A few days ago on Nov 8, the Indian government made a unprecedented and dramatic move by announcing that the existing Rs.500 and Rs.1000 notes are no longer legal tender by the end of the same day. The claim by the government is that these high value notes are used for hoarding unaccounted/black money and hence needs to be purged to bring out the black money. Those having unaccounted wealth cannot come out now, as they would face huge penalties. This move has caused immense hardships to the poor who save money in high value notes and also businesses that deal primarily in cash. The reactions from people who have to exchange their hard earned savings range from anger to justifying the move that corrupt people who hide money needs to be punished. However, are the people with black money forced to come out or have they found a way out? Below are couple of ways which has been used to save their black money held in cash:

1. Backdoor exchange with Touts and/or bank employees: Touts collaborating with bank staff are exchanging old black money notes for new notes (Rs.2000?) for prices like Rs.15,000 for Rs.1 lakh of illegitimate money. This probably is the single biggest wormhole through which black money hoarders are getting away. Speaking with people at hometown, I get the information that these touts immediately got into action after the 8pm announcement by PM Modi. These touts also prey on desperate people looking for ways to exchange their hard earned money.
2. Buying Jewelry: Demonetization has resulted in panic buying of jewelry - a lot of sale happened within hours after the demonetization announcement. The purchasers are asking for back dated bills to escape suspicion. Once converted to gold, all the hoarders have to do is to wait till new notes come in.

3. Misuse of ID Cards: When I went to exchange my old notes a few days ago, I had a fill up a form and give a photo copy of my ID proof to get money. When I gave my Driving license, the bank employee didn't even check the photocopy or original of my Driving license and entered the ID number in the computer. What can prevent the misuse of the photocopy of my Driving license? Also Now there are reports in Social media and in news media about ID cards being misused. UIDAI has now come out with this pointless warning. Perhaps bank employees are misusing Aadhaar, PAN Cards (two cards whose numbers they can easily get from bank accounts in their branch). Perhaps this is how #1 is happening.

   Update 19-nov: Large scale abuse of ID cards by banks and by many companies by using their employees' identity cards have been reported. Perhaps this is what prompted RBI to limit exchange of notes per person to once upto 30-dec. Although you can deposit your old notes to your account, a lot of people don't have bank accounts.

4. Jan Dhan Accounts: These accounts, which are meant for poor people were lying largely unused. Now, contractors are handing over small parts of their money to their employees to deposit them in the accounts. They are promised a small amount in return. Once deposited, all the contractors have to do is to wait for the dust to settle down and demand money from their employees.
5. Mass train bookings: An alert social media user found that high priced tickets in many trains are sold out for next four months!. These wait listed tickets can be cancelled later with not much penalty(much less that what IT dept levies). Perhaps these tickets are mass booked by touts in collaboration with railway employees. This is an small wormhole into the parallel economy, but shows the creativity of people in bypassing the law.

These are the ways that so far I've noticed. There probably is several more. So, is the pain endured by people in long serpentine queues really worth it, when there are several ways to escape and especially when black money in cash is only a small percent of the unaccounted money? There seems to be no longterm plan as the government is introducing Rs.2000 notes, which will make it easier for people to hoard money in future.