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Black money hoarders find escape route in dollars, via farms in Punjab

Foreign currency is being bought from farmers in exchange of scrapped notes through moneychangers, who charge up to 30% for striking the deal

black money crackdown Updated: Nov 14, 2016 23:37 IST
Sumeer Singh
Sumeer Singh
Hindustan Times
black money,currency,note

The demonetisation of high value notes by the Narendra Modi government has suddenly made money-changers active in managing the black money.

Besides investing in gold, Ludhiana industrialists are buying foreign currency to adjust their black money. Since agricultural income is exempted from income tax, hoarders are buying dollars from the farmers, which they get from their relatives in the US, Canada and the UK, through money-changers, who charge between 25% and 30% of the cut for the entire transaction. The farmers in turn are depositing the cash (old notes) in their savings account.

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Sources say traders are buying US dollar for Rs 80-85 whereas 1 US dollar equals around Rs 68. A hosiery trader in Ludhiana recently purchased around $300,000 from two money-changers for Rs 2.5 crore (in scrapped Indian currency) while the actual value of the foreign currency was Rs 2 crore. The farmers who agreed to sell dollars and money-changers shared the Rs 50 lakh between them.

While the farmers conveniently deposit the money they had taken from black money hoarders in their savings account, the hoarders will keep the foreign currency with them till the market stabilises and will later sell it as per the trading value of the Indian currency in the market.

Meanwhile, Ludhiana traders are asking their employees to stand in queues at bank counters and get the scrapped notes exchanged. For an exchange of Rs 4,000, the employees get between Rs 200 and Rs 400.

Vice-chairman of the National Productivity Council Badish Jindal said: “A majority of black money hoarders are paying their workers to stand in queues for hours and get the currency exchanged.”

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First Published: Nov 14, 2016 22:16 IST