Ngultrum trade thrives in Jaigaon
Rajesh rai | Phuentsholing
Illegal trade in Ngultrum (Nu) and Indian Rupee (INR) still thrives in Jaigaon, with Nu’s value plunging as much as eight percent.
On October 5, the Nu 108 recovered 100 INR at Jaigaon.
While this clearly reveals that the Bhutanese currency is undervalued, it is also clear that there are a lot of Nu in Jaigaon, according to sources. There are many ways that Nu flows into Jaigaon.
The under-invoicing of goods imported from India to evade tax is one of the main reasons there is a surplus of Nu in Jaigaon. Bhutanese and those across the border are collaborating on this, sources said.
“If the cost of a product is Nu 100, the Bhutanese importer will ask the Indian exporter to list it on the invoice as Nu 50,” a source said.
It is an open secret that most Bhutanese importers involved in under-invoicing pay their Indian counterparts to Nu.
“This has a negative impact on our economy, since the government will lose a significant amount of revenue, plus a premium will have to be paid to Indian traders for imported goods resulting in the devaluation of the Nu.”
The remaining Nudes, who are missing, continue to float in Jaigaon. The Bhutanese importer and his counterparts are unable to produce the source of this account. This practice accumulates more Nu in Jaigaon as Nu exits Bhutan in bulk, as payments are not made through formal banking channels.
Another possible way out for Nu in addition to the smuggling activities are the vehicles leaving Phuentsholing.
An agricultural exporter said he was receiving payment in Nu.
“I don’t know how they got Nu. They should actually send us INRs. They send us the money via vehicles, ”he said. “I have never received payment in INR.”
He also said that his actual buyer, located beyond Jaigaon, pays his counterpart in Jaigaon in INR. However, the Jaigaon party pays him in Nu.
The INR that arrives in Jaigaon is traded on the black market.
Another businessman said small businesses in Phuentsholing quietly import and pay no taxes. However, they make Nu payments to their suppliers across the border.
“It’s another way for Nu to stack up in Jaigaon.”
Meanwhile, traders in Jaigaon have requested real-time gross settlement (RTGS) payments from the Royal Bhutan Monetary Authority (RMA). To date, the RMA has facilitated seven remittances amounting to Rs 1.5 billion after the international border closed, and is willing to facilitate the exchange as long as traders are able to provide the required information in accordance in the fight against money laundering / Requirements relating to the fight against the financing of terrorism (AML / CFT), Know Your Customer (KYC) and Customer Due Diligence (CDD).
Jaigaon Traders Association (JMA) general secretary RS Gupta said most people in Duar areas have savings in Nu.
“Naked comes from the public,” he said. “Our source is daily sales to the public.
RS Gupta also said that there were few people trading Nu-INR during this critical time. However, he also said that the Indians of Bhutan were sending Nu to Jaigaon.
Jaigaon resident Dharam Gupta, a former professor at one of the colleges, said it had been over a year since major Jaigaon stores accepted Nu.
“Nude can be traded with the INR by paying the premiums of people who engage in this activity. Nothing is officially done, but yes, the presence of Nu exchange shops (agents) brings some relief to the local economy and the general population, ”he said.
“One wonders how people get Bhutanese currency if they don’t trade with Bhutan. It’s a mystery and I think now is not the right time to investigate and solve the problem when people are already suffering from the pandemic crisis, ”he said.
Edited by Tshering Palden