A narrative has gained currency of late that the demonetisation drive is akin to using a Bofors gun to kill a mosquito. Proponents of this theory — the entire ecosystem of our intelligentsia who has never accepted Narendra Modi as India's Prime Minister, the privileged urban class and the opposition — base their theory on two arguments.
One, whatever be the size of India's shadow economy — and here they reveal deep skepticism about latest World Bank figures that put it around 23 percent of the GDP — black money is too entrenched in our system to be ferreted out by inconveniencing people.
They believe that there was no need for such a radical step that puts in jeopardy so many lives. Hidden in this charge is the assumption that black money does not visibly harm the poor, the marginalised and it certainly wasn't a problem big enough to have triggered this amount of chaos. Having consistently labelled the prime minister as "all talk and no action", "a propagandist who works the headlines", post 8 November this amorphous group has amusingly shifted to advocating status-quoism.
Notwithstanding the political positioning at work here, the efficacy of Modi's inordinately risky and deeply disruptive move to root out black money is however a legit question. The jury is still out whether there were less painful methods that could have brought similar results. But that is part of a larger, ongoing debate.
In this piece, we will tackle the second argument against demonetisation. The theory that de-commissioning of notes, as a way to snuff out the fake currency racket, is too much ammo for too insignificant an objective.
This argument is deeply flawed and reveals a total lack of understanding of what fake currency racket is, how it functions and the terrible cost it forces on us. It is also a callous argument to make in a country where more security forces die due to left-wing extremism and insurgency movements than even cross-border terrorism. The move to decommission higher denomination notes was as much targeted towards black money as demolishing this Fake Indian Currency Notes (FICN) industry that fuels terror networks in and around India, provides oxygen to forces of insurgency and serves to also destabilize the Indian economy.
The tentacles of this industry spreads across Pakistan, Bangladesh, Nepal and China. Through a complex network of smuggling that involves banks, couriers and even diplomatic channels, these notes are then circulated throughout India.
An India Today report by Gaurav C Sawant states how Pakistan — which imports printing paper and ink far in excess of its own requirement and uses it to print FICN in government presses in Punjab and Balochistan province — uses the counterfeit currency to fund terror modules in several parts of India including Maharashtra and Gujarat, Karnataka, Kerala, Andhra Pradesh, Bengal and Bihar. According to the report, Pakistan's ISI routes these high-quality fake notes through Nepal, Bangladesh, Dubai, Thailand and even China.
Another article in Firstpost details the intricate functioning of ISI's FICN network through retired brigadier-rank officers of Pakistani Army like Lala, who procured and supplied 'RBI' (ISI's code name for fake India notes) through an intricate network of couriers and smugglers. The report quotes intelligence agency sources as saying that Modi’s action against black money has demolished a section of the ISI headquarters in Rawalpindi. The direct route for FICN, says the report, ran through Munabao-Khakrapar and the Attari border while the indirect route saw money coming to India through the UAE, Thailand, Malaysia, Sri Lanka and Singapore before arriving in Kathmandu and Dhaka.
And this is just one part of the FICN industry. The other major hub lies within India in West Bengal's Malda, the border district where fake currency is smuggled in from Bangladesh. Subrata Nagchoudhury's report in Scroll details how many residents in Kaliachak have gone into a state of shock since the prime minister outlawed the high value notes. The lucrative trade running into crores has stopped almost overnight with rumours abounding of Rs 500 and Rs 1,000 bills being dumped in rivers and fields.
According to Union Minister of State for Home Kiren Rijiju, an estimated Rs 70 crore worth of fake currency is pumped into India every year and Rs 400 crore of such notes is known to be in circulation in the country at any given time. Addressing a news conference in Delhi on Friday, the minister said: "Smuggling of fake Indian currency notes from three international borders — Pakistan, Bangladesh and Nepal — has completely halted after the evening of 8 November". The collateral damage, according to Rijiju, also included proceeds from illegal sale of drugs, opium, arms and hawala transactions.
This choking of funds has resulted in Naxals going into a panic mode with reports emerging of Maoists using the Jan Dhan accounts of poor villagers to park or exchange their extortion cash which by some estimates runs into Rs 7000 crores in Bastar region alone. Latehar SP Anoop Birtharay told PTI that leftist extremists are using villagers to deposit their money into bank accounts so that it can be converted into legal currency.
According to data from South Asia Terrorism Portal, since 2005 till 13 November, 2016, a total of 7,270 people have died due to Maoist insurgency attacks. The figure includes 2934 civilians, 1850 security forces personnel and also 2486 extremists.
Well, may the Left and Congress shout on the floor of the House that fake currency constitutes only 0.02 percent of the total currency in circulation but to use reductionist logic and shrink the role of fake currency in fuelling cross-border and left-wing terrorism in India is intellectual dishonesty of the worst kind.