India's Prime Minister Has Singlehandedly Crushed The Economy With His Reckless Cash Ban

Tyler Durden's picture

Submitted by Mike Krieger via Lberty Blitzkrieg blog,

Today’s piece should be seen as a bit of a followup to yesterday’s post, India’s Demonetization Debacle Highlights the Dangers of Monetary Monopoly. While yesterday’s piece was more philosophical/strategic in nature, today’s zeroes in on some of the devastating real world impacts of Narendra Modi’s insane and inhumane cash ban. It’s hard to overstate the damage this policy has done to India’s economy. Modi is quickly solidifying his place as one of monetary history’s biggest idiots.

First, let’s take a look at the destructive impact the move has had on India’s massive small businesses community. The Washington Post reports:

 Over the past two years, this suburb of New Delhi mushroomed into a flourishing enclave of small cellphone manufacturers, attracting tens of thousands of workers from the countryside. Noida, known as the “handset hub,” was touted as a showcase for Prime Minister Narendra Modi’s pet “Make in India” initiative.

 

Then on Nov. 8, Modi’s government took a step that has jolted the bustling industrial quarter. It scrapped high-denomination currency, with a view, officials said, to curbing illicit wealth and the financing of terrorism. But the cash shortage triggered by the move has also curbed legitimate small enterprises. Many of Noida’s manufacturing units have slashed production by nearly half, and more than a quarter of the workers have gone back to their villages.

 

“It was a booming sunrise industry before November 8th. Not now,” said Vipin Malhan, president of the Noida Entrepreneurs Association, who also runs a business that makes cellphone accessories here. “Many small factories and assembling units, which used to work round-the-clock, with three shifts, have scaled down to just a single shift. We are all in shock now. One word that businesses dread is ‘uncertainty.’ The government has thrown that at us.”

 

Several small- and medium-scale industrial clusters, employing a total of more than 80 million people across India, are reporting declining sales, production slowdowns and layoffs since bills worth 500 and 1,000 Indian rupees were invalidated (500 Indian rupees is worth about $7.40). Towns famous for weavers, lockmakers, power looms, bicycle-parts manufacturers, ready-made garments and handicrafts face rising inventories of unsold goods.

 

Even large car manufacturers have halted production in some of their factories for several days because of a sharp dip in consumer spending. And in a reflection of the belt-tightening that has accompanied the general sense of uncertainty, credit card companies have posted a decline in the total value of transactions, even as the cash shortage is forcing people to use their cards more.

 

“We started hearing murmurs that there were no fresh orders from the market. That our raw material was stuck because we could not pay. Stocks were piling up,” said Sudhir Ramphool Singh, 33, who lost his job at a cellphone assembly unit in Noida and returned to his Dharavu village in northern India this month. He is the sole breadwinner for his family of seven. “Production slowed. The unit was shut down for 10 days. When it reopened, many of us were asked to go.”

 

With the large bellwether state of Uttar Pradesh slated to hold elections early next year, the business slump — and the lines at the banks — have become campaign issues.

 

“Forget about creating new jobs. Modi’s decision is taking away people’s jobs,” the opposition Congress party leader, Rahul Gandhi, said at a public meeting this month.

 

Modi has urged people to adopt digital payment methods and bear some pain to support the long-term goal of rooting out corruption.

 

Mishra’s office is conducting 50 training sessions every day in small industrial hubs to help residents transition to cashless transactions. But many business owners in these clusters say it is not easy to change because daily wage laborers do not accept checks and do not have smartphones with Internet.

Well done Modi.

Last week, about 200 business executives in Ludhiana staged a sit-in against the cash-swap decision, calling it “ill-conceived.” They even formed a “stick brigade” and are threatening to beat tax officers who show up to “scrutinize our books needlessly and harass us.”

 

In the country’s largest textile town, Bhiwandi, in western India, more than 2 million power looms used to operate round-the-clock. Countless machines are silent now.

 

“The cash shortage has come as the latest blow to the industry that was already hit by global competition. Fifty to 60 percent of power looms have shut down, and more than 150,000 workers have gone back to their villages,” said Rashid Tahir Momin, whose family owns about 400 power looms.

Naturally, this is just the tip of the iceberg. The Indian diamond market has also been thrown into total chaos.

As Reuters reports:

The global diamond industry is facing disruption that could stretch through the first few months of next year, including Valentine’s Day in February, as a result of Indian Prime Minister Narendra Modi’s radical move to abolish most of the nation’s cash overnight.

 

In the western Indian city of Surat craftsmen usually spend 10-12 hours a day in small mills or grimy sheds cutting and polishing 80 percent of the world’s diamonds but the business is based on cash and the demonetization of the high-value banknotes from Nov. 8 has prevented many from operating. Thousands of diamond brokers in the area’s narrow lanes are also doing little business.

 

In India, jewelry demand typically climbs in the winter months’ wedding season. But this year sales are plunging as nearly two-thirds of jewelry is usually purchased with cash, which is in short-supply.

 

Ishu Datwani, owner of Mumbai-based Anmol Jewellers, says his sales are down nearly 70 percent since the government scrapped the high-value notes.

 

The demand is unlikely to revive any time soon as India struggles to dispense enough new notes, industry officials say.

Let this be a lesson to all of us regarding the dangers of centralized power. There’s no reason we should ever allow ourselves to be in a position where the foolish, capricious actions of one man can have such a devastating impact on an economy of more than one billion. This is precisely why we need to move toward a more decentralized way of living and discard many of the archaic, unnecessary and harmful institutions of the past.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
PrefabSprout's picture

I say, Ban Prime Ministers!!

stacking12321's picture

yes, and ban presidents and kings, too!

modi can't help it that he is a clueless wanna-be tyrant, best to just get rid of him.

AlaricBalth's picture

By definition, any cash ban is, and will be, inherently reckless.

Using the phrase "reckless cash ban" is superfluous.

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) AlaricBalth Dec 27, 2016 10:10 PM

When the Harriet Tubman $20 bill comes out, I might put a ban on cash myself.

tazs's picture

There are too many false gods in India. Modi did not know which he should listen to, the cow or the snake.

whatsupdoc's picture

Nope. I think the monkey spoke the loudest or perhaps the macaw...

shamus001's picture

Sadly, the monkey never shuts up here in America! 8 years of monkey-business has usurped freedoms and peace the world over!

strannick's picture

How do you know if Modhi's a failure if you dont know what his goal is?

Nemontel's picture

His aim is to cripple Indias economy, just like Obongo tried to cripple Americas economy.

http://www.truthjustice.net/economy/nothing-grows-forever/

Nexus789's picture

I think the rat got a few words in his ear.

SilverRhino's picture

No, he listened to the vampire squid.  

junction's picture

Harriet Tubman only rescued some of her relatives.  The only guys who repeatedly risked their lives smuggling out slaves they did not know were whites, many of them Christians who were true believers in Scriptures.

chubbar's picture

Well, naturally, but don't tell the blacks that, they have damn little to be proud of. Best to let them think that some of their relatives did something of significance.

bluez's picture

Still waiting for the Android Little Green Robot mascot $20 bill.

Salzburg1756's picture

I have a dozen Bernie Madoff $1000 bills which I'm willing to let go for $99.99 a piece. Any takers?

c0nan's picture

and start using Bitcoin.

aminorex's picture

Bitcoin has no privacy, and without privacy there is no freedom.  It exposes you to every extortionist on the planet, in or out of government service.  That is why Monero has been rising so much faster than Bitcoin.

HRH Feant's picture
HRH Feant (not verified) Dec 27, 2016 9:36 PM

Utterly terrifying that one asshole move has destroyed the economy of an entire country and the 1.3 billion people that live in that country. I am guessing Modi's time on Earth grows short. India has a history of killing PMs that upset people.

buzzardsluck's picture

It's a country of pussies, much like the us of a.  Like all humans they will go along to get along.  Also no way one person is deciding shit in a country(any country? certain (((people))) fixed independent countries long ago) that large.

 

Id swear this crieger fucker openly voted for obama twice so why give him any voice?

enfield0916's picture

Speak for yourself. As Jatt Sikh who has a heritage of fighting against tyrants when no one else will, my kin boldly stood up against Modi and his cronies.

Look up Bhagat Singh, he put Gandhi to shame during the Indian freedom fight against the British Raj and exposed Gandhi for the cowrd he was.

Jeffersonian Liberal's picture

It is a stupid move, but it isn't this move alone trashing the economy in India.

A YUGE part of their economy is dependent upon the strength of other economies. This helps to keep them gainfully employed at wages and salaries much higher than what they'd be paid strictly on internal corporations.

When other economies tank, so does theirs.

This cash ban is just a kick on the teeth on the way down.

Nexus789's picture

If it gets bad perhaps India fractures into regions that decide to do their own thing.

IntTheLight's picture

Serves them right. Kicked out the British. Brag about Ghandi as a man of peace. He wasn't. Supported WW2. And slept with naked girls and gave them enemas. And then the elite moved to Britain, US and Canada when their country fell apart.

Lost in translation's picture

Source for the debauchery of Ghandi?

Never heard these things before...

boink.voink's picture

Gandhi's autobiography has these things itself; wikipedia aslo has the reference to where you can find it; gandhi was a pervert who slept naked with his own neices to see if he has overcome lust ! SICK SICK MAN !

OhNo's picture

Plus he was a goatfucker, Had a driver when i went to india for a holiday his grandfather told him, he even showed me how the goat herders have there favourite goat very close by. Oh and India is a shit hole and there people aren't much better.

enfield0916's picture

It all depends on where you are in India, urban India is no less than any of the big western mega cities, except for the traffic.

 

Goa is one of the top destinations for tourism and it's golden beaches are comprable to any great beach in the world. Every county has thie own version of a shit hole, look at NYC or any other Libturd controlled middle city.

enfield0916's picture

Sat Shri Akal :)

I am guessing you are a Sikh as well?

Getafix's picture

His autobiography, "My Experiments With Truth".

IntTheLight's picture

You are kidding me. So many sources. His wife died of pneumonia because he wouldn't let her take penicillin as it was Western medicine. When he became sick, he took it. He slept with naked girls as a test of his willpower and liked to give them enemas. His history with regards to advocating violence in South Africa to advance the cause of Indians is well documented as was his support of WW2. Everything you know about him and Mandela is a lie. Read. Don't ask me to do what any of us can do. Read and research.

Bear's picture

Money, money every where but not a drop to spend

SgtShaftoe's picture

I'm actually surprised they haven't drowned him in the Ganges or burned him alive at the funeral pires. 

marathonman's picture

He's truly a worthy candidate for that outcome. Maybe they could snag Bernanke while they're at it and send a message to the other coin clippers around the world.

DarkPurpleHaze's picture

India was once thought to be part of the much touted BRICS equation that would displace and crush the USD from reserve status. How laughable does that sound at this point?

India will be lucky if they can sustain themselves in the near term. A billion-plus pissed off Indians with little cash and lots of anxiety is not a good thing.

stacking12321's picture

i had that thought as well. and maybe langley exerted some influence over modi and convinced him to do this stupidity that was sure to be unpopular.

we know that langley had a hand in ending the rule of roussef, the B of BRICS, and putting their puppet in place there.

but brics or no brics, the dollar as reserve will fall eventually, it's been a good run.

Jeffersonian Liberal's picture

Yep. They willfully and eagerly aligned themselves with the BRICS

Brazil: Socialist
Russia: Socialist
India: Socialist
China: Socialist
South Africa: Socialist

Of course, they are all small-c capitalists who exploit Capitalism for their own gain.

And let's not forget that they have been active in dumping the role of the USD as a reserve currency.

And we're supposed to be happy about giving them our good tech jobs, to be offshoring so many jobs that Americans could be doing, about training them as replacements if we want our severance?

They chose their side.

IReallyDontCare's picture

You forgot to add the US to your list, bail outs proved the US is just as Socialist.

monk27's picture

Sorry to dissapoint you there mate, but Obozo's US of A is more "socialist" than China...

wisehiney's picture

World's seventh largest economy.

Sounds deflationary to me.

Yen Cross's picture

 Is it just me? I feel like I'm living on an island next to a volcano.

hannah's picture

....with a ticking nuclear bomb and an asteroid flying right at you.

JackT's picture

Or the island is the volcano that has a nuke storage facility embedded into it

HRH Feant's picture
HRH Feant (not verified) Yen Cross Dec 27, 2016 11:09 PM

I can hear the tick-tick-tick of the fucking clock waiting to activate the detonator.

If you have not listened to this 3-hour interview (with NO commercial breaks) I suggest you subscribe and listen ASAP: www.caravantomidnight.com Episode 663 which was posted on 12/22/2016.

I still cannot sleep. Got EMP? That is the way they are going to tank the USSA. One little ole tactical nuke launched from a plane, a cargo ship, whatever and out go the lights. Fucking bastards. I love electricity. I really do.

Hongcha's picture

This is why they want the guns gone.  So they can do this kind of shit and people can't do anything to stop it.  They also want to breed liberty out of Amerikans.  How often do Amerikan politicians use the words, Freedom or Liberty?  Compared to Security or Safety?

The next false flag will be a takedown of a major telecomm grid/network for an extended period.  It is perfect, hits the spot - produces panic with minimal physical damage, difficult to prove, easy to pin on unseen enemies.  I mean, everyone's already thinking "Russians= Hackers" right?

When the cells stop working for 2-3 days the faeries with the gauged earrings will start to whine in earnest.  They will line up for Govt. cheese.  They will figure out who Daddy is right quick.  A little sick to watch in real time, but there it is.

Kprime's picture

I notice the .gov has a National Security Agency, but no National Freedom Agency or National Liberty Agency. 

We have a Department of Homeland Security, but no Department of Homeland Freedom.

So now you know in the land of the free, they only thing important to .gov is their own security, fuck your freedom.

History has been rewritten, it used to be said "Give me freedom or Give me Death".  Now it's been perverted into "Give me a Safe Space".  That's was comes of giving up education into the hands of the .gov.