India no longer fastest growing large economy following demonitisation: IMF

graphican said:

There are many soothing vibes coming from India these days and add this to the list.

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faithfulguy said:

But Indians believe that they will come out on top. Eventually, they will have lots of white servants. Check out this video

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shjliu said:

in the video, why do Indian degrade white people ? that I don't understand. if their goal is revenge then they will not get it!

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save_ghenda said:

overestimated

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1. More economic activities will be reported giving us a correct picture of actual GDP contributing forays which till now have operated in shadow or grossly under-reported.
2. Low value but high volume activities generate considerable revenue, but unfortunately undetected and thus no taxed. These will now come under gamut of taxation regime, increasing revenue for government.
3. Above point also has a potential of bringing down taxation rates, as tax bracket becomes wider.
4. Clarity and transparency in reporting of economic activity will certainly bring in reduction of corruption, where some people cheat government by under-reporting their finances and not pay taxes.

anant_s said:

Au contraire!
International agencies have often pointed out to this fact that a lot of transactions in economy (especially the unorganized one) don't get noticed for either these are low value and/or done through cash. but given the volume of these activities is so huge, if we add up total activity volume, it would have major implication on GDP numbers.
Since these transactions aren't duly noted(& by extension taxed, wherever required), their contribution to economy is not noticed and GDP remains Under Estimated.
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With this new demonetization drive and subsequently insistence of government to increase cashless transactions is going to bring following changes:

1. More economic activities will be reported giving us a correct picture of actual GDP contributing forays which till now have operated in shadow or grossly under-reported.
2. Low value but high volume activities generate considerable revenue, but unfortunately undetected and thus no taxed. These will now come under gamut of taxation regime, increasing revenue for government.
3. Above point also has a potential of bringing down taxation rates, as tax bracket becomes wider.
4. Clarity and transparency in reporting of economic activity will certainly bring in reduction of corruption, where some people cheat government by under-reporting their finances and not pay taxes.

While not everybody is a Modi fan, you got to admire his administration for taking a politically brave step to curb corruption in right earnest.

@Nilgiri @Levina @GORKHALI @nair

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Nilgiri said:

The thing that Modi gets that others dont, is that growth is just a number at the end of the day.

What really matters more than growth is jobs....both raw creation and quality of those jobs.

Some 60 million jobs were created during NDA-1 tenure, compared to very paltry few millions by UPA (both 1 and 2)....but NDA - 1 averaged some 2 -3 points slower than UPA GDP growth figures.

GDP growth is not the be all end all at all. Not even close. Of course its useful to have it more than say 5% annually (real) for a developing country but any number above this threshold needs to be analysed as far as job creation and impact on the ground for the masses.

UPA did a very terrible strategy of converting stock market hot cash into liquidity infusion for loans (basis of the current NPA problem) in an effort to disguise their bad administration of both fiscal and monetary policy (those are very long topics to discuss I am afraid).

Overall effect of this was it created some very nice growth numbers, even well past 10% for some quarters (in real USD terms)....but at the cost of the job growth (esp given their NREGA dissuaded asset creation and mechanisation/efficiency)...and more importantly really pumped up several bubbles in many sectors along with the associated black money associated with them.

This had to deflate sooner than later (it would be nearly impossible to do in a directed manner say beyond 2020...and the bubble crash after that would have been a question of when not if...and would have been quite recessionary for India on a scale worse than 1991 crisis).

Modi could have done it (demonetisation) a couple years before, but I think he went for timing it side by side with GST to figuratively get two birds with one stone (and help mitigate the mid term pain from demonetisation by letting it ride on GST benefits)...and leave enough buffer for the long term benefits (of demonetisation) for his 2nd term to build on it better.

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tw00tw00 said:

60 millions jobs were created under NDA-1? Show me proof.

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graphican said:

WASHINGTON: Modi government`s demonization policy has backfired on the Indian economy as the International Monetary Fund suggests that cancelling nearly 90% of cash in circulation coasted India the mantle of world’s fastest-growing large economy in 2016.

In its World Economic Outlook report, IMF said that India’s growth slowed to 6.6% last year from 7.6% in 2015, while the Chinese economy grew by 6.7% in 2016.

The IMF said it trimmed its 2016 forecast for India by one percentage point “primarily” because consumers tightened their purse-strings after demonisatisation.

Indian Prime Minister Narendra Modi ordered the withdrawal of 500 and 1,000 rupee notes from circulation in a shock announcement designed to tackle widespread corruption and tax evasion.

Modi said that while people could exchange their old notes for new bills at banks or post offices until the end of the year, or deposit them in their accounts, they would no longer be legal tender from midnight.

"To break the grip of corruption and black money, we have decided that the 500 and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight that is 8 November 2016," he said in a televised address to the nation.

"This means that these notes will not be acceptable for the transaction from midnight onwards."

After a one-day shutdown of all banks and ATMs, new 500 and 2,000 rupee denomination notes would be issued from Thursday by the Reserve Bank of India (RBI), the country´s central bank.

The 500 and 1,000 notes, which are worth around $7.50 and $15 respectively, are the largest bills in use in India which is still a massively cash-intensive economy.

Since coming to power in 2014, Modi has pledged to crack down on so-called black money -- vast piles of wealth kept hidden from the tax authorities -- with a series of new measures, including 10-year jail terms for evaders.

The latest announcement comes a little over a month after the government raised nearly $10 billion through a tax amnesty for Indians to report undeclared income and assets.

But many ordinary Indians say they support the scheme if it forces the rich to pay their taxes by making them bank undeclared income. Only a handful of states observed a call for a nationwide protest strike.

"We are protesting against the undeclared financial emergency imposed by the government and the hardships people across the country are facing because of this illegal decision," said Manish Tiwari of the opposition Congress party.

"The decision to demonetise high-value currency was done without any authority and legislation and is clearly illegal."

Owners of the banned 500 and 1,000 rupees ($7.30, $14.60) notes have until the end of the year to deposit them in a bank, and can only directly exchange a small number for the new currency.

But authorities have struggled to print enough new notes to meet demand and economists say the ensuing cash crunch will hit growth.

Former Prime Minister Manmohan Singh, a respected economist, said last week it would shave at least two percentage points off growth, which topped seven percent in the first half of the financial year.

"I do not disagree with the objectives but it is a monumental case of mismanagement," the Congress party lawmaker told parliament.

"The way demonetisation has been implemented, it will hurt agricultural growth and all those people working in the informal sector."

Over 90 percent of transactions in India are conducted in cash and many of the country's poorest have no access to banking.

Many have been left without enough cash to buy food or daily essentials, while farmers have been unable to buy seeds and small traders say business has fallen off a cliff.

Nonetheless, Modi has repeatedly defended the scheme, accusing its detractors of being tax evaders and urging all Indians to switch to non-cash payment methods.

Reference: https://www.geo.tv/latest/127594-In...ng-large-economy-following-demonitisation-IMF

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graphican said:

There are many soothing vibes coming from India these days and add this to the list.

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RoadRunner401 said:

Please someone explains it to me in layman's terms? How taking out these notes will make corruption go away

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