Election Commission Rule on Seizing Cash Roils Gujarat Businesses

Ruth Fremson/ The New York TimesA woman carrying cash to her bank in Ahmedabad, Gujarat, in this Nov. 22, 2008 file photo.

A recent order by the Election Commission of India aimed at curbing pre-election corruption is roiling businesses in the western state of Gujarat, which goes to polls in December.

Hoping to cut down on political parties who trade cash and goods like appliances for votes, a common occurrence in state elections across India, the commission ruled that cash in excess of 250,000 rupees ($4,700) being transported in Gujarat and Himachal Pradesh be seized unless it can be accounted for. Citizens carryi ng this amount of cash or more need to produce documentary evidence of its origin and purpose. But in practice the state authorities are making even those possessing less than the limit do the same.

A group of surveillance teams have fanned out across Gujarat and are checking vehicles in Ahmedabad, Mehsana, Rajkot, Surat, Surendranagar, Vadodara and other cities, seizing cash in transit over the 250,000 rupee level, much to the chagrin of local businessmen. The teams, composed of an executive magistrate, several police officers and a video camera, have seized at least 100 million rupees ($1.9 million) so far in Gujarat.

The Election Commission has also asked income tax authorities to investigate whether the seized money was meant for political use.

Gujarat goes to the polls from Dec. 13 to 17 for a closely watched state election that pits the longtime chief minister Narendra Modi, considered the right-wing Bharatiya Janata Part y's best candidate for prime minister, against the Congress Party, which controls the central government.

Himachal Pradesh's state election is in early November, and while the same rules on cash in transit apply there, they have had less of an impact on the state compared to Gujarat, which is more reliant on trade and industry. Much of the business in Gujarat is conducted in cash, making the new rules wildly unpopular with Gujarat businessmen, traders and angadias, or couriers.

It is also just weeks before Diwali, the Hindu new year, when gifting gold and jewelry is common, and retailers say the clampdown is hurting their business.

“People tend to purchase more gold and jewelry on Diwali than during any other time of the year. A majority of them make the purchase by cash,” said Bhayabhai Saholiya, president of the Rajkot Gold Dealers' Association. “It's just not possible to produce evidence each and every time” one transports money, he said.

I f the Election Commission does not relax the new rules, the business community might call for a widespread strike, he said.

Already a public interest litigation has been filed in Gujarat High Court by Bhagyoday Jan Parishad, an association of traders, in Ahmedabad, seeking “restraint and moderation” of the order. Various business organizations are seeking legal advice and even threatening to go on strike.

Traders and businessmen were caught unaware when the squads started inspecting bags and vehicles last week, trade groups say. In three cases alone, surveillance teams seized unaccounted-for cash worth more than rupees 100 million rupees, including 93 million rupees from a private security agency vehicle near a toll plaza in Mehsana.

The director of the state-run Agriculture Produce Market Committee in Khedbrahma, Sabarkantha district, reported 500,000 rupees had been seized. A guru, Bharati Bapu, in Rajkot, said he also had 500,000 rupees seized and wa s only released after several hours of explanation.

Justifying the seizure of the private security agency cash, Mehsana's district collector, Rajkumar Beniwal, said, “The official of the agency accompanying the van could not produce adequate documents to support his case. The money was withdrawn from ICICI Bank in Ahmedabad, and was being taken to its various branches.”

Earlier, in 12 surprise checks, the teams intercepted cash worth more than 14 million rupees, but returned nearly all of it after the parties concerned accounted for it, officials said. Just 290,000 rupees are unaccounted for in those checks and have been seized, said Anita Karwal, state chief election officer.

While the election battle between the Bharatiya Janata Party and the opposition Congress Party is fierce, both sides are in agreement about the new Election Commission rules: they should be stopped, they say.

The Bharatiya Janata Party state leader Purushottam Rupala urged t he commission to ease the rules, so the common man, traders and businessmen are not harassed, he said. “If any politician is caught carrying cash, the E.C.I. must take strict action, but the common man should not be penalized, because over 90 percent of retail transactions are done by cash,” he said.

Shaktisinh Gohil, the leader of opposition in the Gujarat assembly, has also asked the Election Commission to stop such investigations and seizures until Diwali.