My friend on Black money in India
My theory what will happen to black money-
Excellent move. There will be panic tomorrow and then panic subside.
500/1000 notes are not worthless until Dec 30th. But not worth 500/1000. Market will find its equilibrium. There will be black market. Those notes will get sold for discount!! And that discount will change. Like stock price changes everyday.
Ultimately that money will flow into Jandhan a/cs. It will get well distributed. Some smart sarpanchs in villages with some connection and trust in big cities will become filthy rich by taking cut. They will get money, use their clout convert them into legit currency thru gaon valas, gaon valas get some cut, sapanch will become wholesaler. In a sense it that black money will get tax and tax will get distributed to poor w/c corruption. Black money will be generated in just six month but somewhat less as they will have to give cut.
Real estate still will hide black money. Now ppl will not accumulate cash, but gold. And at certain amt they will convert to RE.
Best part is, terror finance is over. For pakistan, it was easy as they were using Indian money to harm India. No more and I dont’ think they will spend whole lot of their money for terrorism(They don’t have money!). They were giving fake currency to terrorist for their expense!!! Juta bhi apna, sir bhi apna.
Another smaller good is, rural economy will get boost!!! If I am sarpanch, I have control over lot of villagers. I can distribute 1000rs note and give they some incentive for doing nothing and collect 900. Give somebody in city 750-800. So Rs 200 was taxed by villagers to a builder or a politican in city! There will be market and price will keep fultuating, and fluctuation will be wild near 31st dec as it happens in last two hrs of expiry of FO.
But theory that Real estate won’t have black money is total baloney. Black money will be blocked for lets say six months, and lose something in circular transaction, otherwise not much will be change in the way RE operates.
Interesting thoughts Amit.. Can you explain why real estate play won’t change and still black money will work there?.. I feel liquidity will be far gone and most people will not accept money in black any more in real estate deals. Real estate market should crash and pharma companies will thrive for some time as they can accept 500/1000’s till end of this yr..
bijoy
November 10, 2016 at 3:20 am