Black Money Retrieval:
A Long but Mandatory Journey?
The recently constituted Special Investigation Team (SIT) by the Narendra Modi Government is a good beginning in understanding what black money really is and it is hoped it will be helpful in building understanding about the dynamics of the global trade drama.
For far too long, India has copied crony capitalism without unleashing its own inherent creative and intellectual capabilities. As an NRI living in the US in the post 9/11 world, I am fully aware that India has to act firmly in this direction because it’s very own sovereign existence is being challenged this time.
|Citizens should demand only one thing from political parties, which ever it is, that they should bring back the black money lying in Swiss banks.
Former Union Minister and Eminent Lawyer
(First petitioner who filed the case against black money)?
It will not be wrong to say that the western countries too have started feeling the pinch of hawala transactions that have been eating into their very societies in the form of drug trafficking and tax evasion.
In the wake of all this, the retrieval and reinvestment of black money is certainly a “generational project” for India. Though it is a tough and long endeavor, the fact that the world is seeing a “watershed moment” in the fight against offshore tax evasion with a far-reaching international agreement being cobbled to track down evaders maybe considered a positive step in the right direction.Organization for Economic Co-operation and Development (OECD) which has the mission to promote policies that will improve the economic and social well-being of people around the world is in the process of finalizing a system to share information to trap tax evaders, but it appears that there are too many loopholes in it. The idea to shift from ‘information upon request’ to ‘automatic information exchange’ is a major breakthrough by the organisation but unless the loopholes are sealed, the big cats will again get away easily.
Requests for data are typically met with resistance as happened in the case of Switzerland which said that India’s requests are beyond the ambit of the existing bilateral tax treaty. And to top this travesty the denial by the Swiss government that they would not reveal further information as the initial data was stolen and not procured through the right channels is another impediment India has been facing. The bilateral treaties with banking secrecy jurisdictions too have been weak and have not yielded results because they are mostly based on the system of “information upon request”.
OECD’s new system of “automatic information exchange” is aimed at fixing such problems. The OECD is expected to deliver a detailed “commentary” on the new standard, and announce technical solutions for the implementation of the system of information exchange, at a meeting of G20 finance ministers in September 2014.
Even if 25 percent cash and gold stashed abroad by businessmen due to tax evasion or business stagnation in India is brought back, it will be generate enough funds to rebuild infrastructure and asset base of India from the ground up. By forming SIT, the Modi government is moving on the right track. In the course of investigations, many stations and refueling stops will have to be made but the end destination, the grand station will see the fulfillment of expectations that the people of India have from Modi whom they have given a thumping majority in the recently concluded 16th General Elections.
-Pramod Kumar Buravalli ?
|What is Black Money?
Black money’ can be defined as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession.
White Paper on Black Money
Former Finance Minister, P. Chidambaram while responding to an adjournment motion on the ‘Situation Arising out of Money deposited Illegally in Foreign Banks and action being taken against the “Guilty Persons’ in the Lok Sabha on 14 December 2011 gave an assurance that a white paper on black money would be prepared.
The objective of this paper was to place in the public domain various facets and dimensions of black money and its complex relationship with the policy and administrative regime in the country. It also presented the framework, policy options, and strategies that the Government of India has been pursuing to tackle this issue, especially recent initiatives and developments.
The Problem and its Complexities
Black money is a term used in common parlance to refer to money that is not fully legitimate in the hands of the owner. This could be for two possible reasons. The first is that the money may have been generated through illegitimate activities not permissible under the law, like crime, drug trade, terrorism, and corruption, all of which are punishable under the legal framework of the state. The second and perhaps more likely reason is that the wealth may have been generated and accumulated by failing to pay the dues to the public exchequer in one form or other. In this case, the activities undertaken by the perpetrator could be legitimate and otherwise permissible under the law of the land but s/he has failed to report the income so generated, comply with the tax requirements, or pay the dues to the public exchequer, leading to the generation of this wealth.