Respect.

I believe We ARE seeing the beginning of a financial crisis. The question is will you wait until the NEWS (OR OLD!) tells you it until you do something. It is not directed at anyone specifically. If you agree, then great. If you dont, we will see who was more prepared.

Yes, @keithwillshine
We are already in a financial crisis. Forewarned is forearmed.

One way to prepare is to choose sound, honest money.

What do you think?

Great work and article.

Much appreciated (and likely needed) perspective from someone actually living in the area. Given the scale of India's population I'm sure the stories of this new financial paradigm vary quite widely...
Enjoyed dinner with you the last night of Steemfest, glad the economic situation is relatively stable for you at home.
Take care brother.

All good here. Life goes on no matter what in this country or pretty much everywhere I take it. It was great hanging out with you. Hopefully soon in the US of A my friend! :)

Looking forward to it! 🙂