A Central Bank data shows that Indians have exported goods and services, worth over Rs 17 trillion over the last 44 years but have not remitted an equal amount in foreign exchange.
A Central Bank data shows that Indians have exported goods and services, worth over Rs 17 trillion over the last 44 years but have not remitted an equal amount in foreign exchange. An HT analysis of the Central Bank data showed that this might be the first estimate of how much the Indian economy might have suffered from the offshore accounts of tax evaders. This amount is estimated to be at least one-fourth of India’s current Gross Domestic Product(GDP). The amount which is much higher now when adjusted according to the US Dollar is speculated to have been sitting in certain tax havens.
The HT analysis of the RBI (Reserve Bank of India) data collected from 1972-2015 an estimate of 95% of the Rs 17 trillion were exported over the last decade. The RBI data was based on 188,605 exported transactions which were not remitted back to India, which is a requirement under the rules of the Indian Foreign Exchange. while it might be possible that some of these payments might have been stuck due to defaults during the down periods in the economy but the data shows a constant rise in the under-recoveries over a period of time. Disguised export deals are not the only way to storing all the illegal funds in a bunker abroad either. Money l;laundering in stock markets is another of the well-known methods of evading taxes.
Laveesh Bhandari, economist and co-author of a book on corruption, tells HT that it is quite difficult to have an estimation of the black money that has been stashed in foreign countries. Although, he assured that this is definitely one of the many methods through which black money is being sent abroad. Indians have found it more difficult to estimate a number of illicit funds due to the lack of data. Although over a period of time, India has put certain systems in place to cut down on tax crimes by signing disclosure agreements with foreign countries.
The Supreme Court has led most of the campaigns against black money. In 2011, the SC had appointed a SIT team to access the black money, both at home and abroad. Following this, the SIT went seeking the Central Bank’s help with digging out of the suspected export deals. Although, initially it wasn’t clear as to what purpose the data would serve. In the past, the studies and research on untaxed, illegal wealth have been minimal and inconsistent, which the hurt the struggle against corruption that costs India about 1-2% of its entire GDP every year. Whereas, the newest RBI data exercise arrives very close to being definitive on fake exports at least.