MUST READ! Know What Happened to Hawala Traders in Delhi after Demonetization!

It was expected that the demonetisation would have a serious impact on illegal activities such as drug-peddling, human trafficking, etc. but the hit that hawala trading has taken has been unprecedented. Hawala operators in India, Pakistan & Dubai say that only 3-5 percent of the trade is functioning.

Delhi is a hub of money-laundering & the agents in the city have been tremendously affected. Many have even closed shops as both customers & cash are negligible following the 8th of November.

Gujarati traders working in the capital city are most affected &now run the risk of going bankrupt. Their usual custom was to shut down offices for Diwali & go back to Gujarat for 15-20 days. But this time around these traders haven’t even returned back to Delhi. Great volumes of cash that was kept with these people became useless when Prime Minister Modi made the announcement of demonetisation.

Such channels of laundering money are the lifeline of terrorists, drug dealers, & other criminals. With just 3-5 percent of the trade still intact, it is but obvious that terrorism & other mafia activities have suffered a huge blow.

According to investigation agencies these networks are attempting to revive their business by parking new currency in neighbouring countries. But the officials are tightening the screws especially near Bangladesh & ensuring that this is kept to a bare minimum.

One of the hawala dealers said, The liquidity of the new currency is very less so the operator sitting on the other side might not have the same amount as the client is willing to send. But to survive, we are relying on the conversion of black money using agents & giving them 10 percent commission.”

Critics of the low supply of new currency need to pay attention to this statement of the trader. I believe the government purposely kept the supply of new currency low immediately following the demonetisation because if it hadn’t done so the illegal hoarding of new currency would have been very high defeating the very purpose of demonetisation.

During the month following the demonetisation the government saw how & where people found opportunities to circumvent the law. They slowly but surely plugged these gaps like they did with the Jan Dhan accounts. The Finance Minister Arun Jaitley said that massive sums of money would be pushed into the economy to ease the cash crunch during the last three weeks of December.

Let’s see this as a series of events –

  • Demonetisation – 8th of November
  • Keeping the new currency flow low – From the 8th to roughly 10-12th of December
  • During this period maintaining a close eye on the avenues where the corrupt were laundering money
  • Then bringing changes in notifications accordingly & carrying out extensive raids to clamp down on the corrupt
  • The government then feltit safer to push in much higher sums of the new currency in the last few weeks of December

I think it has been a well-thought out strategy. Yes, the implementation wasn’t the best, but how could it when only six people knew of it? And yes, it’s true that the lack of money was troublesome for the public, but I think it was done according to plan & wasn’t just a fault in implementation.

Vinayak Jain