Greed and control

Greed and control is Khaled’s explanation for the conditions that produce a black market: profit-seeking becomes illicit commerce when it meets rules strict enough to obstruct ordinary exchange. He applies the principle to currency and gold, showing how regulation can create both the scarcity that makes evasion valuable and the demand that sustains an organized trade. The idea is not merely a justification for crime; it is the working theory Lin is taught before being shown how to participate in Khaderbhai’s businesses.

The principle and its limits

Khaled describes black markets as a consequence of the relationship between desire for profit and regulatory control. Either element alone is insufficient. Greed may encourage someone to seek a profitable trade, but without restrictions on that trade there is no corresponding black market. Conversely, a government may strictly regulate an activity, but if no one expects to profit from circumventing the rules, the restriction does not generate a clandestine commercial network. The illicit market emerges where the two conditions reinforce each other.

His examples make the distinction deliberately concrete. Strict control over baking would not create a black market for apple strudel unless there were profit to be made from selling it; strict regulation of sewage would not produce an illicit trade without a commercial incentive. The comparisons reduce the idea to a general mechanism rather than a peculiarity of money: regulation supplies an obstacle, while the prospect of gain supplies a reason to get around it. The resulting market is a dark counterpart to legal exchange, formed not simply by lawbreaking but by the collision of restriction and opportunity.

Restricted currency and the exchange racket

The Indian rupee is the central example. It cannot be taken out of India, and it can legally be exchanged for American dollars only within the country. Indians travelling abroad may take only a limited amount of American currency; the balance of their permitted conversion must take the form of travellers’ cheques. To enforce the limit, a traveller seeking the legal allowance must present a passport and plane ticket at a bank. The teller verifies the departure date and marks both documents, preventing the traveller from duplicating the transaction to obtain more dollars for the same journey.

The controls create different problems for different participants. Travellers can legally exchange only a fixed amount, while Indian business travellers may have thousands or hundreds of thousands of undeclared rupees that they cannot readily use to buy travellers’ cheques: banks and the Tax Office may ask where the money came from. At the same time, tourists possess foreign currency they can sell. The contrast between restricted legal exchange and undeclared funds needing a usable outlet supplies both sides of the illicit market.

Khaled illustrates the transaction with a thousand dollars. A dealer buys the tourist’s dollars for eighteen thousand rupees when the bank rate is fifteen thousand, leaving the tourist three thousand rupees better off than the legal exchange would have. The dealer then sells those dollars to an Indian businessman for twenty-one thousand rupees. The businessman can convert undeclared money into dollars, and the dealer keeps a three-thousand-rupee margin to begin another purchase. The same exchange thus appears advantageous to both customer and trader, even as it circumvents the official system.

An organized network, not a single bargain

The trade depends on a chain of intermediaries. Khaderbhai’s mafia council uses touts, guides, beggars, hotel managers, bellboys, restaurateurs, waiters, shopkeepers, airline officials, travel agents, nightclub owners, prostitutes, and cab drivers to find tourists and bring them to street traders. Khaled’s work includes monitoring this dispersed network. Each morning he telephones businesses to establish rates for important currencies, then receives updates every two hours as rates change. A taxi with two drivers working shifts is available to him around the clock.

The movement of cash and foreign currency is divided among several levels. Khaled visits area bagmen each morning and gives them bundles of rupees as working funds for street traders. Touts and other street-level operators direct tourists and businessmen to those traders, who exchange the money and hold the foreign currency in bundles. Bagmen replenish the traders’ cash during the day, while collectors make several rounds through the working day and night to retrieve the foreign-currency bundles. The system turns individual exchanges into a continuing operation with rate monitoring, working capital, collection, and distribution.

Gulf wages and the extension to gold

The travel racket extends the currency business beyond tourists and business travellers. Millions of Indians work in Saudi Arabia, Dubai, Abu Dhabi, Muscat, Bahrain, Kuwait, and elsewhere in the Arab Gulf, often on three-, six-, or twelve-month contracts as domestics, cleaners, and labourers. They are commonly paid in foreign currency and, on returning to India, many seek the black-market rate to gain extra rupees. Khaderbhai’s council offers employers and workers a shortcut: employers sell foreign currency in bulk to the organization, then pay workers in rupees at the black-market rate when they return to India. Employers receive a surplus of rupees and profit from the arrangement; workers obtain the higher rate without negotiating personally with dealers; the network acquires a steady supply of foreign currency for the demand generated by Indian business travellers. The government loses revenue, but the numerous participants do not treat that loss as a sufficient reason to abandon the trade.

The same logic carries into gold. After four months in the currency business, Lin is sent to Madjid Rhustem to learn the gold-smuggling trade. Madjid controls Khader’s substantial gold imports and has run the business for almost ten years. Lin learns that strict government controls on gold imports meet India’s intense demand for the metal: the pairing reproduces Khaled’s account of greed and control in a different commodity market. Madjid’s affluent house overlooking the sea at Juhu becomes the setting for instruction in smuggling, linking the abstract principle to another established operation. Across currency and gold, the pattern remains consistent: controls constrain legal supply or exchange, demand and profit persist, and an organized illicit trade forms in the gap.