The Maoists are the worst hit by Prime Minister Narendra Modi’s demonetisation of big currency notes on 8 November. Increased surrenders by members of armed squads and underground militants in the past three weeks is an indication of the heat mounted on the ultras due to the depletion of their cash reserves, according to the special branch (SB) police of Telangana.

In the last three weeks, the Andhra-Orissa border (AOB) and Chhattisgarh-Khammam zones have seen as many as 275 armed squad members and militants giving up their arms, which is a record in recent times. The district superintendents and local police stations are getting tips from the militants that they intend to come out of the underground life, if the government is ready to rehabilitate them, sources said.

Andhra Pradesh police are more than happy that the demonetisation of big notes — Rs 1,000 and Rs 500 — have yielded positive results in such a short time. The possible impact of scrapping of high-value old notes was discussed threadbare in the presence of the PM at a daylong session of director generals of police (DGPs) conference in Hyderabad on 26 November.

Though the details of the discussions were not made public by the officials, it is learnt that it was the Maoists more than the radical Muslim groups who would be tremendously affected by the big notes ban. Radical Muslim groups are operated through the low cash intensity modules in a sporadic manner where the role of big money is limited.

However, the Maoists operate on a cash intensive method in which they have to maintain a large number of full-time armed squads and their arms and ammunition. Even the part-time militants who act as their moles in villages and forest hamlets are being paid some regular amounts, said a senior official with the SB in Hyderabad.

According to police officials, the desertions from Maoist ranks are happening at two levels: one, the extremists are finding it tough to stay afloat in a less cash scenario and at another level, some are being encouraged by the local Maoist committees to surrender before the cops as a cost cutting measure. “We are seeing all kinds of surrenders,” a police official from Visakhapatnam told The Sunday Guardian

All those who had surrendered before the police since the big notes ban were from the villages of Orissa and Chhattisgarh. A few of them are armed militants while a majority of them are unarmed. The police officials who are keenly watching developments in the Maoist camps are of the view that there may be many desertions in 2017 at the top level as the demonetisation impact would be felt in the long run.

Reports appeared in the media in the last fortnight that there are surrenders of Naxalites from Jharkhand, Bihar and Bengal too. The Union Ministry of Home Affairs has put the figures at 450 plus till the last week of November. This may go up to 2,000 plus in the next two to three months and the actual pinch would be felt by the end of next year, say SB officials.

A special wing has been monitoring the situation on the Maoist front after the withdrawal of the big notes. A few instances of how Maoists’ cash has been caught by their middlemen who wanted to convert into new currency have exposed the ultras’ cash stash. On 29 November, a middleman of the Maoists was caught after he contacted a contractor in Mahabubnagar district headquarter in Telangana to convert the old currency of Rs 1,000 notes worth Rs 1.68 crore into new currency. The Maoists’ front man offered 15% commission to the irrigation contractor who has multiple current accounts in banks. The police, on a tip off, swung into action and caught the middleman.

The police in Nizamabad district have detected some businessmen and professionals trying to convert the demonetised currency into new currency through bank deposits. “Though we cannot specify the amounts, we came to know that some doctors who own private hospitals wanted to deposit Rs 1,000 and Rs 500 notes, apparently belonging to Maoists,” a divisional police superintendent told this newspaper.

The economy of the Maoists is chiefly dependent on contractors. While the Maoists get donations, including extortions, from the big contractors with work in forest and interior areas, the ultras also put their money with some other contractors, businessmen and professionals like doctors as “safe havens”. 

Sometimes these “havens” will also pay some minimum interest on the money parked with them.

The counter-intelligence wing as well as the SB officials felt that the Maoists would face tough times in the coming few months as they cannot make use of their old big notes, which run into a few thousand crores of rupees before 31 December. The cops are keeping a tab on the deposits into Jan Dhan Yojana accounts in Maoist influenced areas of AOB and Chhattisgarh to check the money of militants.

On the other hand, the Maoists are also not in a position to collect their money through cheques and pay through cheques. “They may get essentials like food, clothes and medicines from small traders and local people, but cannot get any big money for their arms and ammunition purchase and maintenance of full-timers,” said the officials.

Most of the foot soldiers of Maoists are from poor families and cannot live without financial support from the leadership. They are fed three times a day besides supplied with clothes and shoes and kitty bags. The Maoist committees also purchase regular doses of medicines like malaria tablets for their cadre, in cash transactions.

The SB officials said that they would be checking the bank accounts of known sympathizers and supporters of Maoists like civil liberties activists and some lawyers, to check if they had acted as conduits to the ultras. The police think that the Maoists who largely thrive on big cash in this modern era are sure to be hit hard by the cash crunch and its impact would be evident very soon.