The hawala rate of the dollar always used to be Rs one or two above the official rate. ``The hawala rate started falling steeply six months ago. Now there are hardly any takers for hawala dollar. The rates for official and illegal dollars are more or less same,'' said a forex market source.

When the official rate of the dollar was nearly 43.50, the hawala rate was also ruling at this level. When the Reserve Bank introduced measures to stem the rupee slide, the hawala rate also fell accordingly.

According to forex dealers, liberalisation of foreign exchange norms and import regime had played a key role in the decimation of the hawala market. A good example is that of gold imports. Earlier, most of the gold requirements in India were met through smuggled gold. After liberalisation of gold imports two years ago, non-resident Indians were bringing gold though official channels in a big way. ``A big chunk money used to go through the hawala route to finance gold smuggling. This has now stopped,'' said a dealer.

Simultaneously, the central bank had also liberalised the rules governing the forex market. ``Foreign exchange rules were liberalised to such an extent that it is not necessary for businessmen to use the hawala route. They can also liberally park funds abroad,'' forex market sources said.

The hawala market is expected to end completely after the government introduces the full convertibility of the rupee on the capital account. ``When the rupee is freely floated, there is no question of any hawala rate. There will be only one market rate,'' they said.

Nearly 30 per cent of the hawala business is routed through Mumbai, the hub of financial and bullion activities. ``My business has dropped by over 50 per cent in the last one year. Now people who want to keep black money are only using the hawala route,'' said an hawala operator, adding, ``if a stable government comes, the hawala market will suffer further setback. During the election time, a lot of black money moves around through the hawala route mainly to finance election expenses.''

Another reason cited for the fall of the hawala market is the liberalisation of imports and entry of multinationals in several fields. Many items are removed from the restricted list and one can freely import them paying lower duties when compared to three or four years ago. The entry of MNCs has also ensured that the country gets many products -- whether consumer goods or cars -- at cheaper rates.