Rajesh Rai | Phuentsholing

The illegal trade of Ngultrum (Nu) and Indian Rupee (INR) still thrives in Jaigaon, with Nu plunging in value by as much as eight percent.

On October 5, Nu 108 fetched INR 100 in Jaigaon.

While this clearly reveals Bhutanese currency is undervalued, it is also clear that there is plenty of Nu in Jaigaon, according to sources. There are numerous ways Nu flows into Jaigaon.

Under-invoicing of goods imported from India to evade tax is one of the primary reasons why there is surplus Nu in Jaigaon. Both Bhutanese and those across the border collaborate on this, sources said.

“If the cost of a commodity 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 of the Bhutanese importers, who are involved in under-invoicing, pay their Indian counterparts in Nu.

“This has an adverse impact on our economy, since the government will be losing a significant amount of revenue, not to mention that a premium will have to be paid to the Indian traders for the goods imported resulting in the devaluation of Nu.”

The remaining Nu, which are unaccounted for, then keep floating in Jaigaon. The Bhutanese importer and their counterparts are unable to produce the source for this account. This practice accumulates more Nu in Jaigaon as Nu goes out from Bhutan in bulk, as payments are not done through formal banking channels.

Another possible way out for Nu besides the smuggling activities are vehicles that are exiting Phuentsholing.

An agricultural exporter said they receive payment in Nu.

“I don’t know how they have Nu. They should actually send INR to us. 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 Jaigaon counterpart in INR. However, the Jaigaon party pays him in Nu.

The INR that comes to Jaigaon is traded on the black market.

Another businessman said that small businesses in Phuentsholing import discreetly and don’t pay taxes. However, they make the Nu payments to their suppliers across the border.

“It is another way Nu is accumulating in Jaigaon.”

Meanwhile, Jaigaon traders have requested real-time gross settlement (RTGS) payments from the Royal Monetary Authority of Bhutan (RMA). To date, the RMA has facilitated seven remittances amounting to Rs 1.5 billion after the closure of the international border, and is willing to facilitate the exchange as long as the traders are able to provide the required information in line with the Anti-Money Laundering / Combating Financing of Terrorism (AML/CFT), Know Your Customer (KYC), and Customer Due Diligence (CDD) requirements.

The general secretary with the Jaigaon Merchant’s Association (JMA), RS Gupta, said most people in Duar areas have Nu in savings.

“Nu is coming from the public,” he said. “Our source is the daily sales with the public.”

RS Gupta also said that there are few people who are trading Nu-INR during this critical time. However, he also said that Indians in Bhutan are sending Nu to Jaigaon.

A Jaigaon resident, Dharam Gupta, a former lecturer in one of the colleges, said it has been more than a year since major shops in Jaigaon have accepted Nu.

“Nu can be exchanged with INR by paying premiums from the people who are into this business. Nothing is officially done, but yes, the presence of Nu exchange shops (agents) are providing some relief to the local economy and people in general,” he said.

“One might wonder how people have Bhutanese currency if they are not trading with Bhutan. This is a mystery and I think it’s not the right time to enquire and solve the issue when people are already suffering from the pandemic crisis,” he said.

Edited by Tshering Palden