While India plugs black money holes, Indians find leaks

Fri Nov 11, 2016 5:34am EST
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By Swati Bhat and Rahul Bhatia

MUMBAI (Reuters) - Indians are inventing ingenious ways to try and hide their money from the tax inspector, as the government attempts to flush out vast undeclared wealth by abolishing high denomination bank notes.

The shock announcement by Prime Minister Narendra Modi on Tuesday gave people only a few hours to spend or deposit 500 and 1,000 rupee bills before they were abolished, although plans are in place to allow a more gradual conversion to new notes.

Those plans involve depositing old bills in bank accounts, however, where they can be seen and analyzed, and, as millions of Indians scramble to convert savings using this method, some with piles of so-called "black money" are looking for loopholes.

Retailers and wedding planners say they have been inundated with frantic calls from people looking to bring forward large-item purchases from anyone willing to accept the old notes.

In Mumbai, a senior marketing executive at an event management company that organizes large weddings has witnessed the scramble, and said his firm was debating whether to accept payment in the old money.

Like many others, he was unwilling to be quoted by name when discussing his customers' requests.

"It has been a stressful day. Wedding clients are going mad," he said this week. "One client called and said 'I'll give you 30 million rupees ($450,000) in (old) 1,000 rupee notes.' There is loads of black money."

That amount is not unusual for a wealthy Indian family's wedding celebrations.   Continued...

A man displays a new 2000 Indian rupee banknote after withdrawing from a bank in Jammu, November 11, 2016. REUTERS/Mukesh Gupta