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https://www.ft.com/content/31cd754e-bde2-11e6-8b45-b8b81dd5d080
New rupee notes worth $13m seized in India black money raids
The seizure of the rupee equivalent of $13m in new banknotes has cast doubts on the Indian government’s assertion that scrapping old notes would make it more difficult to hoard black money.
Tax officials in the southern city of Chennai said much of the cash found in raids was in Rs2,000 ($30) denominations introduced a month ago as part of ban on Rs500 and Rs1,000 notes.
Officials said the money was linked to businessmen, one of them a member of Tamil Nadu’s state ruling party, lending weight to allegations political organisations have been among the biggest hoarders of illicit cash.
One investigator said gold worth Rs280m had also been seized, adding that raids had been carried out at seven locations and would be extended to a dozen more.
The seizure is the biggest in a series across the country in the month since New Delhi announced the “surgical strike on black money”. India’s economy is dominated by cash transactions that make it easier to hide income from tax authorities.
Access to large amounts of cash has in recent weeks been made all the more difficult by strict limits on ATM withdrawals. Account holders can take out Rs2,500 a day from an ATM or Rs24,000 a week over the counter, but registered businesses have higher limits.
Narendra Modi, the prime minister, said anyone depositing more than Rs250,000 in a bank account would have to declare how they had earned it and whether they had paid tax on it.
But questions have been raised about how much of the cash people hold is black money, defined as ill-gotten or hidden from tax authorities. The State Bank of India estimates that more than 80 per cent of the new money is expected to flow back into the banking system by the end of the year.
In recent weeks, police have publicised raids on people they accused of stashing black money in cash. Last month officers in the western state of Gujarat said they had arrested six men carrying Rs40m, some of it hidden in boxes of water pumps.
Last week JVR Arun, a youth leader for the governing Bharatiya Janata party, was arrested in Tamil Nadu after police said they found more than Rs2m in cash, including 900 Rs2,000 notes, in a routine search. Mr Arun had previously expressed his backing for the demonetisation, writing on his Facebook wall: “For the progress of our country, let’s stand in a queue.”
This week the Revenue Department’s enforcement directorate arrested three employees of Axis Bank on charges of conspiring to help launder money through fake company accounts.
New rupee notes worth $13m seized in India black money raids
The seizure of the rupee equivalent of $13m in new banknotes has cast doubts on the Indian government’s assertion that scrapping old notes would make it more difficult to hoard black money.
Tax officials in the southern city of Chennai said much of the cash found in raids was in Rs2,000 ($30) denominations introduced a month ago as part of ban on Rs500 and Rs1,000 notes.
Officials said the money was linked to businessmen, one of them a member of Tamil Nadu’s state ruling party, lending weight to allegations political organisations have been among the biggest hoarders of illicit cash.
One investigator said gold worth Rs280m had also been seized, adding that raids had been carried out at seven locations and would be extended to a dozen more.
The seizure is the biggest in a series across the country in the month since New Delhi announced the “surgical strike on black money”. India’s economy is dominated by cash transactions that make it easier to hide income from tax authorities.
Access to large amounts of cash has in recent weeks been made all the more difficult by strict limits on ATM withdrawals. Account holders can take out Rs2,500 a day from an ATM or Rs24,000 a week over the counter, but registered businesses have higher limits.
Narendra Modi, the prime minister, said anyone depositing more than Rs250,000 in a bank account would have to declare how they had earned it and whether they had paid tax on it.
But questions have been raised about how much of the cash people hold is black money, defined as ill-gotten or hidden from tax authorities. The State Bank of India estimates that more than 80 per cent of the new money is expected to flow back into the banking system by the end of the year.
In recent weeks, police have publicised raids on people they accused of stashing black money in cash. Last month officers in the western state of Gujarat said they had arrested six men carrying Rs40m, some of it hidden in boxes of water pumps.
Last week JVR Arun, a youth leader for the governing Bharatiya Janata party, was arrested in Tamil Nadu after police said they found more than Rs2m in cash, including 900 Rs2,000 notes, in a routine search. Mr Arun had previously expressed his backing for the demonetisation, writing on his Facebook wall: “For the progress of our country, let’s stand in a queue.”
This week the Revenue Department’s enforcement directorate arrested three employees of Axis Bank on charges of conspiring to help launder money through fake company accounts.
