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Proof Of Note Ban Loot And Plunder - Black Money Flows Like Water in Poll-Bound Gujarat

Raman Swamy

As usual, Dr. Manmohan Singh was right.  He told college students in Kerala last weekend that black money cannot be wiped out by demonetizing high value currency notes like Rs. 1000 and Rs. 500 and then simultaneously introducing an even higher denomination currency note of Rs. 2000.

One does not have to be an eminent economist to grasp the implication of this.  The big players in the black money business must have been thrilled when they heard Prime Minister Narendra Modi announce to the nation on December 8, 2016 that he was introducing a 2000-rupee note to replace the 1000-rupee note which he was declaring to be no longer legal tender. 

Huge amounts of illicit cash are much easier to count, hoard, smuggle and transport when the currency notes are of higher value.  More money will fit into a suitcase.  Less storage space is needed for the hoarded cash. 

Apart from such simple and mundane advantages, black money dealers and traders were quick to read the Prime Minister’s lips that fateful night – that they had nothing to worry about.  Note bandi was not directed at them.  In fact, note badly would make life easier for them.   There was an animated video that went viral on social media showing a group of hawala operators dancing for joy with whoops of jai hind and vande mataram. 

It is no surprise, therefore, that a television news channel came out with a special investigation report on Tuesday about black money flooding into Gujarat where assembly elections are being held.   The audio-visual evidence shows that the poll-bound State is awash with cash.   Political parties and contesting candidates – belonging to both the major parties in the fray -- are apparently flush with wads of currency to bribe voters and indulge in obscene amounts of campaign expenditure.  

The question is - was Demonetization just an eyewash and a colossal fraud on the nation?  How else can so many thousands of crores worth of 2000-rupee currency notes be so blatantly flourished and bandied about so openly? 

Was the Prime Minister so naïve as to believe that note bandi and note badli would flush out black money from the country?  Or was he knowingly misleading the nation to justify his demonetization decision?  What about the Finance Minister – was he being misled by his officials when he said as recent as a week ago that demonetization had been a huge success because the quantum of black money in circulation had been considerably reduced in the past ten months?  He also claimed that electronic transactions had quadrupled and cash was no longer being used for deals exceeding five lakh rupees.

There is nothing electronic or digital about the amount of money exchanging hands in Gujarat right now.  It is all hard cash, mostly pink in colour.  And the big parties in the election season are not dealing in lakhs but in crores.   The expenditure limit of Rs. 28 lakh per candidate laid down by the Election commission of India provokes loud guffaws – each serious candidate is spending Rs 28 lakhs every single day of the campaign, which is likely to soar to double or triple that amount per day as voting day draws ever closer. 

The TV sting operation’s hidden cameras have captured several black money operators and couriers boasting about the amount of cash they are handling as the election fever mounts.  They give vivid details of the commission they charge for transferring money from outside the State to recipients within Gujarat.  

All transfers are done efficiently, discreetly, within a few hours and with total anonymity.  No receipts, no paper trail, no names.  Only highly reliable and trustworthy couriers, called angadias, who rely on phone calls, prearranged drop-off locations and code words or pre-determined signals.  There is even a special home delivery service for big orders made by regular clients. 

All this being carried out right under the noses of the supposedly hawk-eyed Election Commission officials and sleuths.  Shockingly, they do nothing.   Or, perhaps, it is not so shocking after all.  They look the other way because of obvious reasons - the recipients are powerful politicians. 

Richard Thaler is the winner of the 2017 Nobel Prize for Economics.  Last December when he heard that India had demonetized the Rupee, he nodded in approval because he assumed the objective was to encourage digital currency and move towards a cashless economy.   But when he was told that the Prime Minister of India had replaced the devalued notes of Rs. 1000 with a new note of Rs. 2000, he uttered an expletive, consisting of one word – “Damn!”

Dr. Thaler is a giant among global economists.  He specializes in Behavioral Economics.  He knew instinctively what the game was.  He understood in an instant that it was what Dr. Manmohan Singh later described on the floor of Parliament – “a monumental blunder, organized loot and plunder”. 

The Nobel laureate said in a Twitter message to a former student of his – “The introduction of the Rs 2000 note makes the motivation for the entire exercise puzzling.   The concept might have been good if it was a genuine move towards a cashless society to impede corruption.  But the rollout looks deeply flawed”.

Incidentally, the BJP’s fake news social media team swung into action by selectively quoting Dr. Richard Thaler’s comment.   The Internet was flooded with tweets and retweets that the eminent economist had “supported demonetization” and “praised Narendra Modi” by saying “The concept was good as a move to a cashless society to impede corruption”.

Just as photographs are morphed, the message was distorted and mutated.  The part where he says the rollout was “deeply flawed” was left out.  The part where he says the introduction of the Rs 2000 note “makes the motivation for the entire exercise puzzling” was deleted altogether.   Needless to say, Dr. Thaler’s eloquent “Damn!” was not mentioned at all by the BJP’s troll army.

Nov 24, 2017


Raman Swamy [email protected]

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