Money In Black
One salient point of Narendra Modi’s election manifesto was the war that his party wanted to wage on black money. The tenure of the UPA government saw scams after scams, exposing many influential personalities and politicians who had made a quick buck. Without wasting much time after he assumed office, Modi set up a Special Investigation Team, which has been approved by the Supreme Court. This was also a way for the new government to establish its own bona fides on the issue of tackling corruption, which Modi’s repeatedly, accused the previous government of temporising. An estimated $2 trillion is sitting snug in the banks abroad, mostly in Swiss Bank. A poverty-stricken India has been struggling to change its image from a country that was ‘developing’ for a long time to an economic ‘super power’. According to World Bank reports, poverty in India is waiting to reach another level, with an estimated 11.8 per cent of total population living below the line of poverty and earning less than $1.25 per day in 2014.
The contradiction between black money and existing poverty levels notwithstanding, Indian hoarders will probably take solace in knowing that the phenomenon is not limited to their country alone. In fact, some of the biggest black money holders are in China and Russia. When a list of such violations was compiled taking each country into account, India stood third, with China leading the list. India has never shown the determination to track down the black money. The angry Indian middle class readily joined hands with Anna Hazare when he waged a battle against rising corruption.
It is clear that the motherland has been bled dry by a small cabal of corrupt, anti-national conspirators. Both Baba Ramdev, who declared that once India has regained its lost wealth, one Indian rupee will be worth $50 and the maverick Ram Jethmalani, the figure behind a 2009 petition that led the Supreme Court to direct the government to set up a special task force to recover India’s lost money are both hopeful and skeptical.
Will black money really make for a new “India Shining”, as so many believe? Well, it already has. “One of the best places in which to invest money is India, not Switzerland or the US or any western destination,” says economics columnist Swaminathan Aiyar. “Housing prices in the US doubled after 2000 and that was called a bubble, but housing prices in India rose almost ten-fold. Declarations by politicians of their assets show a huge preference for real estate over all other assets… Most black money never leaves India, and much of that does come right back.”
Even if we assume that the government will be able to recover such a large stash of cash from Swiss banks, the proceeds would be considered a national asset and go straight into the hands of the state, whose agencies and departments were the major sources of this embezzlement to begin with. The worm will turn the full circle.
If these sensational sums did ever exist, they are certainly no longer lying in Swiss banks, but have long since been put to use in India’s murky real estate market and in the massive war chests deployed by political parties (including the BJP) in the elections. One should consider not just the sums allegedly stashed away illegally, but also the systems and loopholes that have made such large-scale embezzlement possible—and what can be done in the future to stanch such outflows and “round-tripping”. The biggest step that the government should take on ending the black economy is to make it more difficult for people to bring black money back to India.
The gravity of the situation could well be understood from the fact that the largest numbers of foreign depositors in Swiss Bank are reportedly Indians. Not surprisingly, as India is the world`s most corrupt country. Dishonest businessmen, scandalous politicians and corrupt IAS, IPS officers have deposited in foreign banks in their illegal personal accounts money that been misappropriated by them. From 2003 to 2014 out of 5,935 IPS officers, seventy have resigned to join the private sector or enter politics. Just last week two IPS officers gave up their uniforms and joined the BJP in Jharkhand. Some 90,000 Indians travel to Switzerland every year, of which 25,000 travel very frequently. Obviously, these people are not tourists.
If laws are applied conscientiously there is nothing that can mar a fair investigation and repatriation of laundered sums. The smokescreen surrounding “black money” largely stems from the multiplicity of regulators in India including the Enforcement Directorate, Directorate of Income Tax Investigations, Reserve Bank of India and the Securities and Exchange Board of India.