VFMDirect.in: demonetisation

Showing posts with label demonetisation. Show all posts

November 8, 2019

S Gurumurthy on demonetisation

If any single event turned the Indian Economy it was the historic DM decision on 8.10.2019. It was as courageous a decision as the 1998 pokharan atom blast. The DM decision was financial pokharan blast. Unbiased history will record how this single measure made turned the economy
— S Gurumurthy (@sgurumurthy) November 8, 2019

May 17, 2019

Nice post on demonetisation, GST and Rera

By Arvind Modi

Does everyone feel that Modi broke the backbone of the Indian economy by introducing demonetization, GST, and RERA?

I am an IT Project manager who quit a full time job to pursue my dreams as an entrepreneur. 90 out of 100 times I use auto correct to fix the spelling of entrepreneur when I write. Until 2.5 years ago, I had an abnormal IT job for 10 years that never had a start time or end time and then I decided I am old enough to spread my wings and fly off to pursue my dreams considering the fact that I am already used to work for odd hours. So I did!

In 2.5 years, I had a lot of learning, a lot of departments of a company that I would never have tapped are now being managed by me. One of which is ‘purchasing’. And this is where my opinion on demonetization and GST comes from.

Until demonetization a lot of our purchases were paid through cash and never had an invoice. Our choices were limited, most of the suppliers were unregistered large volume suppliers who used every loop hole in the law, bribed officers and have been doing large volume business (in crores) without a single tax ID.

Then, Demonetization happened. The first impact was on these suppliers. It was practically impossible for us to get new currency and pay them. This is when we started scouting for suppliers who would take online payment. Now most of these suppliers have tight knit families so with the 2.5 lakh limit and 20 people in the family, it was easy for them to ask us to transfer to one of the 20 bank accounts they gave us. They were pretty smart they thought! So for the next few months after demonetization, whenever we had an order to place we would get a new account number to make a payment to.

At this stage, our suppliers list has shrunken down by 50% already.

Now eventually came GST. GST is a game changer for every business man. The VAT system was pretty simple, almost every sale we had was either 5% or 14.5% taxable. Being an online business, our data was always ready and it took us less time to report our taxes and pay them. But I knew a lot of them misused this reporting by submitting false purchases and lesser sales (for online business every single payment is to the bank account so we can not float these values).

Signs of desperation @iam_anandv

Let us put this thread in context.

1. Tax payers dropping off the radar after Demonetization.
2. Revenue short fall of 1L crore.
3. Very close to recession territory.
4. GDP fudgery.
5. Drought and Agrarian distress.

Now pushing UPI through *Mandatory Voluntary*. https://t.co/z6FX8MTUqv
— V. Anand | வெ. ஆனந்த் (@iam_anandv) May 13, 2019

May 7, 2019

FMCG growth slowdown in March quarter isn’t a temporary blip

India’s famous consumption story is going awry. At least that’s what March quarter results of some large fast-moving consumer goods (FMCG) companies show. Volume growth numbers fell substantially for these companies, with Godrej Consumer Products Ltd (GCPL) reporting a mere 1% growth in the domestic branded business volumes. A bigger worry was the low-spirited management commentary, which suggests that the worst is far from over.

“When a generally measured management like Hindustan Unilever’s uses the term ‘recession’ in its comments in the post-results presser, it generally isn’t a one-quarter blip," pointed out analysts from Kotak Institutional Equities in a report on 4 May. On Friday, HUL’s management had said, “While FMCG is recession resistant, it is not recession proof."

Management commentary from GCPL and Dabur India Ltd wasn’t inspiring either. These two companies harped ...

Read more at https://www.livemint.com/market/mark-to-market/fmcg-growth-slowdown-in-march-quarter-isn-t-a-temporary-blip-1557170188356.html

April 9, 2019

Sales of scooters slip for first time in 13 years, PV segment sees slowest pace in 5 years

November 9, 2018

Interesting news from the past

We have given you 700 days,Modiji, instead of 50 days you asked for, to show the 3LCr of Black money unearthed by Noteban.But far from getting anything, you now ask RBI to give you 3LCr from it's reserves! Still we won't burn you alive. But voters will hold you to account in '19! pic.twitter.com/kULu9bLy1x
— Prashant Bhushan (@pbhushan1) November 8, 2018

September 5, 2018

India Shoots the Wrong General in Lost War on Cash

When there’s no trick left to defend a spectacularly failed experiment, blame Raghuram Rajan.

If India’s top policy think tank is to be believed, the reason economic growth faltered last year, reaching 5.6 percent in the June quarter after 7.6 percent nine months earlier, had nothing to do with the November 2016 ban on 86 percent of the country’s cash.

The decline had been in the making since early 2016 because, under Rajan’s governorship of the Reserve Bank of India, the central bank devised “mechanisms to identify stressed and non-performing assets, which is why the banks stopped giving credit to industries,” Rajiv Kumar, vice chairman of state-controlled NITI Aayog, said on Monday.

The political compulsion to defend demonetization is understandable. Recent central-bank data showed that 99.3 percent of the currency made worthless was eventually returned to banks. To the extent one of the stated goals of the exercise was to immobilize so-called black money – wealth that dare not join the formal banking system because it’s ill-gotten – the draconian experiment came a cropper.

Read more at https://www.bloombergquint.com/opinion/2018/09/04/rajan-isn-t-to-blame-for-the-consequences-of-india-s-cash-ban#gs.sjZwgFU

September 3, 2018

So a scapegoat is found for all of India's problems... now all problems solved

August 11, 2018

Gujarat’s bitcoin-based Ponzi scheme could lead to India’s largest banking scandal

A $3 billion scam could be unfolding in Gujarat as probe into an alleged Ponzi scheme reveals tax evasion, police corruption and a fugitive politician.

Accusations of tax evasion and police corruption, a kidnapper who was kidnapped, a fugitive politician, and billions in bitcoin lost. This is crypto-trading Gujarat-style.

The ingredients are part of an investigation in Prime Minister Narendra Modi’s home state into allegations that investors poured cash into a bitcoin-based Ponzi scheme that could exceed the country’s largest banking scandal. The fallout extends as far as Texas and has embroiled a former lawmaker, tarnishing Modi’s ruling party months before an election.

It began in February, when property developer Shailesh Bhatt charged into the Home Minister’s office in Modi’s home state of Gujarat, claiming he had been kidnapped by a group of policemen and told to pay 200 bitcoin, worth some $1.8 million at the time, for his release. He said he had nowhere else to go.

The state’s elite Criminal Investigation Department was called in and the evidence it has uncovered points to a potential fraud on an epic scale. Eight policemen have been indicted and suspended pending trial. The abduction was allegedly spearheaded by Bhatt’s associate, Kirit Paladiya, and masterminded by Paladiya’s uncle Nalin Kotadiya, a former lawmaker in Modi’s ruling Bharatiya Janata Party, according to Ashish Bhatia, the lead CID investigator. Bhatt has been charged too, as the allegations of kidnapping widened.

Paladiya is now in jail, facing charges of abduction and extortion, and Bhatt and Kotadiya are both absconding, according to police. Kotadiya posted a video via Whatsapp in April denying wrongdoing and saying he’d informed authorities about the crypto scam, said Prashant Dayal, a senior Gujarati journalist who broke the story.

In the video, reposted on Youtube, Kotadiya says Bhatt is responsible for the scam and threatens to release evidence that could implicate other politicians. Both Bhatt and Paladiya have denied wrongdoing, according to their lawyers.

Between late 2016 and early 2017, Bhatt invested in BitConnect, a cryptocurrency firm that was being promoted in Gujarat by a man called Satish Kumbhani, according to Bhatia, the CID investigator, in an interview at his office late June.

Kumbhani is one of the founders of BitConnect, which has allegedly scammed individuals across the globe, according to Crypto Watchdogs, a group of six investors who’ve filed a U.S. federal lawsuit against the company. The firm recruited clients worldwide to deposit bitcoin and receive BitConnect coins they could lend ...

Read more at https://theprint.in/economy/gujarats-bitcoin-based-ponzi-scheme-could-lead-to-indias-largest-banking-scandal/96241/

February 23, 2018

Currency circulation in India at 99% of pre-demonetisation level: RBI data

What happened to Digital India, cashless economy?

November 15, 2017

India’s farms report income greater than our GDP! Target them in the war on black money

... the total agricultural income filed with the IT authorities was three times the total GVA for the three years. If only 2011 and 2012 are taken into account, agricultural income declared was almost 5 times the GVA for those two years. Preposterous! That effectively means that agricultural income was even greater than India’s GDP or GVA! Unbelievable!

But that is what the numbers say. Some taxmen tried to pass this off as data-entry errors. But that is implausible. This is because any income over Rs 20 lakh has to be fed into the income tax servers directly by the assessees. If the figures are wrong, the assessees should be hauled up and penalised for wrongful entries. The entries should then be cancelled and treated as null and void. Else, they should be prosecuted and fined for concealment of income. Neither has happened. The Finance Ministry is silent about this. So are the income tax authorities.

In fact, the income tax on such declarations could be large enough to account for almost 100 years of total taxes collected. That could actually make Prime Minister Modi’s plan for giving money back to tax payers a reality.

Read more at http://www.moneycontrol.com/news/business/economy/indias-farms-report-income-greater-than-our-gdp-target-them-in-the-war-on-black-money-2437801.html

November 10, 2017

When you run short of excuses or explanations

Read more at http://indiatoday.intoday.in/story/drop-in-prostitution-a-demonetisation-benefit-for-law-minister-ravi-shankar-prasad/1/1084912.html

One might as well say demonetisation reduced inflation because poor labourers started skipping meals which reduced the demand for food and thus brought down prices.

November 7, 2017

Counterview: One year after demonetisation, the government has data to show it worked

... The onus was clearly on the government to prove that demonetisation was a success. Swallowing its pride, the government waited patiently for data to show up. One year down the line data has just started trickling in.

The government’s crackdown on shell companies shows that around 35,000 of the 2.24 lakh shell companies deposited Rs 17,000 crore post the demonetisation drive only to withdraw it later, thus raising suspicions of ‘wrong entries’.

In one such case an account with a negative balance just before the demonetisation day saw Rs 2,484 crore being deposited and withdrawn soon after. Other examples were also shared by the Finance Ministry and Corporate Affairs Ministry to showcase how the money entered the banking system.

Read more at http://www.moneycontrol.com/news/business/economy/one-year-after-demonetisation-the-government-has-data-to-show-it-worked-2430993.html

Full text: Arun Jaitley presents his report card on demonetisation

Time to accept the blunder: Here's what Manmohan has to say on note ban anniversary

Manmohan Singh says the GDP might come out of the temporary shock but the deeper impact would continue. "...rising inequality has been a constant threat to our nature of economic development. Demonetisation may exacerbate such inequalities which can be harder to rectify in the future.

Manmohan does not agree that demonetisation was a good way to create a less-cash or digital economy, a justification the government has offered time and again and an objective many expert have found laudable.

"Any behavioural change cannot be coerced or forced. It has to be nudged and incentivised, as behavioural economists have found. Digital or cashless economy is a mere post-facto justification for what was fundamentally a flawed economic policy. They may be worthwhile objectives in themselves but perhaps misplaced in our current set of economic challenges and priorities for India," he said during the interview. He also differs on the argument that demonetisation would widen the tax net. "Widening ..

Singh thinks the Goods and Services Tax (GST) as well as demonetisation have hit the economy, but while GST is a good idea implemented badly, the very idea of demonetisation was wrong.

Read more at http://economictimes.indiatimes.com/articleshow/61541962.cms

November 1, 2017

Demonetisation effect: 1.5 million jobs lost in first 4 months of the year

Call it the cascading effect of demonetisation, around 1.5 million jobs were lost in the first four months of the year (January-April 2017), says a new survey data put out by the Centre for Monitoring Indian Economy (CMIE).

The estimated total employment during the period was 405 million compared to 406.5 million during the preceding four months, September-December 2017.

Moreover, the job losses were concentrated in the younger age brackets, reflecting a sign of an economic slowdown.

Read more at http://www.timesnownews.com/business-economy/article/demonetisation-effect-15-million-jobs-lost-in-first-4-months-of-the-year/65815

October 4, 2017

Arun Shourie lamblasts the govt on state of economy

"This is a government of two-and-a-half persons, that is, Narendra Modi, Amit Shah and one in-house lawyer. They don't have the expertise and they have surrounded themselves by persons who don't have the expertise.

"They are now in a sealed echo-chamber. They don't hear what is happening. The distress the RBI has documented of small and medium enterprise. These poor fellows had been clamouring and shouting. Nobody heard them," he added.

He said that persons like Yashwant Sinha, P. Chidambaram and several other economists have been "talking about facts".

"And those facts emerge from official reports such as The Economic Survey, the RBI surveys, the SBI's report etc. Is it a fact or not that GDP has collapsed to 3.7 per cent according to the old series? Is it a fact or not that index of industrial production has gone down from about 9 per cent in 2015-16 to about 1.7 per cent in April to July? Is it not a matter o ..

Read more at: http://economictimes.indiatimes.com/articleshow/60934642.cms

September 27, 2017

Yashwant Sinha: The economy is on a downward spiral, is poised for a hard landing

The economy is on a downward spiral, is poised for a hard landing. Many in the BJP know it but do not say it out of fear

I shall be failing in my national duty if I did not speak up even now against the mess the finance minister has made of the economy. I am also convinced that what I am going to say reflects the sentiments of a large number of people in the BJP and elsewhere who are not speaking up out of fear.

So, what is the picture of the Indian economy today? Private investment has shrunk as never before in two decades, industrial production has all but collapsed, agriculture is in distress, construction industry, a big employer of the work force, is in the doldrums, the rest of the service sector is also in the slow lane, exports have dwindled, sector after sector of the economy is in distress, demonetisation has proved to be an unmitigated economic disaster, a badly conceived and poorly implemented GST has played havoc with businesses and sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market. For quarter after quarter, the growth rate of the economy has been declining until it reached the low of 5.7 per cent in the first quarter of the current fiscal, the lowest in three years.

The spokespersons of the government say that demonetisation is not responsible for this deceleration. They are right. The deceleration had started much earlier. Demonetisation only added fuel to fire.

Economies are destroyed more easily than they are built. It took almost four years of painstaking and hard work in the late nineties and early 2000 to revive a sagging economy we had inherited in 1998. Nobody has a magic wand to revive the economy overnight. Steps taken now will take their own time to produce results. So, a revival by the time of the next Lok Sabha election appears highly unlikely. A hard landing appears inevitable. Bluff and bluster is fine for the hustings, it evaporates in the face of reality.

The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.

September 20, 2017

Economic slowdown likely to worsen: Ambit

The government’s inability to train and educate its people, automation-led job losses, and demonetisation-induced closure of informal sector firms could seriously hurt India’s economic prospects, according to Ambit Research.

The slowdown is resulting in job losses, especially in the blue- collar segment, and a broad-based deterioration in the land and real estate markets. “Investors who ignore these effects and continue to pile into expensive Indian stocks are treading on water,” it said.

September 9, 2017

How much black money did demonetisation remove? RBI says it does not know

Depending on whom you ask, you will get different answers.

The Reserve Bank of India (RBI) has told a parliamentary panel that it has “no information” on how much black money has been extinguished as a result of demonetisation of Rs 500 and Rs 1000 notes.

Read more at http://www.livemint.com/Industry/4HcmOqr7An2Io8RZ1ib0xJ/Demonetisation-RBI-says-dont-know-how-much-black-money-was.html

The next source will be the Income Tax department but we will have to wait for their figures. I don't expect this figure to come out soon as it will take a lot of time. Notices have to be served, cases may go upto tribunals etc etc.

September 2, 2017

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