Nepal bans new Indian Rs. 500, Rs. 2,000 notes

These notes will be legal in Nepal only when India issues a notification under the Foreign Exchange Management Act.
Nepal Rastra Bank (NRB) on Thursday banned the use of India’s new notes of Rs. 500 and Rs. 2,000, terming them “unauthorised and illegal”.
These two currency were issued by the Reserve Bank of India recently after old Rs. 500 and Rs. 1,000 notes were withdrawn.
NRB has called the new notes “unauthorised and illegal”.
NRB spokesperson Narayan Poudel said these new notes were not yet legal in Nepal, according to Onlinekhabar.com.
Mr. Poudel said these notes would be legal in Nepal only when India issued a notification as per the Foreign Exchange Management Act.
India is likely to issue a FEMA notification, allowing people in Nepal and India to possess certain amount of Indian currency.
Earlier, a ban was in effect in Nepal till 2015 against the use of Rs. 500 and Rs. 1,000 notes.
The authorities had lifted this ban after the visit of Prime Minister Narendra Modi to Nepal.
In 2015, Nepal allowed people to carry Indian Rupees of higher denominations up to Indian Rs. 25,000.
The RBI had formed a task force to ease currency exchange facility in Nepal for non-Indians who possess the now-defunct notes of Rs. 500 and Rs. 1,000.

Reliance Jio 4G preview offer: Terms, conditions you need to read

Reliance Jio’s 4G services are now live and for customers who sign up data and voice will be free till December 31, 2016, after which tariffs come into force. Jio’s 4G se

rvice will offer free voice-calling to customers, and claims to have the lowest data rates in the world starting at Rs 50 per GB. The plans are starting at Rs 19 and with free voice-calling. However, there’s a lot of fingerprint text one needs to read to fully understand what Jio is actually offering.

Here’s a look at the terms and conditions of the Reliance Jio service, that one needs to consider before signing up for the service.

For starters, the Jio service’s voice-calling is free for sure, but video calls you make on the network will be debited via your data-calling pack. The plans start from January 1, 2017.

The free WiFi data benefit in your prepaid and postpaid plans will only work through public WiFi hotspots of Reliance Jio. A user needs to access and log-in on the Reliance Jio WiFi app to access these, after you have located an actual WiFi hotspot.

The deal about the “Unlimited at Night”, means data that is used between 2am and 5am. If you use beyond this, your regular data pack will apply.

In the political battle that has emerged out of the demonetisation exercise, both proponents and opponents are ostensibly defending the interests of the poor. Some politicians are relying on anecdotal evidence to advocate the difficulties being faced by the common man. We instead use data from the National Sample Survey Organization’s (NSSO) survey to estimate such difficulties faced by the poor. The survey provides estimates of earnings in cash and kind by different income categories. We use the survey data for 2011 which comprised approximately 500,000 individuals across the country. Our estimates suggest that the poor are likely to have visited a bank branch at most once to exchange their earnings in the old currency notes to new currency notes. Thus, we infer that the politicians advocating the difficulties faced by the poor are being disingenuous in pushing their claims for political gains.

To estimate the above, we make the following arguments. First, the poor are unlikely to have substantial savings stored in Rs500 and Rs1,000 notes. Second, the bottom half of the population ends up spending almost their entire earnings on consumption. Third, only two weeks have passed since the demonetisation was launched on 9 November. Therefore, the weekly earnings of the bottom half of India’s income earners provide us the estimate of the cash that the poor would have in their kitty, which they would have to exchange in a nearby bank or post office. Finally, since the survey was conducted in 2011-12, we inflate the earnings by the average rate of inflation per annum during the period from financial years 2011-12 to 2016-17. This is likely to overstate the earnings of the bottom half of the population because, unlike salaried individuals and other richer sections of society, the earnings are unlikely to get adjusted for inflation in a consistent manner. However, the overestimation of earnings would only reinforce the bias against the inference that the poor are likely to have visited a bank branch at most once to exchange their earnings.

As the adjoining table clearly demonstrates, the bottom half—be it rural workers, daily wagers, weekly wage earners, or fortnightly wage earners—earn less than Rs1,350 per week. In fact, even the bottom half among the urban population earns at most Rs1,970 per week. Even if the bottom half of the population has saved up to two weeks of their earnings, the amount they have to exchange will be less than the Rs4,000 limit that was set by the government in the first week. The above inference assumes that the daily, weekly or fortnightly wage earners were fully employed in the past several weeks so that they could not only earn enough for their consumption but also to save. In practice, such wage earners are chronically underemployed. As a result, the total cash in the hands of the bottom half is likely to be less than Rs4,000. Thus, it is quite clear from this data that the bottom half of the country’s population would have by now visited the local bank or the local post office at most once to exchange their old currency.

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This conclusion then suggests that the long queues seen stem from two sections of the population: (i) people from the top half of the country’s income distribution, i.e. the richer folks, who want to exchange their honestly earned savings for new currency; and (ii) people who are acting as agents for the dishonest. The significant decrease in the queues after the government decided to use indelible ink to identify people that have exchanged their currency suggests large presence of the second category of people.

Beyond doubt, the former category is inconvenienced and the government and the Reserve Bank of India should take all steps to ease their difficulties. But this category comprises people from the top half of the country’s income distribution, certainly not the poor. In contrast, those from the second category who stand in the queue are only making efforts to earn a premium from the dishonest, who are willing to pay them such premium to convert their black money into white. No politician who genuinely wants the country to clean up the black money menace should sympathize with the latter category. After all, they are abetting the dishonest in evading the legitimate tax and penalty.

With respect to the difficulties that the country’s poor are likely to face till 30 December, note that around seven weeks of earnings are left before the deadline for depositing the demonetized notes. So, based on the estimates provided in the adjoining table, the maximum cash earnings of the bottom half would be around Rs8,000. Even if we suppose that they will be paid entirely using old currency till December, at most two more visits to the local bank or the local post office would suffice to deposit their old currency. Of course, it is quite likely that these workers refuse to accept their wage in old currency. In that case, they would not need to make the visit at all. As workers in this income category are likely to have been underemployed sometime in the past, they would have a bank account to receive Mahatma Gandhi National Rural Employment Guarantee Act payments. Therefore, future wage payments can be made via cheque by honest employers. In this case, such workers may have to visit the bank once to encash the cheque.

Note, we are not arguing that poor people are not facing difficulty because of demonetisation. Of course, standing in the queue for a day can mean loss of a day’s earnings for the poor. However, using the large sample data and careful analysis, we would like to highlight the exaggerated claims of disingenuous politicians who profess to be fighting for the poor.