Joginder Singh ji,
Former Director- CBI
Despite tall promises to crack down on black money at home and slush funds stashed in Swiss banks, nothing has been done.
When the Union Government says it has no idea about the amount of money secreted abroad, it is right to a certain extent as the legal banking channels are never used for sending and secreting funds in foreign bank accounts.
Significantly, India finds mention in the Swiss Banking Association report published in 2006, which provides details of bank deposits in the territory of Switzerland. In absolute terms, India has $1,456 billion parked in tax havens. Other countries mentioned in the list for huge black money deposits are:
Russia — $470 billion.
UK — $390 billion.
Ukraine — $100 billion
China — $96 billion
The interim recommendations of the BJP Task Force 2009 have estimated the amount of black money to be between $500 billion to $1,400 billion. However, a recent study by the Global Financial Integrity has estimated the present value of illicit money outflow to be close to $462 billion.
According to Union Minister for Finance Pranab Mukherjee, the legalities prevent the Government of India from disclosing details of black money held abroad by Indians. As he went on record saying, “All these estimates are based on various unverifiable assumptions and approximations. Government has been seized of the matter and has constituted a multidisciplinary committee to get studies conducted, to estimate the quantum of illicit fund generated by Indian citizens …Legalities come in the way of detecting and recovering black money.”
However, such arguments do not hold ground. India is a sovereign republic and its Parliament is supreme. The legalities, which come in the way of getting black money back, have been framed by the Government. So it is up to the Government to excise such laws that hinder the objective of unearthing black money and getting it back. However, the most pertinent question is why a legal framework has been provided to crooks and thieves to get away with money laundering.
It is common knowledge that no deal in India is completed without a substantial component of black money. Being the current president of a cooperative housing society at Dwarka in New Delhi, I know that a four-bed room flat is often sold at ~2.20 crore — as any property dealer in Dwarka would tell you — while the registered sale deed reflects not even 25 per cent of the value.
According to my rough estimation, on the conservative side, at least ~10,000 crore of black money is generated daily across the country. The Revenue Department has the power to acquire such undervalued
properties. But the procedure is so cumbersome and laborious that it has been rarely used.
This rotten state of affairs not only leads to generation of black money but also deprives the Government of the revenue. Probably, there is more black money in our country than in all tax havens put together.
The stark truth is that corruption prevailing in India generates black money. There are ample incidences, as per Government reports, where schemes meant for the poor have not been implemented but funds allocated have been siphoned off. Even the apex court has admitted that nothing moves without bribery in India. Though all political parties harp on bringing back the black money from tax havens, not a single party has demanded that steps be taken to prevent its further generation.
Mr Pranab Mukherjee has admitted that the Union Government has detected undisclosed income of around ~15,000 crore in the last 18 months. During the same period, Directorate of International Taxation has collected taxes of ~34,601 crore. “The Directorate of Transfer Pricing has detected mispricing of ~33,784 crore, which has prevented shifting of an equivalent amount of money outside India,” he conceded.
What Mr Mukherjee is losing sight of is the fact that money stashed abroad is not always tax-evaded money. Drug lords, gun-runners, terrorist groups, gangsters international syndicates — all stash their money in safe havens, only to withdraw it at times of need for operational purposes. The Union Government has no mechanism to determine with cent per cent surety that the money parked abroad is only tax-evaded money and not crime-linked cash.
Significantly, more than 80,000 people travel to Switzerland every year and 25,000 of them very frequently. It would not be wrong to conclude that such frequent travelling has a lot more ‘substantial’ purpose than tourism.
The Supreme Court has said in unequivocal terms that more should be done to repatriate funds illegally parked overseas. The Revenue Department and other agencies of the Government like the RAW have their offices abroad. However, they do not have a common mandate for reporting any suspicious transactions by Indians, who are either visiting or staying abroad.
What irks is that we have a Government, which is creating alibis for people who have illegally salted away cash in tax havens. Mr Pranab Mukherjee has admitted that the Government has the names of account holders in Liechtenstein’s LGT Bank as well as in German banks, only to argue that the information cannot be revealed “as it violates international law”.
Incidentally, there are only 15 banks in Liechtenstein, seven of which are Swiss. The principality, with an area of about 160 sq km, is surrounded by Switzerland and Austria and has a total population of 67,000 people. A good sleuth, even on a tourist visa, can spot Indians roaming around and visiting the banks. The rest of the job of tracing the flight of black money from India can be done locally, provided the Government has the will. So far, the UPA Government has only been making excuses — some tenable and some untenable.
Unfortunately, no Government, irrespective of the party in power, has made even a pretence of stopping the generation and flight of black money from India, forget about getting the money back. Thanks to the prodding of the Supreme Court, the UPA Government has at least initiated actions in retrieving the money stashed abroad. However, it must remember that pretension almost always overdoes the original, and hence exposes itself.