Narendra Modi's stated objective behind the demonetisation exercise is to flush out black money and bring it into the system. But it would seem his police force in Chhattisgarh does not agree.

Narendra Modi's stated objective behind the demonetisation exercise is to flush out black money and bring it into the system. But it would seem his police force in Chhattisgarh does not agree. And it has strong reasons to defy the order.

The police in this Maoist-hit state believe that a substantial sum of money, mostly in denominations of Rs 500 and Rs 1,000 is kept at safe dumps, buried under the soil in forest areas of Chhattisgarh, Jharkhand and Odisha. Now with the currency declared illegal tender, the security forces believe the Maoists will try to reach some of the safe hideouts where they have buried the money to take it out. The cops want to ensure they cannot do so. So entry points into the forest areas are under the radar.

Usually, the exact location of the dumps are known only to the top committee leaders of the Maoists. The Chhattisgarh police feel a desperate Maoist leadership may pass on the word to some of their trusted tribals to take out the money since their movement into the jungle would be fraught with risk.

The police believe much of this money is gained through extortion from contractors of tendu patta (used to manufacture beedis), infrastructure firms and levy from businessmen. They also accuse Maoists of extorting from illegal mining mafia groups. Another avenue of extortion is to collect what in local parlance is called Maoist tax from vehicles passing through 'liberated zones'.

But how much money would really be inside the forest? No one quite has a clear idea since none of those who give money under duress speak out. Any guesstimate about the amount is usually pieced together based on the literature that is confiscated after an encounter.

The Institute of Defence Studies and Analyses (IDSA) in a report in 2013 had pegged the money extorted at Rs 140 crore per year. But police officers on the ground consider this a conservative estimate.

The Chhattisgarh police has maintained that the outlaws who practically control the southern part of the state, collect up to Rs 2,000 crore through extortion every year. As a result of collections over the years, they believe that close to Rs 7,500 crore would be buried in Chhattisgarh at this point in time.

That this parallel economy thrives in the world of terrorism was clear when in 2007, Misir Besra, a central committee member of CPI (Maoist) was arrested. Besra reportedly revealed that the Maoists had earmarked that year Rs 42 crore for arms, ammunition and explosives, Rs 2 crore for intelligence gathering and Rs 16 crore for propaganda, computer training, documentation and transport. Besra was subsequently freed in 2009 during a daring attack on a police in the court premises in Bihar.

The Maoist extortion machine in Jharkhand also is believed to collect, according to the Union Home Ministry, close to Rs 320 crore every year. But whether it stays safe is a crucial question. In August this year, a bag containing Rs 29 lakh consisting of Rs 1,000 notes was eaten up by termites in the Chakri-Bakrakocha jungles of Jharkhand. It is believed that the bag was extortion money buried by Kanhu Ram Munda, who is one of the CPI (Maoist) leaders in Jharkhand.

Odisha and Maharashtra are other areas which yield a rich harvest though Maoist influence in these parts has been on the wane. The recent encounter last month in Malkangiri in Odisha in which 30 Maoists were killed is a pointer to the ability of the security forces to push them on the back foot and hit their leadership.

But given the expenditure incurred by the Maoists on intelligence gathering, weapons and ammunition and medical emergencies, it is not clear how much they would be putting for safekeeping in the forests. Police sources say Maoists are also reported to pay a monthly remuneration to their cadre in the range of Rs 2,000 to Rs 5,000 depending on their rank and tenure in the outlawed organisation.

Since 10 November, the police are also keeping an eye on banks in Maoist-affected areas for anyone coming with a large amount of money, which he cannot account for. But it is quite possible that forests are not the only hideout, given the risk of a Jharkhand-like termite attack. The overground Maoist sympathisers in villages, towns and cities could also be safekeepers of such unaccounted for cash. That will make the task of tracking down the cash trail tougher.

But if the Maoists are in possession of even a fraction of the amount estimated by the security agencies, they will be hit badly. It will cripple their operations more severely than any encounter has in the recent past as they would not be in a position to run the outfit. It is also likely to make them more reckless, going on an extortion overdrive to line their pockets with new cash.

The Prime Minister's intention was also to track fake currency and cut off the supply to terror funding. The hit on the Maoists has been an unintended financial strike, which will bring the security forces much cheer.