India finds banned currency notes

Reuters: Four people were arrested in India’s western state of Gujarat on Sunday (May 28), after police seized banned currency notes worth INR 10 million (USD 155, 000) from the car they were travelling in.

The accused were caught when Bharuch city police received a tip-off, and set up a temporary check-post and started inspecting vehicles. While checking, police stopped an SUV with four occupants. On inspecting it, Special Operations Group of the city police found scrapped notes in the denomination of INR 500 and 1000.

Police have launched an investigation into the matter to find out the source of the money.

Since Prime Minister Narendra Modi announced the withdrawal of high value notes November, last year, police have seized cash worth millions as people attempt to get rid of their unaccounted wealth without alerting the authorities. The move to demonetise the large bills was designed to bring billions of dollars’ worth of cash in unaccounted wealth into the mainstream economy, as well as dent the finances of Islamist militants who target India and are suspected of using fake INR 500 notes to fund operations.

India’s “black economy”, a term widely used to describe transactions that take place outside formal channels, amounted to around 20 percent of gross domestic product, according to investment firm Ambit.