1. Editorial: Trading black money

Editorial: Trading black money

Fix the trade database, check money flowing out

By: | Published: December 15, 2015 12:49 AM

The fact that the government got a mere Rs 3,770 crore worth of declarations for black money held overseas when it opened a one-time compliance window in October seemed to suggest estimates of money stashed away in Swiss vaults was vastly exaggerated—more so since the talk of black money flowing out of India has been accompanied, over the decades, with talk of it coming back into the country through the participatory note (PN) route. At the same time, assuming there is something to the Global Financial Integrity (GFI) numbers used by the BJP’s top brass to estimate Indians have $462 billion stashed overseas, some perspective is required. For one, at $83 billion, the number given for illegal forex outflows for 2013—mostly through under-invoicing exports and over-invoicing imports—represents just 4.4% of India’s GDP. More important, with the amount being siphoned out rising 4.3 times between 2004 and 2013, this underscores the importance of focusing on money being siphoned out right now as opposed to worrying about the past—as both GDP and trade rise, the amount allegedly being siphoned out also rises dramatically.

That is why it is important that customs officials have a robust database to compare the value of both exports and imports on a 24×7 basis, and such databases are easily available globally. The Indian Customs Valuation Database Project was initiated to develop a real-time, electronic database in respect of goods imported at all customs stations in India. “The idea is to provide instant access to the combined data, duly analysed and flagged by the Directorate of Valuation (DoV), to all assessing officers for their use as an effective tool to check under-valuation and valuation fraud so as to safeguard customs revenue,” the Central Board of Excise and Customs has outlined as the objective of the database, but as pointed out by the Tax Administration Reforms Commission (TARC) in its report, data management and sharing has been a major problem in the revenue department. While there is a need to create a unified and robust data collection, dissemination and sharing within the revenue department, as suggested by the TARC, utilisation of various global platforms and organisations providing important trade pricing data through this window is critical for this exercise. Trade data exchange windows in the East African Community, European nations and also trade facilitation agreements, have succeeded in curtailing loss of substantial customs revenue on account of trade mis-invoicing, and there is no reason why India can’t do the same to curb illicit outflows and raise customs revenue that can be utilised for development.

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Tags: Black Money
  1. Hemen Parekh
    Dec 29, 2015 at 7:23 am
    How to conquer Corruption ? There is only one sure - and superfast - way to get rid of corruption By introducing : * NEGATIVE MOTIVATION Putting behind bars ( - and right away ; not after 6 years ) , every corrupt fellow and immediately confiscating his ill-gotten wealth * POSITIVE MOTIVATION By abolishing Personal Income Tax and introducing Amnesty Scheme , incentivize # converting of black money into white # acceptance of all payments thru official channels As far as providing " Negative Motivation " is concerned , I had sent following suggestion to our Hon Prime Minister / Finance Minister / other Ministers / Secretaries etc , on 4th Nov 2015 : # INTERNET OF THINGS ( IoT ) As each currency note of Rs 500 / 1000 , is getting printed , embed it with microscopic RFID chips ( with this , current cost of a RFID chip will fall from 50 paise to 5 paise ) Besides communicating with each other , these chips will also transmit their existence location , through internet , to cloud-based servers of Income Tax Department This will form a " NETWORK OF CURRENCY NOTES ( NoC ) " You may like to call this Internet of Currency ( IoC ) , a sub-set of IoT ! # IP ADDRESS SYSTEM ( IP V 6.0 ) Each Rs 500 / 1000 currency note must be igned ( at the time of printing ) , its own unique Internet Address , using IP V 6.0 This IP address should be linked with the unique Serial Number printed on each note. Since IP V 6.0 , will be capable of igning " 2 * 10 to the power of 128 ", no of IP addresses , there is no danger of running out of addresses , even if we decide to extend this idea to Rs 100 currency notes ! Here are the most important BYE - PRODUCTs : * No more possibility of fake / forged / counterfeit , currency notes * No thief would ever want to steal such currency notes which continuously announce their location * No one would want to make any " Cash Deal " . All payments will become official only ! * Plastic currency notes will last 10 times longer ! * Who will buy GOLD biscuits , using RFID embedded notes ? No need for PAN card ! * No giving / No receiving of bribes ! No disproportionate ets ! This reform will enable the Central Government / Income Tax Department , to : * Continuously trace the movement of each of these higher denomination currency notes * Instantly locate any place ( using Google Map based GPS ) , where there is an aculation of more than Rs 1 Crore worth of currency notes Such aculation will be made to appear as a TAG CLOUD on the web site of IT Dept, like thousands of balloons floating on a map of India , capable of being drilled down to within 1 Sq Meter ! Of course , visible only to IT officers ; not to general public ! On each balloon , will appear a number announcing , " Amount of Cash here - Rs " ! This will vastly simplify the task of Anti Corruption Dept / Enforcement Dept etc Of course , RBI will need to allow 6 month's time to the owners of current paper currency notes of Rs 500 / 1000 , to get these exchanged with new plastic notes before withdrawal of the old notes from circulation Implementation of this suggestion , does NOT require ping of any BILL in Lok Sabha or being held to ransom in Rajya Sabha ! And it can be implemented in India , within ONE YEAR But if Chinese President Xi Jinping comes to know about the practicality of this suggestion , he might implement it in 6 months ! How come ? Simple ! Xi Jinping has the political will ! And no historical baggage ! ------------------------------------------------------------------------------------------------------- hemen parekh 24 Dec 2015 ( Also read blog " CREATE WEALTH to CREATE JOBS " at , > Blogs )

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