The Reserve Bank of India (RBI) governor Raghuram Rajan had raised a red flag on the unusual spurt in cash circulation in recent months . He stated that an extra 60,000 crore was being circulated in the country, because of the assembly election in five states.
Rajan pointed out that it is “not normal” and added that “you can guess the reason why. We can also guess.”
There was a 48 percent increase in money circulation, the data released by the central bank for the fortnight ending March 18 showed.
But what rings the alarm bell in the RBI now is unprecedented spurt in demand for currency in Karnataka in the January -March quarter, a Times of India report, said on Tuesday.
The department of statistics and information management of the RBI has sought details of high volume transactions at banks in southern districts of Karnataka.
The Election Commission has directed the banks to report all transactions above Rs 10 lakhs in states where election are held.
The letter sent to the lead development officer asked whether the Rs one trillion increase in currency demand in the last quarter of the FY 2015-16, was unusual. The RBI wanted to know whether this has found its way to neighbouring Kerala.
Kerala ballot is on 16 May.
If Rajan had only raised questions about 60,000 crore, the RBI letter to the lead bank in Mangaluru, wanted to know where Rs. 1 trillion has vanished. An e-mail query to union finance ministry remained unanswered.
The TOI report also quotes Raghav Yajamanya who is the lead bank manager, Syndicate Bank saying that the query must have risen because the money withdrawn has not come back to the banks.
Mangaluru, a port town borders Kerala’s northern district of Kasaragod and is considered to be a stronghold of BJP and its affiliates. The main worry of political analysts is whether the huge amounts withdrawn from the banks in the region is channelised to bankroll BJP’s campaign in Kerala.
Observers of the election commission had last week seized Rs. 1.35 crore from two passenger from a bus bound to Kerala’s Palakkad district. Though the seizure was from Coimbatore in Tamil Nadu, the arrested duo confessed that the money was being carried from Karnataka.
According to poll watch dog officials, more than Rs 30 crores have been seized as on March 30 from poll bound states.
BJP is leaving no stone unturned in its push to win at least a clutch of seats in the southern state. The party is yet to open an account in Kerala Assembly.
BJP is known to wield considerable influence in Kerala’s northern assembly constituencies like Kasargod, Manjeswaram and Uduma, which borders with Dakshin Kannada.
The fight is mostly triangular in almost all constituencies of Kerala. The BJP led NDA has got several communal organisations on board here in its push for power in the 140 seat assembly. However it is concentrating in some 25 constituencies.
A slew of high profile leaders have already hit the campaign trail. Prime Minister Modi is slated to address five election rallies from May 6 to 11.
Nine union ministers are also reaching Kerala to campaign for BJP candidates. Party President Amit Shah is also touring the state till the campaign ends on 14 May.