While all suspect tax evasion and money laundering of corruption or crime proceeds merit investigation, the curious case of Kashmir shops that pay rent in excess of market rates but do not attract customers raises the additional dimension of insurgency and terror financing.

During a 2012 visit to Nainital, one was surprised to see many Kashmiri shops on the Mall Road. All through a three day stay, we walked by the Mall at various times of the day but rarely found a customer in most of the shops. It was tourist season and the products on display were likable, so the empty shops were surprising.

This shop, too, gets very few customers. It had about eight sales persons. Being a qualified accountant, the question that came to mind immediately was its financial viability!

That got one curious! On day three, I spoke to a few locals who still have shops on the Mall. They said Kashmiris paid rents that were much higher than the going rate, about 1.4 times. Therefore, locals were more than happy to lease their shops to them.

The next question, how are shop owners making money when rent is so high and few customers visit? A local said this was something they were unable to fathom either. He shared an unintended effect – because the monthly rent, in absolute terms, was high, many landlords developed bad habits.

Fast forward to 2016. Close to the Maratha Palace at Thanjavur, Tamil Nadu, is a Kashmiri shop. One walked through the shop’s three levels and admired the range and design of products. Wanting to compliment the owner, the writer walked up to the cash counter and during the conversation, learnt that the owners were from Kashmir. This shop, too, gets very few customers. It had about eight sales persons. Being a qualified accountant, the question that came to mind immediately was its financial viability!

Also in 2016, the writer saw a couple of Kashmiri shops close to the entrance of Meenakshi Temple, Madurai. They were similar to the Thanjavur shop – excellent products spread over two or three levels, but no customers!

Unlike other shops in the State, the owners of Kashmiri shops did not permit the author to click pictures of their products although the intent expressed was to promote the shop on social media.

This got one even more curious. In Delhi and Mumbai, one has seen Kashmiri shops thrive, but in Nainital, Thanjavur and now Madurai, the opposite was true. A long-time resident of Auroville, Pondicherry, expressed similar sentiments with respect to Kashmiri shops there.

The question arose – did they not ask where the money was moved to, had they informed the local police? Without replying explicitly to the question, he said that once the money moved out of the State, it was outside the jurisdiction of the local police. Matter closed.

In August 2016 (August 15 weekend), we were at the Mall road in Manali. Here, too, the maximum number of shops were run by Kashmiris. During a four day stay, observed that only a few attracted customers.

Again one spoke to some local shop owners and found a story similar to that of Nainital. The rent paid by Kashmiris was much higher than market rates, so locals happily leased their shops to them.

This time I decided to dig a bit deeper. One spoke to some locals in the market and then a prominent local shop owner, on the condition of anonymity, said, ‘We had the same questions as you. So informally approached local banks to ascertain the modus operandi. We were told that most shop-owners deposited Rs 30-40,000 every morning in the bank. Before the end of banking hours that day the money was moved out of the account’.

The question arose – did they not ask where the money was moved to, had they informed the local police? Without replying explicitly to the question, he said that once the money moved out of the State, it was outside the jurisdiction of the local police. Matter closed.

Notwithstanding the fact that the author does not have possess hard evidence to prove the above bank transfers, the fact that these shops pay rents in excess of market rates and attract few customers raises questions!

According to the norms for high value transactions, when cash deposits in one or more accounts of a person exceed Rs 10 lakhs or more in a financial year, banks are supposed to report all such transactions to the Income-Tax authorities. According to this report in the Business Line, “One of the stringent recommendations from SIT on curbing generation of black money in India was putting a cap on huge cash transactions as these mostly take place in illegal activities.”

…the curious case of Kashmir shops that pay rent in excess of market rates but do not attract customers raises the additional dimension of insurgency and terror financing.

A senior Chartered Accountant construed these transactions as, ‘The deposits in the bank are supposed to be sales but could just be the cash requiring laundering. The withdrawals are supposed to be purchases/expenses, but might reach the banks of the people who gave the cash for laundering.’

One wonders how this activity is structured to avoid any implications under VAT and Income-tax.

While all suspect tax evasion and money laundering of corruption or crime proceeds merit investigation, the curious case of Kashmir shops that pay rent in excess of market rates but do not attract customers raises the additional dimension of insurgency and terror financing. This certainly merits a thorough probe.

It is not the author’s intention to paint all Kashmiri shop owners in tourist locations with the same brush. During a recent visit to Leh one saw many shops doing thriving business. The author has the highest regard for the entrepreneurial spirit of Kashmiri businessmen and apologises if sentiments are inadvertently hurt.

But the observation made at certain places suggests that something is clearly amiss, and merits an impartial investigation.

Why can’t the Central and State Intelligence Agencies, along with the Ministry of Finance, unravel the mystery of these shops which pay hefty rents but attract few customers?