Lost in the wash

Ratna Raman

LAUNDERING is an important facet of diurnal (daily) life. A ‘laundry room’ is where clothes can be washed and ironed, manually or with the help of machines. Cottons, linen and denims adapt to washing machines but silks and natural dyed fabrics do better when hand washed.

Laundering services provided by launder men (dhobis) and launder women  (dhobans) have been replaced by ‘laundromats’ or ‘launderettes’ in  public rooms. Coins inserted into washing machines  enable  people to wash and dry clothes. 

When the washing and cleaning of cloth is replaced with the metaphorical washing of ‘black money’,  it is termed ‘money laundering’. Money  laundering is responsible for the circulation of black money into the economy. 

Black money can be generated  in the context of sale and purchase, when  goods and products are ‘under invoiced’ (price  stated  is less than its actual cost) or ‘over invoiced’. Some money exchanged between buyers and sellers is not  accounted for and  therefore not subject to tax. This money surplus is often used to bribe persons in positions of authority to ‘grease palms’(paying money to facilitate illegal transactions) or siphoned off as profits.

  Quite often, stores of unaccounted   black money  are quietly transformed into assets in India and abroad. Parallel banking systems such as the hawala (entrusting  money locally to have it shipped overseas or to another city) promote  the circulation of black money, leading to the creation of a  parallel economy.

Demonetisation is an attempt to clean up the black money. Will it prove to be a ‘noteworthy’ ( attention grabbing) solution that will end the generation of black money?Experts opine that unaccountedblack money rapidly transforms into investments  in gold, land, property and other soft options.  Actual cash hoards comprise less than 5 per cent of the total black money produced. 

Currently, much ‘dirty linen has been washed in public’ (airing of private grievances) because of demonetisation. Two issues remain unaddressed: India may have a parallel economy that runs on black money but in the Indian  economy maximum everyday transactions involve cash exchanges. This section of the economy has been hit hard by demonetisation. 

Squirrelled stores or caches of money, put away by people for emergencies or rainy days , was not black money in the first place.  Ordinary people could have been spared needless agony, because their suffering is not necessarily  going to lead to the confiscation of black money. Less cash is the order of the day but a cashless economy in the absence of adequate infrastructure seems rather taxing.

Can demonetisation launder systemic ‘shortchanging’ (cheating) wherein authority figures and tax inspectors collect bribes and the coffers of political parties are lined with cash donations? Already efficient money laundering systems are in place, providing instant relief to cash-strapped elites  who are putting unaccounted money into Jan Dhan accounts, aided by  efficient bank managers. Meanwhile, touts take commissions on exchanging old notes for new, generating  unaccounted profits for themselves.

Will demonetisation  ‘washwell’  (be successful) and wash out corruption? We continue to be  awash (flooded) with anxiety.