Demons that haunted demonetisation

When the shock from the announcement had died down, the speculation began about how much money the government would rake in. The conversation turned to how many of the withdrawn notes had already been deposited officially. Ashwini initially covered these stories like everyone else, but her focus shifted when rumours started flowing in the market that most of the withdrawn notes had already been deposited in the bank. She started talking to accountants and bankers to do a show about how the money had been diverted to other less formal channels by individuals and corporations. The last afternoon and evening had been packed with absorbing interactions with bankers and accountants. Her first meeting had been with Mohan, a chartered accountant whom she had contacted through one of her acquaintances. Mohan had said that some of his clients had paid their employees their salaries in cash, some in advance payments, while others had teams booking airline and railway tickets in cash. These tickets had been cancelled later, and payments would be refunded later only in the new currency.

“A few of my clients made a lot of money too,” he said. Mohan liked to be on the right side of things, but he could not enforce that moral code on his clients. Several businesses ran primarily on cash, like restaurants, theatres, liquor shops, and petrol bunks. They offered to take the illegal currency and return it in new currency after taking a 20% cut. “Who is to decide what is right and wrong,” Mohan reflected, taking a rather squashed paan from a plastic pouch he always had in his back pocket. A large part of the Indian economy runs on cash and trust. The government’s sudden announcement had dislodged small enterprises from their familiar track. During that uncertainty, they decided to take any available opportunity to make money. Many people had purchased blocks of gold at a premium from gold retailers who were willing to accept cash. It was a windfall month for retailers, who had sold expensive items like watches, designer jewellery, and even paintings from art galleries. Mohan had suggested she speak to an accountant at one of the large auditing firms and also to a person named Chacko who worked at a multinational bank. “You won’t believe the things these guys advise their clients,” Mohan said, spitting out his pan into an old receipt and dropping it into the wet waste bin under his table. The next morning, when Ashwini went to meet the accountant at the well-respected auditing firm, he kept her waiting for an hour. When Mr. Senthil finally called her into his cabin, he insisted that what he said was strictly off the record. “Of course,” she said, and waited for his ruffled feathers to settle down. The best way, she had realised over the years, to get someone to talk was to stay silent and let them speak. Questions weren’t always the way to get answers. People needed to find their narrative. “Did you know that temples, mosques, churches—all of these religious places received massive donations between November and December 2016?” He waited to see how Ashwini reacted to that, but she stayed silent and watchful. “They have taken ‘donations’ from ‘believers’,” he said, pausing as he placed the air quotes for dramatic effect, “and returned clean money.” They realised cleaning money is more lucrative than cleansing souls. “How would they return the cash?” Ashwini asked. “Well, there are many ways. As you may be aware, most religious institutions are exempt from tax and are not monitored as closely as private companies. Nobody questions the fact that some temples may have received a sack of jewels or notes as a donation. The person who donated opened a dummy company. The religious institutions pretend to buy something from the dummy company by issuing a purchase order. They then pay out the money for a dummy purchase after deducting a percentage that was agreed on at the time of the donation, “said Senthil. The auditing firm that Senthil worked for did not get into such transactions, but he knew of others who were arranging for high-net-worth individuals to meet with heads of religious institutions. They were connecting high-net-worth individuals with builders, too. Builders were sitting on a pile of unsold inventory and desperately needed the cash. The illegal currency of the rich was being turned into bricks.”Did Mohan tell you about Toufique?” “No. Who is he? “Ashwini made a note of the name in her diary. “He is a councillor in Ramnagaram and heads a cooperative bank. He can tell you colourful stories. You may think it is impossible, but in rural areas, the audacity of the rich is surreal. “

Senthil said that Toufique had told him that people brought cash, in suitcases and trunks, and even in bundles wrapped in sarees, to cooperative banks. The cash was being accepted blatantly in the open, till the Reserve Bank of India cracked the whip and stopped cooperative banks from accepting any more cash. Toufique had made nearly a hundred crores in a week. But he did not take part in the atrocity forced on farmers. Their land deeds were taken away and they were forced to deposit defunct currency in their Kisan Credit Accounts. The defunct money would come back to the farmer as cheque payments twelve months later. The land deed would be returned to the farmer once he returned the cash deposited into his account. Senthil had tried to intervene and help the frightened farmers, but a state minister shooed him away.

The excerpt is from Riding the De(mon) (Leadstart Publishing).