Demonetisation proving to be a 'minor inconvenience' for money launderers

The agony of the common man waiting for his turn at an ATM to withdraw just Rs 2,500 but with no success has become the order of the day. On the other hand, freshly minted currency notes are tumbling out of the cupboards of crooks in raids across the country.

Till date, new currency notes worth more than Rs 300 crore have been seized by authorities across India after demonetisation was announced by PM Narendra Modi on November 8.

What could probably have been an exception has become more ubiquitous, with reports about seizure of notes in new denominations coming almost on a daily basis.

Some pertinent questions that emerge out of cash tumbling out of closets are, firstly, can pilferage of new currency notes be possible without the connivance of bank officials? Secondly, will raids be a deterrent for black money hoarders? And, thirdly, will big fish be caught?

One of the first incidents of new currency being stashed came from the Thanjavur district of Tamil Nadu, where the Election Commission seized a mini van with currency worth Rs 7.5 crore.

The biggest income tax raid so far, post demonetisation, took place on December 8, when officials seized Rs 90 crore in cash and 100 kg of gold. A series of raids in Tamil Nadu's capital brought the department the biggest seizure of new currency notes till date, worth close to Rs 70 crore.

On December 11, a police raid on a Delhi-based lawyer (Rohit Tandon) led to the recovery of unaccounted new currency notes of over Rs 13.5 crore. In total, with raids conducted on him earlier also, the Delhi’s lawyer’s cash stash has touched Rs 157 crore. He is known to have connections in political spheres, and his list of clients includes an arms dealer as well as Gautam Khaitan, who was arrested for his role in the Augusta Westland scam.

The BJP has been calling the demonetisation exercise a "minor inconvenience" for people, but its own functionaries and leaders have been caught with bundles of new currency notes.

The party's youth wing secretary from Salem, JVR Arun, was arrested by the Tamil Nadu Police during a routine vehicle check, when he was caought with about Rs 20 lakh in new notes on December 1.

On December 5, the police arrested Manish Sharma, a BJP leader and party candidate form Ranigunj in West Bengal’s Burdwan district, with Rs 33 lakh in the new 2,000 denomination.

When Modi announced the drive on November 8, he had said the situation would return to normal by December 30. He again made an impassioned plea on November 13 in Goa and urged people to cooperate and give the government time till December 30.

But just two days ago in Gujarat, he said the path to normalcy will be gradual and slow even after the 50 days that he had sought to deal with hardships.

- Modi in Goa, Nov 13: “I have asked for 50 days from the nation. If after December 30, I am found wanting, am guilty of error or wrong intentions, I am ready for any punishment the country will pronounce".

- Modi in Banaskantha, Gujarat, Dec 10: "Lekin pachas din ke baad maine hisab lagaya hai ki dheere, dheere kar ke, pehle jaisi sthithi ki taraf aage badhenge (after 50 days, I have calculated, we will slowly, slowly, move towards what the situation was earlier)."

Has Modi’s calculation gone wrong and isn’t he actually changing the goalpost?

The PM appeared to be in control of the narrative till the end of November. The Centre had just framed the Pradhan Mantri Garib Kalyan Yojana (PMGKY), an income declaration scheme to tap into the unaccounted cash returning as deposits into the system.

And the people were largely tolerant, despite the inconveniences they were subjected to. But the picture appears to be changing now.

Income tax raids and searches are throwing up large caches of new Rs 2,000 notes, leading the common man to wonder how hoarders have been able to lay their hands on such large quantities of notes when banks and ATMs are running dry.

Former IAS officer EAS Sarma has written a letter to PM Modi and asked whether the government operates on double-standards, and whether there are a separate set of rules for NDA ministers and for the common Indian citizen.

In his letter, he pointed out two reports appearing in newspapers - the first, “50 chartered planes to ferry VVIPs to Nagpur for Gadkari’s daughter’s wedding”, and second, “Weddings put off as families struggle to tide over crash crunch.” 

He says: “As a result of the prevailing cash crisis, many families have put off their scheduled weddings. Many other weddings have broken down. But, Gali Janardhana Reddy, Mahesh Sharma and Gadkari feel no crisis whatsoever, as they seem to have the blessings of bigwigs from both BJP and the NDA. While your Ministers are indulging in such unhealthy extravagance, is it not ironic that you yourself should exhort the common man to stand in queues to uphold your grandiose mission to fight against black money?”

Clearly, the speculation that black money hoarders are having a field day is not unfounded.

The PM's stated aim was to check black money and counterfeit currency with the demonetisation drive. But, if the reported incidents of black money seized in new currency are a partial representation of unaccounted cash, imagine just how huge the actual amount may be.

Till now Rs 11.55 lakh crore has already returned, says the RBI. This can only mean that hoarders of unaccounted cash have managed to launder their money, proving wrong the original assumption that - between a quarter and a third of invalidated notes would not return.

It is possible that a substantial number of counterfeit notes have managed to find their way into bank deposits? And I am tempted to say “pink is the new black”.

Also read: Why didn't government think of this to tackle black money?