With old crores in cash, Naga insurgents look to tax exemption law, bank accounts

Phungthing Shimrang, the NSCN (IM)’s military chief, told The Indian Express that reports of the group being handed new currency notes were “completely crazy”.

Written by Praveen Swami | New Delhi | Updated: November 23, 2016 3:22 pm
naga, nagaland, naga insurgents, demonetisation, old notes, tax exemption law, nscn, naga bank accounts, black money, white transaction, cash deposit, banks open, indian express news, india news, demonetisation news NSCN cadres at a camp in Nagaland. Express archive photo

Moving swiftly after the demonetisation of notes of higher denomination, the NSCN (IM), which spearheaded decades of insurgency in the Naga hills before signing a peace deal last year, has begun depositing in banks the cash it earned from levies on contractors, local businesses and government officials’ salaries.

The NSCN (IM)’s main rival, the Myanmar-based NSCN (Khaplang), is also seeking to physically ship chunks of the estimated Rs 100 crore it makes each year to a welter of bank accounts held by businessmen and other proxies on the Indian side of the border.

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Phungthing Shimrang, the NSCN (IM)’s military chief, told The Indian Express that reports of the group being handed new currency notes were “completely crazy”. “There are all sorts of rumours being circulated by our enemies in an effort to discredit us, because of the peace talks,” he said.

However, Shimrang declined to comment on how the NSCN (IM) was handling its cash holdings in the wake of the demonetisation of Rs 500 and Rs 1,000 notes. “Like everyone else, we have problems right now meeting the needs of our cadre and organisation,” he said. “But we have survived hardship in the jungles; this is not a problem.”

Members of tribes living in Nagaland, Manipur, Tripura, Arunachal Pradesh, Mizoram and the Assam hill tracts are, by law, exempt from tax on income earned within the region. In essence, this means there is no concept of unaccounted-for wealth, or black money.

“This opens the door for insurgent groups to deposit their cash in proxy bank accounts, no questions asked,” a government official said.

“There is, however, a certain obvious reticence to do this, given the sums involved, but it’s the way it’s got to be done.”

Founded by Isak Chishi Swu and Thuingaleng Muivah, the NSCN (IM) signed a peace deal last year, which the government says will pave the way for a political settlement to build on a ceasefire agreed to 15 years ago. The rival faction, led by S S Khaplang, has rejected the deal, and resumed combat operations against Indian troops.

Estimated to have up to 5,000 armed cadre, the NSCN (IM) passed a budget of Rs 168.29 crore for 2016-2017, with Rs 51.29 crore of that earmarked for non-military administrative expenditure.

Intelligence Bureau sources estimate the NSCN (IM)’s actual earnings are almost three times as high, with some of the remainder being funnelled into toy and tourism businesses in Thailand. The group’s current cash holdings in India, the sources said, are likely around Rs 250 crore.