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Post Demonetisation bolt, now Hawala operators limp back to their Business as usual

November 9, 2017

Demand for their services continues to grow from shadowy businesses operating on the margins.

Hawala operators bounce back                       pic by rediff

One paper, the shop owner in Old Delhi’s Chawri Bazar imports all construction material from China. In reality, he’s a conduit for owners of real businesses trying to dodge taxes. He’s an angadiya.

Angadiyas – Hindi for couriers – are the cogs in the parallel banking network of black money/slush funds that can’t flow through the legitimate banking system, but travel through such agents.

When black money’s transacted overseas, the conduits’re called Hawala agents.

It’s a network that thrives on trust.

“The money never changes hands,” explains, Ravi, a Delhi-based client of the Chawri Bazar shopkeeper who agreed to be identified by just first name. The shopkeeper spoke on condition of anonymity to avoid police intervention.

“Suppose I get an order to sell 1000 bottles of glue at? 200. I’ll invoice it at? 100 in my books & that’ll be transferred to my bank by my client,” said Ravi who supplies industrial glue to businessmen in Ludhiana.

“But the remaining? 1 lakh’ll come to me through the chain of angadiyas between Delhi & Ludhiana.”

There’s no physical movement of cash, only phone calls/ messages from 1 angadiya to another.

The Chawri Bazar man just has to ensure that he has enough cash to make the final delivery to Ravi & in return, he earns a commission. In this case, the Chawri Bazar man is the terminal point in the chain. In other cases, he could be the 1st point with his Ludhiana counterpart being the terminal 1 . At some point, the angadiyas square off their books.

8th November 2016 is a date the Chawri Bazar shopkeeper won’t forget. That evening, he lost ₹10 lakhs in a matter of minutes, before the echo of PM Modi’s address to the nation had died. The PM announced the invalidation of 500 & 1000 rupee banknotes.

The entire amt. with the Chawri Bazar man was in ₹1,000 notes – all of it unaccountable to taxmen. Hundreds of his fellow angadiyas also saw huge amounts of money vanish into thin air that day.

But just one year later, the wily network of black money agents is slowly recovering from that body blow as demand for their services grows from shadowy businesses operating on the margins of the legal economy.

Curiously, the Chawri Bazar storekeeper isn’t sore about demonetization, which priced out smaller angadiyas.“It has reduced competition,” said the 39 years old angadiya.

Demonetization has changed other things too. Code words & mobile numbers now change more frequently.

“WhatsApp is the safest!” said a South Delhi hawala agent known as Bhai-ji. The 47 years old stocky man fiddled with his 3 high-end mobile phones as he allowed glimpses of his secretive communication codes: Kg for $10,000; 2-kg for $20,000.

For the angadiyas that survived demonetization, increased risk fetches higher commissions: ?80-100 to ?130 for each lakh of rupees transferred on the Ludhiana- Delhi network. It can go higher if deadline is tighter & facilitator cleverer.

A Mumbai-based businessman said he didn’t mind the rise in commission. Heightened surveillance is what bothers him, as his ill gotten income comes mostly from the real estate deals, cricket betting & bogus invoicing.

The govt. has banned cash transactions over 2 lakh since April; if caught an equal amt. must be paid as penalty. Official data shows a 154% increase in tax raids under PM Modi in 2016-2017 leading to a 272% increase in black money recovery.

“There’s no evidence to suggest that black money generation has reduced, but increased surveillance & curbs on cash transactions has made the business of cash transfers within & outside the country risky,” said a top tax officer.

The young angadiya in Chawri Bazar agreed that the focus on digital economy is hurting him. To meet money transfer demands, at times he borrows from local money lenders.

“Imagine they charge interest on hourly basis!,” he complained.

But he also saw a silver lining. “The increased rates’ll help once the economy picks up & we’ve more demand for money transfers.”

Inputs from HT

Source - ptinews.com

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