How Indians are dodging ‘black money’ crackdown

[caption id="attachment_100111" align="alignleft"] Indian trader Sanjeev Baluja looks on as he sits in the office of his currency exchange and travel agency office in New Delhi in this Nov. 9, 2016 file photo. — AFP
[/caption] NEW DELHI — From deploying ‘cash coolies’ to buying Rolex watches, Indians have found unique ways to dodge the government’s surprise move to withdraw high value bills in a bid to tackle widespread corruption and tax evasion. Prime Minister Narendra Modi sent shock waves through the country by announcing on Nov. 8 all 500 rupee ($7.30) and 1,000 rupee notes — some 85 percent of all bills in circulation — would cease to be legal tender within hours. The announcement threw India’s cash-dependent economy into turmoil and triggered a mad rush among people with undeclared, unaccounted cash — so-called “black money” — to exchange old notes or use them to buy gold and luxury items. Tax evasion is rife in India with many small businesses and professionals such as doctors and lawyers asking to be paid in cash to avoid taxes. Only six people earning over 500 million rupees filed returns in 2012-2013, despite there being an estimated 2,100 ultra-wealthy Indians whose net worth exceeds $50 million. But the government is cracking down and banks must report anybody depositing more than 250,000 rupees, while holding undeclared cash can lead to a penalty of double the tax owed. There have been multiple reports of factory owners and businessmen asking staff — or even hiring casual laborers — to stand in bank queues and exchange cash for them before the Dec. 30 deadline. The initial over-the-counter currency exchange limit was 4,000 rupees but was later reduced to 2,000 rupees after the government said “unscrupulous elements” were paying the poor to queue to exchange their money. The government also asked banks to ink people’s fingers — a tactic normally used to fight voter fraud — after they had exchanged bills to prevent them from queuing up again. Wealthy Indians rushed to make costly purchases with unaccounted cash soon after Modi’s announcement on Nov. 8. Several luxury retailers stocking brands like Rolex and Dior sent emails to clients stating their stores would be open until midnight that day, the Economic Times reported. The daily said a leading global fashion brand store in Delhi remained open all night immediately after the move was announced, selling merchandise worth more than $150,000 in less than three hours. — AFP