Black Laws, Black Markets, and a Dark Room

In 1977, I decided to travel overland from Delhi to Europe, and back.

In 1977, an Indian was only allowed to buy 100 dollars from the Reserve Bank of India to pay for his foreign expenses. At the airport, you could buy another 8 dollars, to pay for a taxi at the other end. 108 is an auspicious number, but it takes the genius of bureaucracy to come up with the logic of separating this into two components, two transactions, each requiring a ream of papers filled out in quadruplicate.

In those days, there were travel guides that helped you ‘do’ Europe at 10 dollars a day. I was sure I could manage it in a lot less, especially as the first part of my journey was taking me through Afghanistan and Iran, which were a lot cheaper.

A relative had promised to give me some additional money in Paris, but there was still the matter of getting there. Quite apart from the amount of foreign exchange I could take out, I was also a student, at a time when pocket money was very limited. For months, I squirrelled away my D.U. scholarship and my artiste fees from All India Radio, cut back on dosas and vadas in the D School canteen, and gathered enough rupees to pay for another hundred dollars. The official price of a dollar was just over eight rupees then, but I paid ten rupees - ten notes of a hundred rupees each, exchanged for one 100 dollar greenback, at a stall which sold jeans in Mohan Singh Place, the new-but-tawdry bazaar adjoining Rivoli cinema at the Hanuman Mandir end of Connaught Place.

Now came the matter of leaving India with this illicit note. A hundred dollars sounds trivial, as it should, but in the socialist era, foreign exchange was the domain of criminals in dark caverns, drinking VAT 69, of gold smugglers playing hide-and-seek with cops. The Foreign Exchange Regulation Act governed our relationship with the money of other nations, and though it sounds innocuous, its acronym, FERA, was a dreaded term. In my imagining, being caught for a FERA violation led straight to jail, and, like the Monopoly card, read “Do not Pass Go, Do not collect 200 pounds”.

Plainly, it wouldn’t do to get caught with a hundred extra dollars, as I left Palam airport for my first stop, Kabul. Long after I had procured this note from the jeans shop, I spent many semi-waking hours trying to figure out how to smuggle it out of the country. The answer came to me one day when I was developing a roll of film in the laboratory - yep, the days of chemical, not digital photographs.

35 mm film

This is what a roll of 35 millimeter film looks like. The bulk of the film is coiled around a spindle inside the cylindrical canister you see in the image, and the little flap you see sticking out is the leader bit of the film. The canister goes into the film cassette chamber - labelled in the image below; the film is threaded across the back of the camera, and the leader secured into the take-up spool on the opposite side of the camera. After each photograph is taken, a lever on top of the camera advances the film onto the take-up spool. When 36 to 38 photographs are taken, the film inside the canister is exhausted, and if you try to advance the film any more, it will strain against its spindle in the now empty canister.

35 mm film camera

One afternoon that May, I used my dark room to violate FERA 1973, enacted for  “the conservation of the foreign exchange resources of the country, and the proper utilisation thereof in the interests of the economic development of the country”.

I opened up a 35 mm canister, and detached the film from the spindle, replacing it with a 100 dollar bill, folded into a narrow ribbon. I cut the film to half its length, attached it to the currency note with scotch tape, and wound the paper and celluloid roll around the spindle. I seemed to have judged the amount of film right, because the hybrid assembly fit snugly into the canister, the leader still stuck neatly out, and I was able to insert the film into my second-hand Minolta SR II camera. The re-engineered film threaded perfectly into the camera mechanism, and when I closed the back and took a photograph, the film wound to the next exposure without a hitch.

“What mechanical genius”, I thought to myself - “I didn’t realise I had it in me”. 

But, all this effort to bypass a law that stood between an individual and the use of his money! In pre-1991 India, tens of thousands of rules inhibited enterprise and economic initiative. Those who refused to be inhibited used imagination and focus to find ways around the law, when they could have used that tenacity to create new goods and services for a starved economy. Remember, it takes black laws to create black markets.

After we liberalised the economy in 1991, though only partially, the display of goods in our bazaars and malls grew rich and diverse, hundreds of millions were lifted out of poverty, and Indian entrepreneurs took their place among global rankings of business success. And, yes, young people could travel abroad without breaking the law.

Our path to economic freedom is far from complete. In the Heritage Foundation Index of Economic Freedom, India is two-thirds of the way down the list, at 121 out of 184 nations. The recent move to licence the import of laptops and computers is regressive, but it's not our first shift away from open markets. Import tariffs are creeping up, and non-tariff barriers are erected overnight. 

The LRS (Liberalised Remittance Scheme) allows each Indian adult to transfer, or spend, 250,000 dollars  outside India every year - a generous amount for most of us, and a far cry from my tightly folded hundred-dollar bill. The recent move to impose a tax of 20% on such expenditure, even if refundable, drains cash flow for the individual, and adds to the compliance burden for banks, who have successfully lobbied for its delay. 

These are unfortunate moves in the wrong direction. Even though I don’t believe we will ever go back to the dark days of the 70s, our move must be to become ever more open, ever push for less regulation, not more. 

Note:

This piece was inspired by The 1991* project, helmed by Shruti Rajagopalan, at the Mercatus Center of George Mason University. In her introductory essay to the project, Shruti writes: 

“Two-thirds of Indians today were born after the 1991 reforms and have no memory of India under socialism with its shortages, corruption and general impoverishment.”

The incident I describe above is one of my many memories from that time. 

https://the1991project.com/