Black money issue: Govt refuses to give out names (From Hindu Business Line)
Though facing charges of inaction on black money, the Government has reiterated that it will not make public the names mentioned in the list provided by the French Government in June 2011.
The Finance Ministry also remained silent on specific allegations of money laundering made against foreign bank HSBC.
On Friday, India Against Corruption (IAC) activist Arvind Kejriwal had claimed that around Rs 6,000 crore was lying in 700 accounts of the Geneva branch of a bank. He had also made public the names of some prominent corporates that he said were in the list with the Government.
On Saturday, the Department of Revenue, in a statement, said, “It would be pertinent to point out that the information received from the Government of France is covered by the confidentiality clause under the Double Taxation Avoidance Convention (DTAC) between India and France and can be used only for the tax purposes specified therein.”
Reacting to allegations of Government inaction on the information, the statement said that investigations in the matter are on, including with the foreign tax authorities to obtain more information with regard to the reported account holders.
Action has been taken on these cases and further action including assessment, tax collection and the levy of penalty will be taken according to the provisions of the Income-Tax Act, 1961 and based on the facts of each case, it said.
In June 2011, the Government had received information from the French Government relating to bank accounts reportedly held by certain individuals/non-individuals in a foreign bank.
On December 14, then Finance Minister Pranab Mukherjee, responding to a debate on an adjournment motion on the issue, had said, “There is a demand that we publish the names. But what will happen? It will have its impact on the industry, on the investment, and on the reputation of the people.”
On August 23, Minister of State for Finance S.S. Palanimanikam, in response to a question in the Rajya Sabha, had also said that investigations had led to detection of undisclosed income of Rs 565 crore, and that taxes amounting to Rs 181 crore had already been realised
Black money flowing out of India is more than fiscal deficit
It’s a season of clean chits. The latest to join the bandwagon is Annu Tandon, the Congress Lok Sabha MP from Unnao, supposed to be close to Congress general secretary Rahul Gandhi.
“Allegations against me are absolutely baseless and malicious… I completely deny all this rubbish,” Tandon said, giving herself the clean chit.
“I had gone to the Congress meeting and have just learnt of the allegations…I feel saddened that instead of doing something to benefit the nation we are speaking about lowly matters,” she said, adding that Kejriwal was perhaps seeking publicity by making such allegations.
She stopped short of saying I am ready to face any investigation, as politicians are won’t to say in such cases.
The black money that went out of India in the period 2000-2009 was more than the fiscal deficit of the government of India in the current financial year. AP
Arvind Kejriwal’s in his latest exposure has said that about Rs 6,000 crore of black money was lying in the Geneva branch of HSBC as on July 2011. This list included the brothers Mukesh and Anil Ambani, Reliance Industries, Motech Software (a Reliance Group company whose managing director was Annu Tandon ), Naresh Goyal of Jet Airways and Sandeep and Annu Tandon.
Annu Tandon and her late husband Sandeep have been accused of having Rs 125 crore each stashed away in their HSBC Swiss Bank account.
There is no way of independently verifying who has how much stashed away in the Geneva branch of HSBC, unless the bank chooses to reveal it. But at a broader level it can safely be said that a lot of Indian money does end up in Swiss banks and other tax havens abroad.
And the quantum of this money going out of India is huge. A report titled Illicit Financial Flows from Developing Countries Over the Decade Ending 2009 released by Global Financial Integrity in December 2011, gives us some astounding numbers. This report was written by economists Dev Kar and Sarah Freitas and was supported by the Ford Foundation.
In the period 2000-2009 the illicit capital flows from India stood at a whopping $104 billion. Currently one dollar is worth around Rs 55. Hence in rupee terms this amounts to a huge Rs 5,70,00 crore. To give the reader a sense of comparison, the fiscal deficit of the government of India for the financial year 2012-2013 ( i.e. the period between April 1, 2012 and March 31, 2013) was initially estimated to be at Rs 5,13,590 crore.
Fiscal deficit is the difference between what the government earns and what it spends. So the black money that went out of India in the period 2000-2009 was more than the fiscal deficit of the government of India in the current financial year. Hence the numbers clearly aren’t small by any stretch of imagination.
And this not a recent phenomenon. In another report titled The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008 brought out by Global Financial Integrity and written by economist Dev Kar, it is shown, that black money has been going out of India for decades, though it has gone up in recent years.
Kar estimates that in a period of 61 years from 1948 to 2008, India lost a total of $213 billion dollars due to illicit flows, the present value of which is at least $462 billion. In rupee terms this works out to a whopping Rs 25,317,60 crore. This number is almost 5 times the fiscal deficit of the government of India for the year 2012-2013.
And chances are this number is understated. As Kar writes “In all likelihood, this estimate is significantly understated because economic models can neither capture all the channels through which illicit capital can be generated nor the myriad ways in which the capital can be transferred.”
In an interview I carried out for the Daily News and Analysis (DNA) in April 2009, Professor R Vaidyanathan of IIM Bangalore had put the number at $1.4 trillion or more than Rs 70lakh crore at that point of time. “More amounts were stashed away during the Nehruvian socialist regime…In fact, in those days, the Indian rupee commanded a better value per US dollar, so fewer rupees could get a dollar. Hence the estimation that Indian money stashed away may be of the order of $1.4 trillion,” Vaidyanathan had said.
Another estimate has been put forward by Arun Kumar, a professor at the Jawahar Lal Nehru University in New Delhi and the author of Black Money in India. An article onFirstpost quotes him as saying “At least $70-80 billion goes out every year.” That is an astonishingly huge number. In comparison Kar and Freitas put the total amount of money that went out of India between 2000-2009 at $104 billion.
What is interesting is that a major portion of the black money in India ends up at Swiss Bank and other tax havens abroad. As Kar puts it “The total value of illicit assets held abroad represents about 72 percent of the size of India’s underground economy which has been estimated at 50 percent of India’s GDP (or about US$640 billion at end 2008)…This implies that only about 28 percent of illicit assets of India’s underground economy are held domestically, buttressing arguments that the desire to amass wealth without attracting government attention is one of the primary motivations behind the cross-border transfer of illicit capital.”
Kar’s research also shows that a lot of black money has gone abroad since the United Progressive Alliance (UPA) government led by Sonia Gandhi came to power. Between 2004 and 2008 around $96.3billion dollars of black money has gone abroad. Kar puts the total flow from 1948 to 2008 at a little over $213billion. This means that nearly 45% ($96.3billion expressed as a percentage of $213 billion) of the total black money that has gone abroad since independence has gone during the rule of UPA. UPA came to power in May 2004.
What this clearly tells us is that crony capitalism has gone through the roof since Manmohan Singh became the Prime Minister of the country. Businessmen and politicians are the most likely candidates for sending their ill gotten wealth abroad. Also, the data is available only till 2009, and corruption has only gone up since then.
The money going abroad has also gone up since India adopted a policy of economic liberalisation in 1991. Between 1991 and 2003 around $50.3 billion of black money went abroad, as per Kar’s estimates. Hence between 1991 and 2008, a total of $ 146.6 billion ($50.3billion + $96.3 billion) of black money has gone abroad.
All this money going abroad has had a huge impact on the economic development of India.
As Arun Kumar wrote in an article in The Hindu in August 2011 “India could have been growing faster, by about 5 percent, since the 1970s if it did not have the black economy. Consequently, India could have been a $8-trillion economy, the second largest in the world. Per capita income could have been seven times larger; India would then have been a middle-income country and not one of the poorest. That has been a huge cost.”
Annu Tandon in her reaction to the accusation of stashing away black money to the tune of Rs 125 crore abroad said “I feel saddened that instead of doing something to benefit the nation we are speaking about lowly matters.”
Yes these are lowly matters but given that they have cost the nation so much, they need to be talked about. And since the government and the Congress Party refuse to talk about these things it’s up to the likes of Arvind Kejriwal and Prashant Bhushan to bring it to the notice of the nation. And if that means, as Tandon put it that Kejriwal is seeking publicity, then so be it.
Oh and in the end, let’s be ready for another round of clean chits.
http://www.firstpost.com/economy/45-of-black-money-abroad-has-gone-during-upa-regime-521434.html/2
If you are interested to read more about black money please click on following three links which enlightens what is black money in somewhat detail
If you are interested to read more about black money please click on following three links which enlightens what is black money in somewhat detail
What is Black Money
Black Money in India, in Indian banks and invested in real estate sector is many many times greater than total of black money parked in various foreign banks including that in Swiss Bank. UPA Government in Delhi has been making various lame excuses for its failure in declaration of black money held in foreign banks as National assets. But do they fail to stop game of black money in India itself.
It may be difficult for the government to force foreign banks to declare details of account holders. But I am unable to understand why government in not interested to strengthen control mechanism on financial transactions to stop continuous escalation in black money racket in India and why government fails to unearth black money from Indian market and why does it fail to punish real perpetrators of black money.
It may be difficult for the government to force foreign banks to declare details of account holders. But I am unable to understand why government in not interested to strengthen control mechanism on financial transactions to stop continuous escalation in black money racket in India and why government fails to unearth black money from Indian market and why does it fail to punish real perpetrators of black money.
http://danendrajain.blogspot.in/2011/12/what-is-black-money.html
War against Black Money
Government should make efforts to reduce creation of black money in following ways.
First and foremost is very simple solution to the problem of black money and it is minimizing cash transaction. As per company rules all payment above value of Rs.20000 should be through cheque but still companies are making purchases in cash .Ramdeo Baba has right pointed out that notes of Rs.500 and Rs.1000 should be demoetised.Even Rs100 note should be demonetized. Politicians always talk of poor farmers, small traders to continue their earning through evil means. More than 90 percent of population of India does not earn 100 rupees a day; more than 50 % of population does not earn even Rs.20 a day. As such they will not face any problem. In developed countries like USA, 99 percent of sale and purchase take place through cards or bank cheques and after giving acceptable identity only. In India 90 percent of sale and purchase takes place in cash. Government should try honestly to remove all constraints coming in way and ensure that more than 90% of such transactions takes place through cheque .
First and foremost is very simple solution to the problem of black money and it is minimizing cash transaction. As per company rules all payment above value of Rs.20000 should be through cheque but still companies are making purchases in cash .Ramdeo Baba has right pointed out that notes of Rs.500 and Rs.1000 should be demoetised.Even Rs100 note should be demonetized. Politicians always talk of poor farmers, small traders to continue their earning through evil means. More than 90 percent of population of India does not earn 100 rupees a day; more than 50 % of population does not earn even Rs.20 a day. As such they will not face any problem. In developed countries like USA, 99 percent of sale and purchase take place through cards or bank cheques and after giving acceptable identity only. In India 90 percent of sale and purchase takes place in cash. Government should try honestly to remove all constraints coming in way and ensure that more than 90% of such transactions takes place through cheque .
http://danendrajain.blogspot.in/2011/12/war-against-black-money.html
MONDAY, DECEMBER 12, 2011
Black money Park
It is absolutely true that black money generated and accumulated by Indian businessmen and bribe money earned by servicemen and politicians are mostly parked in Indian banks or invested in landed property. Bribe, graft, kickback etc are mostly used to purchase landed property. This is why landed property worth Rs.100 lacs is actually registered at value of hardly 25 lacs in the office of Registrar.
http://danendrajain.blogspot.in/2011/12/black-money-park.html
http://danendrajain.blogspot.in/2012/06/corruption-black-money-and-flattery-can.html
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