Petrol bunks daily sale & 2.5Lakh

As per 2015-16 statistics total petroleum consumption in India is 183 million metric tonnes. We are talking about 493 million kgs per day. At the density of .745kg/liter which is of diesel (petrol is at 0.719) this is 662 million liters of petroleum products. At the retail price of 55/- per liter (conservative estimate) this is 3,640/- crore per day of sale or 127 thousand crore over the 35 day period.
Assuming that 50% of this sale is through retail channels of Diesel, petrol & LPG. We are still talking of over 63.7 thousand crore of transactions which happens largely in cash and is sizable enough. If all these transactions happen in cash and there is no spike (extra sales) in the volume, we are talking about 4.5% of 14Lakh crore currency being deposited via this route. Through back dated bills, cooperative banks etc. some more money is getting shifted but I am presuming would have already been deposited in the 28th Nov figures released by government.
The more interesting is the significance of 2.5Lakh in Indian demographics. Attached is the data from Credit Suisse that was recently published in Economist. Rather than taking the earning capacity, they have taken the entire wealth (includes property prices, less loans, cash, bank deposits, securities etc.) The distortion with annual earning as the metric is that it inflates the wealth by the young and the salaried, while under-reporting those not declaring returns or living off interest, dividends or rent.
It is interesting to note that bulk of the people should not be impacted by the 2.5Lakh relaxation. Also a lot of people in the 4 decile that I have highlighted would have wealth in property or already in the bank. Hence no impact.
The two questions that demonetization raises are:

  1. Is the amnesty scheme of taxing only 50% under the black money bill (interest free deposits should not be a concern who are used to keep money under the mattress) is too liberal? Having the second voluntary disclosure scheme in the same year is too lenient. A better move would be to impound and de-notify the unexplained funds. This way Government could have mopped up the whole 3Lakh crore that it is aiming for rather than half of it.
  2. Will it actually change the habits of Indians? If two years down the line we have the same level of black money, then probably this 50 day of hardship is for nothing.

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