Thursday, January 5, 2017


I support what Col MG Kaoor, a jurist now has said. He is also an electronic techie!! We tend to copy blindly what some Western nations do. Their actions are quite often driven by their industry, to make money and then are changed.

Look at t he cyber threats to major economies. It is even more potent than Nuclear attacks, since it is very difficult to trace the source of attack.

I wonder if you saw last night testimony of US Intelligence Czars on CNN before US Congress Int Committee as regards Russian hacking related to US Presidential elections. Same applies to monetary transactions.


Majority of India does not live in Delhi and other cities. It lives in Rural India!! THe Chai Walla should not forget his roots!!


Harbhajan Singh
Lt Gen

From: MG Kapoor <>
Sent: Thursday, 5 January 2017 12:17 PM

I am afraid we are all, perhaps, talking in the air while talking of going cashless. No one is considering the inherent frauds in on line transactions. Accounts are hacked, people's hard earned money is swindled, passwords are compromised etc etc. 

Only today it is reported that SBI has stopped payments through Paytm and some other portals as frauds have been reported. A few months ago SBI had frozen almost all debit cards as fraudulent transactions had been reported. SBI then issued new debit cards. 

Those well conversant with net banking and online transactions do try and make the passwords very strong and keep changing them from time to time. However, such kind of a thing cannot be expected from such users who are rather new to on line transactions. I saw an elderly person asking a person to help him draw cash from the ATM. After inserting the debit card the person asked the elderly person for the password, which was given. Lucky that the amount available from the ATM was a meagre one note of 2000/- only once. Else imagine what could happen if the helping person was not honest! 

Another important issue to be considered is that in cashless transactions one tends to overspend. Particularly in the case of credit cards one spends without restraints. When he overspends he opts for EMI. The rate of interest in the case of credit cards is very high. A time comes when he is paying only the interest and is unable to pay the principal amount. With expenditure in cash one exercises restraints while making purchases. 

Also, after the initial period the transactions on credit cards / debit cards / portals like Paytm. Rupay, mPaise etc etc are going to levy charges which the vendor would indirectly charge from the consumer. 

The above are in addition to and not excluding the disadvantages of cashless economy discussed by various learned contributors on this blog. 


Sent from my iPhone

On 04-Jan-2017, at 9:58 PM, Samir Srivastava <> wrote:

Hi Supratim and list members,

  I am retraining from  commenting on the demonetization. 

  If plastic card, cheques are used only, then cost of transactions in Soft Earning Unit (SEU) will go down, as volume of the transactions will increase.

 Instead if govt / public opinion pollers do the voting on COMPLETE CASHLESS ECONOMY, that will be ultimate decision. If you are living in a geographic area, you have a limit on the foreign currency. And you have to declare the source of it. In hard currency you can do money laundering. In SEU if you do not have the lawful source of foreign currency, then you cannot have it.

  Due to end-to-end trace-ability of SEU, corruption as listed by you will not be there in SEU environment. We can even trace the funding of terrorism also. Please go through the paper and slides on Cashless Economy on . It does not fix everything. There will be unfair scenarios also in Cashless Economy. 

  Regarding master and slave etc, we need election reforms. We should do voting via mobile. Then people do not have to go polling booth. Gundas will not be able to go to everybody's house for forceful vote. Moreover we as citizen will force our rulers to declare their earnings in SEU before filing papers. If it is mandatory then we have more accountability. I have lot more thoughts but cannot pen it now.


On Wed, Jan 4, 2017 at 10:24 AM, Supratim Basu <> wrote:
Dear Sarbajit,

While I significantly disagree with you over some of your socialist viewpoints (!), I applaud your stance and that of the IAC on this matter of the importance of cash for a free citizenry and the role of cash to keep fascists/statists/communists at bay. I also applaud the consistent stance that the IAC has taken on this matter, including calling out the RBI for its inability to honour the promise that is printed on the bearer notes (cash), causing many of us to wonder if the rupee note is any better than toilet paper, now.

I have read practically all the arguments that have been put forward by various people on this list and I would like everyone to consider the following:

1. Cash, in the form of either paper or coins, has the lowest cost in terms of friction costs in any economy - cash is the least expensive option to use while trading, compared with any other means - credit/debit cards, cheques, bank transfers, LCs, etc etc. This is one reason why "hundis" continues to flourish in our country.

2. Giving up cash for sole electronic transfer has to be the prerogative of the citizen - the state can not enforce this diktat. Those who are sheep and wish to be slaves or subjects of the state, rather than free citizens may voluntarily give up their option to trade (buy/sell) in cash. Those of us who want to remain free citizens, with the state as our agent and not our master, shall continue to want to trade in cash as an option. And, I say this as a person, who practically uses electronic means for over 90% of my transactions - but, with this attitude of the state and the emasculation of the RBI, I am going to increasingly use cash. If the state tries to sieze my/our option to pay in cash, tech savvy folks like us are going to shift to using dollars and crypto currencies for all major transactions - this would also have the affect of lowering economic growth in India.

3. Reneging on a promise that is written on each piece of currency note - and allegedly a sovereign guarantee (in the form of the RBI) - will have long term consequences for India and its economy. This will lead to a greater dollarisation/use of gold in the economy as well as an increase in the parallel economy, not a decrease. If you shake the faith of people in a currency issued by the sovereign, be prepared for all kinds of unexpected consequences.

The above is far as the theory aspect of freedom and why cash is important goes. One quote - "Those who would give up a part  of their freedom for security, deserve neither".

Now, as to the practicalities of the demonetisation move:

1. None of the three stated objectives of the move have been met - extinguishing black monies in the form of cash, rooting out fake notes and stopping terror funding. Out the 15.0tn of cash circulating in the high value notes, apparently all or MORE have been deposited with the banks. The RBI has not even published the official numbers as of Dec 30th, despite asking banks to submit all details on the 30th itself - including telling banks that they can not count these cash deposits as part of their quarter end cash balances. Once the cash deposited number reached Rs13.5tn, the RBI practically went mum or was gagged on further reporting. Sources indicate that MORE than Rs15.0tn have been returned to banks - what does that tell you?

2. There are no good options before the Modi govt re: cash deposits in banks. It can keep conducting a few raids here and there and announce seizures of a few tens or hundreds of crores - a drop in the bucket of the cash returned. And, if it increases the number of raids (a la VP Singh) significantly, then the economy will start slowing down even more, in any case - besides being a bonanza for the income tax officers.

3. Demonetisation does nothing to tackle the sources of corruption - unless the only structure of governance is changed from what we have currently - which is a colonial ruler-subject structure - nothing will change on the front of corruption. Neither petty corruption like in the RTOs nor mega corruption like power plants, road projects, ports or defence deals. Pls understand that unless the incentives are changed, people will continue to behave in exactly the same manner that they have been doing so far. Removing the ability of bureaucrats to "auction"/sign off on mega projects and dismantling the new licence raj that has once again been instituted is the only way to go.

4. To remove political corruption, you have to first understand reform the entire funding process of fighting elections - unless you have state funding of elections, politicians will necessarily have to indulge in corruption. Else, how will they fund their elections? It is only in this respect, I see a tiny glimmer of hope - Modi has asked ECI to look at broad reforms of the entire funding process of political parties and to consider state funding of elections - if he applies his mind seriously to his issue and executes on it, then this may turn out to be the real big bang reform that the country desperately needs today.

I can go on and on, writing about the horrible governance structure that we currently have - including colonial laws for the police and judiciary, not just the bureaucracy - but, I urge everyone to THINK from first principles of liberty and freedom and human behaviour. Also, to know that WE, the people ARE sovereign, and the state/government is only our agent/servant and NOT our master. It is foolish of us, the Masters, to let our Servants to lord it over us.

Thanks for hearing me out.


On 4 January 2017 at 19:17, Sarbajit Roy <> wrote:
Certain people (fools) are busy promoting cashless transactiions and
removing currency totally from the economy, without understanding the

#1 CASH / CURRENCY is a measure of the liability the Government has to
the people of India.  In simple terms.CURRENCY is a measure of how
much the Government owes to the citizens.Removing Currency implies
that Government owes people nothing and can do what they want and
print money at will.

MORAL -> FASCIST Govts desperately want currency and autonomous
Central Banks eliminated.

# 2 CURRENCY Notes must statutorily be exchanged for "value" - ie.
valuable coin. Previously this was gold, now its a mix of metals like
copper and stainless steel. The difference between the intrinsic value
(ie. metal price in open market) of the coin and its face value is the
Govt's tax (called "seignorage"). Typically whenever seignorage
exceeds 25-30% the public rejects paper currency in favour of stronger
currencies and there is monetary inflation. At present India's
seignorage is 70%. No wonder the India Rupee has depreciated 100%
against Dollar because smart Indians are "exporting" their value.

MORAL -> A Rafale fighter jet costs 2x what it did during Congress
time because we now have a chaiwala as PM instead of a former RBI

# 3 If there is no currency, then there is also no need for RBI (whose
only role is to regulate currency and money supply).  If there are no
Indian currency notes then people will devise ways and means (also
called Internet APPS) to ensure that transactions take place on
foreign websites in foreign currency but goods are "magically"
delivered in India. This is already happening Udtaa Punjab.

MORAL --> Why would anybody pay in Indian rupees on Indian websites if
a foreign supplier will anonymously deliver the goods to you without
bill after you have paid in dollars or Yen or BITCOIN ? The whole
online Pharmacy racket works on this principle.

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