Tax authorities have conducted 30-35 raids in Karnataka and in parts of Andhra Pradesh as part of a drive to smoke out cash hoarders, even as the government and RBI moved to pump in funds into some of the states facing a currency crunch.
In Bihar, for instance, Rs 800-900 crore has been pumped in through the ATM network with initial assessments suggesting that the shortage may be tackled soon. But the problem is seen to be more deep-rooted in Andhra and Telangana, where the role of large contractors is under the I-T department’s lens.
While the amount seized in the raids conducted so far is not very large, operations are expected to gather pace in the coming days as hoarding of 2,000-rupee notes is seen to be the main reason for ATMs running dry in several parts of the country.
Initial feedback from the two southern states suggested that the large contractors have been issuing cheques to smaller players for what was shown as the subcontract. The smaller contractors, in turn, withdrew money based on the payments they received, to spend on projects. In some cases, tax officials have discovered that no work was to be executed by the small contractors. A senior official told TOI that the focus was on individuals and entities that have undertaken large withdrawals over the last few weeks. “In some cases, the withdrawals are not justified and they do not tally with the income or spending patterns. We believe that cash is only being held with no actual spending planned in several cases,” said a source, who did not wish to be identified.