Why India wiped out 86% of its cash overnight | Hacker News Reader

Why India wiped out 86% of its cash overnight

bbc.com

A lot of news site are completely missing the fact that one of the biggest reasons it was announced right now was to give BJP (modi's party) an upper hand in upcoming Uttar pradesh elections.

Not many people know this but it quite common for political parties to distribute huge amounts of cash to voters beforehand elections to buy their votes (think trucks literally filled with 500 rs notes). Last time before UP elections there was a huge drive and a lot of cash was seized while crossing the Delhi-UP border just before the elections. This time it was a masterstroke by Modi and now wonder both the biggest parties in UP are worst hit and complaining the most about it (i.e.Mayawati and Mulayam singh).

I am really happy that Prime Minister Narendra Modi is taking action and trying to Black Money out of India's economy. I hope this will bring more tax revenue to the country and hopefully the entire nation will move forward. This not only help is stopping lot of illegal activities which go on the in country but also is a great way to fight corruption as well where you have to bride folks to get small things done. This makes money more traceable and easy to account.

I don't understand it. If they introduce a 2000 rupee note, isn't that exactly the same thing?

Yes, but they just pushed the reset button. Years and years worth of 1000 and 500 notes will have to come out of hiding.

Quote: "At the moment you can exchange up to 4,000 (£48) of the old rupees every day in cash for new 500 (£6) and 2,000 (£24) rupee notes."

Quote: "There is no limit to the amount that can be deposited in bank accounts until the end of December, but the government has warned that the tax authorities will be investigating any deposits above 250,000 rupees (£2,962)."

So, if you have a safe full of 1000 rupee notes, you have to deposit them. You just can't exchange them, because the rules make it impractical.

>Because so much business is done in cash, very few people pay tax on the money they earn.

>...The size of this shadow economy is reckoned to be as much as 20% of India's entire GDP.

What's been the effect on the economy, positive or negative? What problem is it trying to solve here?

>Curbing tax evasion is part of the agenda for the "aadhaar" scheme, a giant digital database designed to give hundreds of millions of Indians a unique ID, and of the new Goods and Services tax.

Wow, wtf India is getting worse. A unique ID, easier government tracking. Goods and Services Taxes punish everyone who buys things, especially the poor.

This does not punish poor, they still have time to open bank accounts and swap the money. This is primarily designed to go after big businessmen who avoid paying taxes and also lot of bad activities like terrorism.

Well, all of the money that moves into the bank accounts will be taxed. Won't the hit on that tax affect the poor more than the rich? Sure the rich might take a larger hit in absolute terms or even relative to the size of the money taxed, but the poor take a larger hit in that the money being taxed may be a life's savings pool (i.e. relative to their overall wealth / net worth).

Goods and Services taxes are regressive, that hurts the poor.

> Wow, wtf India is getting worse. A unique ID, easier government tracking.

this is not unlike a Scoial Security Number (united states) and serves a similar purpose.

I never really understood the objection to national ID. Is it really that much worse than state IDs? Tracking can work either way, that seems like a different fight. Companies seem to use the SSN anyway.

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