Indian bank officials arrive with a currency counting machine during one of the raids carried out in Tamil Nadu.
Indian bank officials arrive with a currency counting machine during one of the raids carried out in Tamil Nadu.

SAN FRANCISCO (Diya TV) — The seizure of rupee notes worth a reported $13 million in new banknotes has cast doubts on the Indian government’s assertion that scrapping old notes would make it more difficult to hoard unreported or black money.

Tax officials in the southern city of Chennai said much of the cash found during the raid were in the exact Rs. 2,000 ($30) denominations introduced only a month ago as part of Prime Minister Narendra Modi’s ban on Rs. 500 and Rs. 1,000 notes.

Officials said the money was linked to a businessman, one of them a member of Tamil Nadu’s state ruling party, which has only fueled the fire of allegations that political organizations have been among the largest hoarders of unreported money. One investigator, according to The Financial Times, said gold worth Rs 280M had also been seized. According to the Times report, seven raids have already been carried out, and there are at least a dozen more planned.

The seizure is the largest in a series that have taken place across the country since New Delhi announced the country’s “surgical strike on black money.” India’s economy is dominated by cash transactions that make it easier to hide income from tax authorities.

Access to large sums of cash in the country has been made all the more difficult because of daily withdrawal limits — account holders can take out Rs 2,500 a day from an ATM or Rs 24,000 a week over the counter, but registered businesses have higher limits.

Modi said anyone depositing more than Rs. 250,000, or $3,000 U.S. dollars, into a bank account would be required to declare how they made the money and whether they’ve paid tax on it.

However, questions have arose about how much of the cash the country’s residents are carrying is actually black money. The State Bank of India estimates that more than 80 percent of the new money is expected to find its way back into the country’s banking system by the end of the year. Regardless, police in recent weeks have publicized the raids on people they accuse of stashing black money in cash.

Last month officers in the western state of Gujarat said they had arrested six men carrying Rs 40m, some of it hidden in boxes of water pumps.

Last week JVR Arun, a youth leader for the governing Bharatiya Janata party, was arrested in Tamil Nadu after police said they found more than Rs2m in cash, including 900 Rs2,000 notes, in a routine search. Arun had previously expressed his heartfelt support for Modi’s demonetization efforts, writing in a Facebook post: “For the progress of our country, let’s stand in a queue.”

This week the Revenue Department’s enforcement directorate arrested three employees of Axis Bank on charges of conspiring to help launder money through fake company accounts.

Information from The Financial Times contributed to this report.