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It’s 130 million black rupees a month!

* Lahore’s underground economy continues to grow with liquor and drug trade, prostitution, arms trade, gambling, smuggling and tax evasion

By Aayan Ali

LAHORE: While scores of people commit suicide because of poverty every month, the black economy has grown to a size the Revenue Department would envy.

Black economy is a term used for economic activity involving illegal dealings, which include buying and selling prohibited or stolen merchandise or otherwise legal merchandise illicitly, to evade taxes. Lahore’s parallel economy is almost as huge as the real economy, but only involves a million of the city’s 10 million population, according to a Daily Times survey.

Figures given by sources in Police, Anti-Narcotics Force (ANF), Federal Investigation Agency (FIA), Anti-Corruption, and Excise and Customs show that the total money earned in liquor and drug trade, prostitution, arms trade, gambling and smuggling is about Rs 130 million a month. This excludes money saved in tax evasion, which is the major part of what is known as the black economy.

Black economic activity picks up on such occasions as Eid, Independence Day, Basant and the New Year’s Eve, sources in black market say, and law-enforcement officials and several political leaders are also involved in the trade. They said they could earn more on festivals than they earn in a month otherwise. Black trade of about Rs 180 million took place in August, sources told Daily Times.

Police, the primary law-enforcing organisation, has been a barricade to restrict the black economy, but has not been able to eliminate it. A senior policeman said operations were carried out regularly but new techniques and new inductions kept the underworld alive.

Tax evasion by the corporate sector is a major part of the black economy, sources said. Some traders stock essentials to create a temporary shortage and sell them at higher prices, they added.

Drugs: Hashish, heroin, opium and other intoxicants come from federally administered tribal areas and Afghanistan. Drug peddlers often work for or are supported by senior government officials, sources said.

Cocaine, heroin, ecstasy and morphine are the most expensive of the drugs, and are usually imported, they said. Ecstasy tablets are too small to detect, they added. Girls and boys of rich families sell these drugs, they said, and an ecstasy pill costs Rs 2,500 to Rs 5,000.

Sources said Punjab ANF seized about 10,000 to 15,000 kilogrammes of drugs a year, mainly hashish and a few hundred kilogrammes of heroin. There are more than five million drug addicts in Pakistan, of which at least 300,000 are in Lahore, sources say, and drugs worth more than Rs 40 million are sold in Lahore every year.

Liquor: There is a large market for local and imported liquor in the city. The Excise Department issued about 1,500 permits in Punjab this year, and police officials say most people use these permits to buy liquor that they later sell. From rich localities to poor ones, demand for liquor increases tremendously on festivals, sources say, and liquor selling is one of the most celebrated businesses in Lahore.

Liquor prices vary from Rs 50 a bottle for poor quality local liquor, to Rs 15,000 for good quality scotch whiskey. Dishonest bootleggers refill bottles of imported liquor with local liquor that tastes similar.

A liquor agent said an order for 150 bottles of top quality liquor for a party would cost somewhere near Rs 0.6 million. “Parties give us good business,” he said. “In winters we have to switch off our phones because we cannot meet the demand.”

Arms: The demand for arms is high throughout the year and deals usually take place in the city’s outskirts. Weapons are usually sold one at a time to trusted customers.

Smuggling: Gold, weapons, clothes, electronics and humans are the most popular smuggling items. Human smuggling includes forging documents to send people abroad, by agents who charge hundreds and thousands of rupees for the job.

Gambling: There are more than 350 illegal gambling centres in Lahore, and most gamblers bank on cricket matches. Gambling centres earn about Rs 10 million a month, sources said, and the average sum of bets placed on a cricket series is about Rs 100 million. A bookie said all gamblers wanted to be bookies, because “the house never loses”.

Prostitution: A “madam” or “supplier” said there were about 8,000 prostitutes in the city and the clientele was diverse. The red light area and other prostitution hubs earned about Rs 11 million a month, she said. Foreign women also run brothels in Lahore, she said, and Russian prostitutes were the most expensive. Brothels have to shift regularly because neighbours usually begin to get suspicious soon.

Cyber crime: Although the trend is recent, more than 21 cyber criminals have been arrested in Lahore so far for fraud of more than Rs 30 million. Sources said a large number of arrests were expected soon.

Forged currency: Forged bank notes of Rs 1,000, Rs 500 and Rs 50 are in wide circulation in the city, and the total sum of forged currency in the market is about Rs 1 million, sources say.

Money from black economy usually circulates in close circles, sources say. Owners of gambling centres spend most of their money on prostitutes, drugs and liquor, prostitutes spend most of their income on drugs and liquor, liquor agents and drug dealers pay heavy bribes to law enforcement personnel, who spend it on other illegal trade.

Talking to Daily Times, renowned economist Dr Akmal Hussain said poor law enforcement was the key reason for such a large underground economy. Poverty and unemployment caused people to join illegal trades, he said. The underground economy did not contribute to the formal economy, he added.

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