Infact, the names of some Indian individuals and entities have already come under the scanner of the Swiss authorities during an ongoing exercise to identify real beneficiary owners of funds held in various banks operating in Switzerland, a senior Swiss Government official has said. These efforts by the Swiss Government will help the the Indian Government to a great extent to weed out corruption. In one of the latest report the Swiss banks have revealed that India has more money stashed in Swiss banks than the combined other countries.
According to a ‘White Paper on Black Money in India' report, published in May 2012, the Swiss National Bank estimates that the total amount of deposits in all Swiss banks, at the end of 2010, by citizens of India were Rs 9295 crore or $2.1 billion. The Swiss Ministry of External Affairs has confirmed these figures upon request for information by the Indian Ministry of External Affairs. However, media reports say that the total amount of money parked in Swiss Banks is around Rs 1400 crore.
Rs 9295 crore deposited in all Swiss bank by Indians at the end of 2010
Sources of black money
The black money or the unaccounted illegal money may generate from activities like, illegal trade, smuggling, trafficking, terrorism, counterfeit currency, corruption, arms trafficking, etc. Apart from these activities, illegal money is also a part of dishonest industrialists, corrupt bureaucrat, scandalous politicians.
Impact of black money on Indian economy
The black money is one of the major reason for foreign debt in India leading to high fiscal deficit. If the unaccounted money is brought back, the entire foreign debt can be repaid in 24 hours. The Government's revenue is severely effected to running of a parallel economy in the country. Tax evasion deeply effects Government's revenue and if some reports are to be believed, the amount of unaccounted money in India equals to 40 per cent of the GDP(gross domestic product).
The running of parallel economy in the country have also encouraged corruption which is deeply-rooted in Indian society. The NDA-Government's recent move to seek details from Swiss banks will be one of one landmark step in eradicating corruption. Many hawala transactions operating in the country also contribute to circulation of black money. The real per capita income of the people and the national income of the country are shown as low due to these unaccounted transactions. If all the black money circulating in the economy is flowed back into the national economy of the country, there will a substantial rise in the real incomes of the people and the national income of the country.
The illegal money circulation also create inflationary pressure as Government raises tax rate due to its expenses in order to balance the budget. Terrorism, drug trafficking has been a menace for the Indian Government and the money used for such illegal activities have also effected the Government's revenue.
SIT on black money
The Special Investigation Team (SIT) on black money has sought details of all major cases of tax evasion and criminal financial fraud being probed by various investigative agencies which are mandated to keep a check on circulation of unaccounted wealth.
According to PTI report, the SIT has recently asked for the data in order to understand the trends and magnitude of the menace of black money and generation of illegal Funds in the country, which is done through a variety of ways like evasion of Taxes and duties, flouting of foreign exchange laws, creation of disproportionate assets, creation of 'benami' properties within the country and outside and laundering of wealth obtained through illegal and corrupt means.
Do we need stringent laws to curb black money?
Though we have certain institutions to check black money like CBDT( Central Board of Direct Taxes), ED (Enforcement Directorate), Financial Intelligence Unit, CBEC(Central Board of Excise and Custom), Central Economic Intelligence Bureau(CEIB), we still lack proper legislation to check anti-national and illegal activities which contribute to accounted wealth. Hawala system is one such thing through which money can be easily siphoned away to different places without any inquiry.
Black money has been a major problem in Indian elections
The Indian election process is one of the major contributor to black money with crores of wealth generated for campaigning for the candidates in the Lok sabha and Assembly elections. A study by the Mumbai-based Centre for Monitoring Indian Economics (CMIE) found in 2006 that each parliamentary poll generates between $10.19 billion and $11.33 billion of black money. The Election Commission has also addressed these concerns in the recently concluded Lok Sabha election.
Curbing black money a challenge infront of Government
After last UPA Government failed to bring back illegal money stashed abroad, the people have lot of expectations from the new NDA Government in power to check black money which is severely effecting our GDP and overall Indian economy. The Narendra Modi Government who is already facing severe challenges of high inflation, low growth and high fiscal deficit will have to strategically plan to bring back unaccounted wealth over a period of time. The Special Investigation Team (SIT) constituted by Indian Government have promised action if any illegality found.
The Government should aim to have transparent economic management system, which can only help to root out the evil of black money and corruption from our society. Even though it may take a period of time to eradicate circulation of illegal money but no doubt the Government's initiative is welcomed.