50 Days of Demonetization are over: it’s payback time, folks!

Soumya Dutta

1. If the total cash in circulation on Nov.8 was about Rs.1700000
crores (as was being published), and just about 10% was spent daily (a
fairly conservative estimate, as for the vast majority of poor and
middle class, 10 days to spend the cash in hand is too long, but some
cash will be in banks too), that results in a daily cash transaction
amount of 170000 crores.

2. Supposing about 50% of this is forced to e-transactions, by the
demonetization move, that comes to Rs.85000 crores/day.

3. In cash transactions, you get what I pay, and no one gets any
commission in between (except the odd Chillar fellows sometimes), with
the RBI spending some 12-13000 crores annually on notes printing &

4. Taking a modest 1% commission on these NEW E or D transactions
(remember – some 10% transactions were already going through digital
modes) as “service fee” (credit cards often charge 1.8%, debit cards
1%?) by these companies – after December 31, The extra windfall
(commission) to a handful of digital payment gateways like Paytm,
FreeCharge, JioMoney etc, comes to 850 crores/day.

5. The annual Bonanza comes to Rs.310250 crores !! A nice little sum .
of money for Ambani (JioMoney), Vijay Shekhar Sharma (Paytm) and the

6. Compare this with some Rs.12000 crores in cost of printing new
notes, plus a little for circulation & withdrawal of old notes. Say
13000 crores in total.

7. The existing E-Transaction in FY2015 was $1.43 trillion, or about
Rs.9580000 crores. On the same 1% basis (actual likely to be more),
the payment gateways were already getting some 95800 crores annually.
To setup & maintain their gateways, not even 10% is required.

8. That means, “We the People” were paying a sum of about Rs.13000
crores annually, to maintain our cash economy (ultimately, what the
govt or RBI spends, comes from us).

9. Now, “They, the E-Transaction Kings” will suck out about Rs.310000
crores, annually, and increasing !! For giving us the great service of
risky E-transactions (card or e-banking frauds can
siphon off “billions in a blink”, as shown by many recent examples).

10. This is roughly 46% of the total bank NPAs.

11. Also the banks are now flush with over Rs.1400000 crores of
additional money, with may be a possibility of 40% going out soon as
cash (with the scare created by D, no one but the very poor will keep
as much cash as earlier), leaving about Rs.840000 crores with them.
“Nice” way to recapitalize at least cost (least cost to govt, high
cost to the people).

12. So, the roughly Rs.670000 crores NPA will cease to be a priority,
and more loans to the “defaulters”, and more big write offs can
happily take place.


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