Indians Rush Frantically to Launder Their ‘Black Money’
For decades, Indians have stuffed their mattresses with 500- and 1,000-rupee notes, the most widely circulated bills, worth the equivalent of a few dollars.
But Prime Minister Narendra Modi wanted to tax that money. His strategy was to force Indians to reveal what they had been hoarding. How? He banned the bills and told everyone that they had to exchange them for new ones.
.. Because more affluent Indians are allowed to exchange only 250,000 rupees, or about $3,700, without proof that they paid taxes, some are handing wads of cash to poor people, paying them a fee to hold the money in their accounts and return it later.
.. About a third of all business in India is carried out using black money. Whole industries, like real estate, trading, luxury retailing and wedding services, have been fueled by black money for decades.
.. In a country where government oversight is weak, it has been easy to transact business in cash and to avoid taxes
.. Cash had become so ingrained in the real estate industry that it was difficult to make a deal without paying some portion under the table. When Ramanan Laxminarayan, a Princeton University senior research scholar, tried to buy an apartment in the New Delhi area, he was told that he would have to provide 60 percent of the purchase price, about $420,000, in cash to close the deal.
.. India’s notoriously lavish weddings have taken a big hit. Families that had stashed large amounts of black money to spend in the coming wedding season
.. Several marriages planned for five-star hotels have been downscaled