Global Financial Integrity, a non profit research specializing in Tax havens has estimated that Indians have $500 billion of illegal wealth abroad (now we know why our politicians are not concerned about the falling rupee – their “savings” are in dollars!!). The organization further has said that two-thirds of this amount has been stashed away after liberalization. Clearly the aspects of liberalization that has lead to this stashing away of black money must be scrutinized – of course, not by the political parties.
Political Parties And Talk Of Returning Black Money
The congress during 2009 had in fact initially disputed the very existence of black money abroad. But were ultimately forced to admit that huge Indian black money has been stashed away. The Chairman of the United Progressive Alliance Smt Gandhi committed in her address to her party workers meeting at Mangalore on April 27, 2009 that the UPA, if elected, would work to bring the black monies illegally stashed away by Indians abroad. The Prime Minister, Dr Manmohan Singh, also came out with similar undertaking to the people of India that the monies illegally stashed away abroad would be brought back.
The Finance Minster, Mr Pranab Mukherjee, addressed the media about black money stashed in Tax havens on 25-01-2011 indicated the Government’s approach to the issue “The issue of black money has attracted a lot of attention in the recent past. I will like to take this opportunity to share with you the proactive steps taken by our• Government to combat the menace of illicit funds generated both as a result of tax evasion and corruption. … Creating an appropriate legislative framework; Setting up institutions for dealing with Illicit Funds; Developing systems for implementation; and Imparting skills to the manpower for effective action”.
Legislation & Policing
In going one step forward, recently Indian foreign tax and tax research (FT&TR) division in the finance ministry has approached half a dozen foreign jurisdictions, including British Virgin Islands, the Cook Islands, Singapore and other offshore hideaways, for banking and other financial details of 500 individuals and entities that might have ‘secret offshore accounts’ at those places.
Foreign tax and tax research has also approached Samoa through diplomatic channels, along with a few other countries for details of entities alleged to have secret accounts at those places.
To keep a tab on such activity Securities and Exchange Board of India is finalizing new anti-money laundering guidelines covering entities such as brokers and mutual funds to put in place stronger check against possible cleansing of funds through capital markets. The guidelines, expected to ready within a few weeks, will replace Anti Money Laundering and Combating the Financing of Terrorism Standards (AML/CFT), which first came into effect about 10 years ago and saw the last major amendments in late 2010.
Black Money Belongs To Our Politicians – A known Fact
While all of this is fine – it is a known fact that most of the black money belongs to the politicians. So this must be an eyewash (remember the congress initially even denied the existence of external black money) – what motivates them to bring it back especially when a part of it is probably theirs – unless of course it is needed for elections.
One should realize though that black money is bought back into the country via the FDI route (through Mauritius)– and currently there is no policy that allows for FDI investment in elections 🙂 (maybe there should be) – so the money can only be bought back by Hawala. But Hawala is no longer easy at least not in large quantities. The same channels via which Hawala money flows, terrorism is funded as well and after 911 western government have truly clamped down on such activity.
In spite of all the numbers, estimates of black money and processes put in place to get them back in the country – has there been any census or measure on how much has been returned since the announcement of these initiatives ?? None what so ever, and none should be expected – these announcements are all talk, meant for the naïve during elections.
So it would seem that Indian black money is truly stuck abroad.