On Friday afternoon, news reports said the Reserved Bank of India, dispatched to Manipur, Rs. 107 crores in the new Rs. 500 and Rs. 2000 currency notes as well as in the older smaller denomination to facilitate it in the nationwide transition of currencies ever since the old Rs. 500 and Rs. 1000 denomination currency notes were suddenly declared discontinued from November 9. The approximate amount of Rs. 107 crore is what the banks estimate to be the value of the currency of the discontinued notes in circulation in the markets here. Indeed as a small, non-industrialised state, with an annual budget (plan and non-plan combined) of about Rs. 10,000 this is a reasonable assessment. This means, with little or no other sources of fund infusion, all businesses of the state, black and white, official corruption and even extortion by insurgent groups, are all within this ceiling. It is probably because of this smallness that the Union government’s currency demonetisation move has not resulted in any visible panic, at least not yet, although plenty of inconveniences are already being faced by every layman. Long queues outside the limited number of ATM booths and bank branches are as expected. Many shops still accept the discontinued notes, but on condition that there would be no changes to return in case the buyer buys less than the value of the notes they pay with. Majority of the shops here do not accept card payment so shoppers have no choice than to not shop or else shop with no hope of getting back changes. Many who need money for emergency purchases and services have also to resort to usurers for help, buying smaller denomination notes for a premium with the discontinued note they have in their possessions.
While the blow to everyday life is expected, what is of interest is the coolness of those who may be hoarding black money in the discontinued notes, although for those who know the state, this too is not altogether unexpected. Manipur is a state where official corruption is widespread. Nobody will doubt black money is generated daily by the official corruption chain and dishonest businesses, and this is indeed seen as the scourge of the state’s misery by practically everybody. But despite this all-pervading public sense of oppression, comparatively the volume of money turning black, which is necessarily a fraction of the state’s annual budget, would have to be small, therefore probably deemed as manageable by those hoarding them. There are other reasons for this lack of panic. Amongst the Meiteis, a feudal hangover is still pervasive. Wealth therefore tends to be flaunted in terms of gold jewellery of their womenfolk, worn during traditional ceremonial functions, celebrations and feasts, or else as landed properties and opulently built homes. The acute lack of investment avenues in the state has helped in perpetuating and prolonging this culture. It is therefore not difficult to imagine how this lingering archaic impulse of vanity and feudal ego would have saved many with illegally earned money from the current demonetisation blitzkrieg of the Modi government.
If this is the scenario on one side, on the other side, amongst communities, all of whom belong to the Schedule Tribe category exempted from paying income tax, the line dividing black and white money is considerably more blur. There is also a small Schedule Tribe community who enjoy the same exemption. This being the case, opening proxy accounts in the names of ST and SC persons, by those amongst these communities as well as outside, can also be a convenient way of disguising and laundering black money. This leaves extortion money of insurgent groups to be accounted for. Controlling “terror”money, minted in Pakistan, was cited as one of the reasons for the government’s currency withdrawal move, however, on this side of the border, the reality is a little different. Insurgents fund their movements mostly through illegal taxes they impose and not through counterfeit money from Pakistan mints, and therefore their coffers are unlikely to be of the scale of their counterparts in the western sector. One circumstantial evidence will bear testimony. Again, most of the insurgent groups amongst the tribal communities are in peace talks with the government, and if reports are to be believed, the Union government home delivered freshly minted money for at least one group the NSCN(IM), making a mockery of the drive against black money. On the other hand, insurgents from the valley are now mostly based in neighbouring Myanmar, so they probably have already converted their money into foreign currencies. The other routes of disguising black money through proxy accounts too are available to them.
There is one more category of people who may have the old discontinued notes in their possession. These would be people across the border in Myanmar. Since the Myanmar currency Kyat remains one of the most unstable and weakest in the world, people of the country rich enough to make savings tend to save in more stable foreign currencies, and the preferred currency is the US dollar. However, not everybody has access to USD. However many people close to the Indian border also save in Indian rupees. It may be recalled two days ago there was a small news report in a section of the media that Rs. 30 crore worth of the ban currency notes brought in from Myanmar by a conduit was caught at a check gate. This is a potentially sad story, and Indian authorities ought to have thought of a way to be a little lenient on this category to enable them to encash their savings.
Source: Imphal Free Press