Currency ban: The effects of demonetisation on terrorism funding, Left-wing extremism in 10 points

Union Defence Minister Manohar Parrikar on Sunday called demonetisation the Prime Minister's "surgical strike" on black money, terrorism funding and drug money.

'Hawala' cash transfers to terrorists and separatists in Kashmir, which were mostly made using the defunct bills, have dried up, an intelligence officer tracking terrorism funding in Jammu and Kashmir said earlier this month. That has made it harder for them to pay young people to stage violent protests, he said.

However, two freshy-minted Rs 2,000 notes were recovered last week from the bodies of two terrrorists, who'd been gunned down in an encounter with security forces in Bandipora, Jammu and Kashmir.

While some ministers have asserted that funding for terrorists has taken a hit after the currency ban, Congress leader Digvijaya Singh took exception to that idea last week. Bitcoin, a digital currency that's "impossible to trace", is widely used for funding terrorists and by drug-peddlers, he claimed. "Can the Prime Minister, Government of India and particularly the NSA be so naive to believe, that terrorism can be erased by simply demonetisation?" he asked.

The government on Friday told the Supreme Court that demonetisation - in addition to stamping out black money in India - would make void fake Indian money printed by "hostile intelligence agencies" - an obvious reference to Pakistan's Inter Services Intelligence - and used to finance terrorist activity in India. Prime Minister Narendra Modi, too, had mentioned terrorism funding provided by "enemies from across the border" when he announced the currency ban on November 8.

According to intelligence inputs, Left-wing extremism has been hit hardest by the currency ban. Upto 584 Maoists have surrendered in the last 28 days, and 469 of them did so on or after November 8 - the day on which the the Rs 500 and Rs 1000 notes were demonetised.

Union Home minister Rajnath Singh on Friday hinted that Maoists, strapped for cash, are now running from pillar to post to swap their devalued cash. "They are trying to exchange their old notes through local contractors, businessmen and sympathisers," he said.

'Maoists collect 'levies' from road contractors and big industrial houses carrying out mining activities in states such as Chhattisgarh and Jharkand, and extort - according to estimates from experts and intelligence agencies - up to Rs 1,500 crore every year.