DEMONETISATION. Much ado about nothing

A week after demonetisation last year, the then defence minister Manohar Parrikar declared the end of terror funding and stone-pelting in Kashmir. “Earlier, there were rates: ₹500 for stone pelting (on security forces in Kashmir) and ₹1,000 for doing something else. PM has brought terror funding to zero,” Parrikar was reported as saying at an event in New Delhi. “In the last few days after PM’s daring move there hasn’t been stone-pelting on security forces. I congratulate PM for it.”

However, days before the first anniversary of demonetisation, little has changed in and about Kashmir. Militancy, despite a record number of around 170 deaths of terrorists this year, continues to thrive. An estimated 94 local youth have joined Hizbul Mujahideen and Lashkar-i-Taiba. What is more, this year has witnessed more infiltration. In an estimate attributed to Multi-Agency Centre, a nodal agency comprising security and intelligence officials, the count is nearly 70.

One outcome of this is the revival of Jaish-e-Mohammad. The outfit carried out two deadly attacks this year: one on the police lines at Pulwama in which eight security personnel died (August) and another on the BSF camp near Srinagar airport in which one ASI lost his life. Stone-throwing, too, has continued — waxing and waning in intensity — notwithstanding the official narrative that it has been reined in. And so have the protests.

Some bank robberies by militants did indicate a temporary dearth of cash, but militancy as such hasn’t taken a beating. In fact, this year has been the most violent in the last seven years with 290 killings so far, 65 of them security personnel and 49 civilians.

Interestingly, one of the overriding rationales for demonetisation was that it will deal a mortal blow to terrorism and restore peace in Kashmir. But the situation has only deteriorated. Firing across the Line of Control (LoC) hasn’t stopped after the surgical strikes of September 2016, and the “financial surgical strike” hasn’t met its anti-terror objective.

While the rest of the country spent days and weeks in queues outside banks and ATMs following the note ban announcement on November 8, the streets of Kashmir wore a relative calm. There was little panic in the air — except for the first two days when around ₹1,100 crore was deposited in the State; half of that amount was reported as coming from Kashmir Valley. Within a week, the queues outside ATMs had ebbed drastically. “The rush at our bank lasted for the first few days and then everything was normal again,” says Mohammad Afzal, a manager with J&K Bank in Srinagar. “The only problem we faced was the supply of ₹100 notes. We used to stock our ATMs with a limited amount of cash every morning, which would be withdrawn within an hour or two.”

This turn of events was surprising considering it was at variance with the official narrative about Kashmir being the hub for the unaccounted terror money. Local papers ran stories which rubbed this point in. ‘Demonetisation deflates claims of black money, hawala in Kashmir’ went a headline in Greater Kashmir , a leading daily in the region. Even national media registered this fact: ‘Demonetisation effect: Kashmir remains undisturbed’, went a story in The Hindu .

Why was it so?

Economists in the Valley have an undramatic, commonsense explanation: “First, the Valley had witnessed an uninterrupted shutdown in the four months preceding demonetisation. Businesses were shut. Little money was in circulation. Most people didn’t need to deposit savings,” says economist Nisar Ali, a former member of the J&K Finance Commission. “Second, Kashmir is not a big business centre like some other parts of India, say New Delhi and Mumbai. So, people do not have large amounts to deposit in banks.”

What about the black money and the alleged terror finance that comes from across the border? “While I can’t say anything about the terror funding or how it operates, the larger Kashmir society has little to do with it. Like elsewhere, Kashmir will also be having its share of black or unaccounted money. But demonetisation has proved that this money hardly exists in cash,” says Ali. “One big sector where it could possibly have been invested in is real estate and some other businesses”.

There is another compelling reason for people to not keep cash at home: the lingering turmoil in the State.

“The Valley witnesses violence almost every day, with frequent encounters between militants and security forces. In the process, houses get burnt. Similarly, houses are searched during crackdowns. So, people prefer depositing it in the banks,” says Shakil Qalander, a businessman and former president of Federation Chambers of Industries, Kashmir. “Except for some tolerable inconvenience to the people, demonetisation had no impact in Kashmir”.

Did it impact businesses? “Very little,” Qalander adds. “The GST has had a massive detrimental fallout.”

Riyaz Wani is a journalist based in Srinagar

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