1. Where is India’s black money? Reports gather dust even as Modi govt scheme fails

Where is India’s black money? Reports gather dust even as Modi govt scheme fails

With the black money scheme turning into a big embarrassment for Narendra Modi and the BJP, the PM must tell FM Arun Jaitley to disclose the findings of the black money reports...

By: | Updated: October 5, 2015 9:43 AM
black money Narendra Modi

PM Narendra Modi’s black money scheme: Initial indications suggest mostly those already targetted by the CBDT have utilised the window to escape from bigger embarrassment and prosecution. (Reuters)

raghuram rajan imf chiefWith the black money scheme turning into a big embarrassment for Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP), the PM must tell FM Arun Jaitley to disclose the findings of the black money reports of NCAER, NIPFP and NIFM so that a strategy could be drawn to make a serious dent in the Indian shadow economy.

It will not at all be surprising to see a crackdown from the Income-Tax Department on the black money front, with the abject failure of the three-month compliance window to unearth unaccounted income and assets stashed abroad.

Only 638 declarations have been received under the compliance window which was opened on July 1, declaring undisclosed foreign assets amounting to just Rs 3,770 crore.

The department was advised against bringing in any amnesty or compliance scheme by several experts, but the government went ahead and brought the compliance window despite even officials in the Central Board of Direct Taxes (CBDT) not being confident about the results.

Initial indications suggest that mostly those already targetted by the CBDT have utilised the window to escape from bigger embarrassment and prosecution.

The department will now try to make-up for this failure to capitalise on the compliance window in a big way.

It must, however, refrain from a roving inquiry or a witch hunt and prepare a systematic and well-planned strategy to track and crack the black money bastions.

Black money is not a black box. It has got accumulated over a period of time in specific areas like, real estate, bullion business, and mining because of the lax regulatory regime.

Another reason for creation of black money has been a high incidence of tax and low level of enforcement in the tax domain — both direct and indirect taxes.

The government has detailed information about this in the form of three black money studies done by the National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM), but it is yet to act on these.

PM Narendra Modi must now tell FM Arun Jaitley to hold public discussion on these reports on black money to draw a comprehensive strategy.

According to the NIFM study (see full report here): “…the sectors where unaccounted income is found to be highest included real estate, mining, pan masala, gutka and tobacco industry, bullion and commodity markets, film industry, educational institutes and professionals. The other sectors, namely securities market and manufacturing also showed a high incidence of unaccounted income”.

To tackle black money menace in the real estate sector, it has recommended: “…constitution of a regulatory authority; rationalising circle rates with market rates; rationalization of stamp duty; automated and single-window clearance; including real estate in goods and service tax; eliminating ‘percentage of completion’ method; posting records online; capacity building and use of advanced tools like data mining generation of suspicious activity reports to spot tax fraud and money laundering”.

The report not only list outs different ways to estimate black money but has also given sector-specific and area-specific recommendations on the steps to be taken in dealing with black money.

The government must discuss these suggestions in detail and make this a part of the Budget-making exercise for FY17 that it has already started.

Check out the NIFM report on black money.

  1. Rajendra Babu
    Oct 3, 2015 at 11:29 pm
    This is just to show the bhakts that they have done their job. Before elections Feku made the statement that !5 lakh crores was staked abroad. What they got is 3700 crores which is peanuts. They will never venture wheartedly, as the capitalist, the businessman community, and dalals of share bazar who pumped in money to win elections are equally strong to uproot him. Any attempt to temper with their money means the gaddi will be taken away.
    Reply
    1. Jayasankar
      Oct 5, 2015 at 1:34 pm
      Modiji must Change the FM. Arun Jaitley Performance is Below par. He does not have guts to Bring out Black money. He is not better than Chidambaram. FM may be honest and Clean, but where is the Action? People want real action. Time for Modiji to think and do something before everything goes out of his hand.
      Reply
      1. D
        dharamdas
        Oct 6, 2015 at 12:59 pm
        refer this link for black money
        Reply
        1. D
          dharamdas
          Oct 6, 2015 at 12:58 pm
          Reply
          1. R
            rs
            Oct 3, 2015 at 5:33 pm
            At least this government initiated the process to unearth the black money. Instead of taking a cynical view, let us give credit the the government for positive movement. Now they should go after the ones who have black money stashed abroad and not declared. Special cells to be set up for this purpose and the guilty to be dealt with iron hand. Also there is need to pick officials with integrity for going after these crooks.
            Reply
            1. Suman Bhat
              Oct 4, 2015 at 4:48 pm
              provide the proof in which rally Modiji said RS15 lakh every indian will get HEwas refering as example Atleast this govt is working to get black money what corrupt congi did looted country and going to foreign soil every month to save the black money Flashback: Here's what Modi promised India on black money :www.rediff/news/report/flashback-heres-what-modi-promised-india-on-black-money/20141029.htm
              Reply
              1. T
                t p
                Oct 3, 2015 at 6:45 pm
                There is need to pick officials with integrity for going after these crooks. Good suggestion.
                Reply
                1. V
                  vc sekar
                  Oct 4, 2015 at 4:21 pm
                  Taking cue from Dr.Subramaniam Swamy, the Centre can explore doing away with Income Tax and bring in an alternate strcture but very simple and without any hle to individuals, so that untapped funds can go into official circulation and boost the economy.
                  Reply
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