" For years I
wanted to be older, and now I am."
—Margaret Atwood (Canadian, 1939)
Word
for the day
Soliloquize (v)
talk to oneself.
Malice
towards none
Attended a marriage last
night.
I am sure a lot of cash is
being hoarded by the families who have marriage in family.
All this money will flock
the markets as marriage season ends in December.
First random
thought this morning
BJP, RSS et. al. want to impose their idea of good governance on
the country, considering it to be inarguably the best alternative. Some may
find it against the basic tenets of parliamentary democracy. But I have no
problem with this. If it is good for the country, it is good. Regardless of
everything and anything.
My problem is that they want to experiment with their ideas at my
expense.
BJP & RSS canteens are neither Swach (clean) nor cashless. BJP
and RSS have not issued any whip or request to its members and elected
representatives to not to deal in cash any further; donate 2hrs a week for
cleaning of public places; not to attend or arrange lavish marriages or
birthday parties; I visited 7 Patanjli stores in Delhi yesterday. None accepts
payment otherwise than cash.
I am done and over with
I have also spent at least
70hours, studying, analyzing, explaining, arguing, criticizing, defending and
writing about the measure in past three weeks. I feel it's high time that I get
past this whole issue and focus on the road ahead. I would therefore like to
close the discussion with the following summary of my final understanding, view
and opinion on the issue. I totally concede that there is huge scope for
disagreement. But I am in no mood to take this discussion any further. All
comments are totally unwelcome.
·
I firmly believe that the latest exercise of the
government and RBI does not qualify to be demonetization in any measure. It's
simply replacement of currency notes. I am reasonably confident that by the
times cows come home, Banks and RBI would have received more old currency notes
than the RBI balance sheet showed as outstanding at 8:30PM on 8 November 2016.
Other things remaining the same, the note printing press can rest for next
2-3yrs, after working overtime for two months.
·
The exercise may lead to direct transfer of some
INR50-70K crore to the lower strata in the socio-economic pyramid of the
country. This combined with the additional cash flows to the middle of pyramid
through 7th Pay commission and OROP payouts, and better Kharif realizations for
farmers, there are sufficient reason to believe that the consumption slowdown
due to disruptions since 9 November, may get fully neutralized by 1QFY18. No
surprises if the consumption surprises on higher side as the propensity to
consume is much higher in the "receiver" lower half of the pyramid as
compared to the "transferor" upper half of the socio-economic
pyramid. The positive sentiment amongst the common public shall also aid
consumption. The GDP of FY17 may be lower by 30-40bps but with upside risk.
FY18 likely +8%.
·
Political rhetoric apart, the time spent in
ATM/Bank Qs does not matter much in terms of productivity loss. Most people standing
there are either employed in disguise or underemployed.
·
This exercise will prepare a solid ground for
smooth implementation of GST in FY18 or FY19. Most small businesses will get
tech savvy and less resistant to "white" payments.
·
The plastic money may grow at least by 50% in
next 2-3 years, leading to higher velocity of money (sustainable higher
liquidity) and lower cost for banks. Lending rates could fall on sustainable
basis, adding materially to economic growth.
·
This exercise and reactions thereafter have
introduced significant unpredictability in the system. This shall logically
lead to break in status quo and coax higher compliance. Property and gold
businesses will change structurally and for the good.
You may also like
to read the following:
No comments:
Post a Comment