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Govt paper whitewashes black money claims
Pranab tables 108-page White Paper, but it doesn’t reveal names of Swiss account holders
Sanjeev Sharma/TNS

New Delhi, May 21
The White Paper on Black Money tabled by Finance Minister Pranab Mukherjee in Parliament today has trashed the huge figure of illegal wealth stashed away by Indians in Swiss banks and said much of the money may have already come back into India through illicit means.

The 108-page paper did not disclose any names of Swiss account holders or provided any fresh estimate of black money in India.

Mukherjee, in his introduction to the paper, quashed the black money estimates that have been floated “without adequate factual basis.” He also rebutted the perception that has been created that the “government’s response to address this issue has been piecemeal and inadequate”. He mentioned five Bills that have been brought by the government - the Lokpal Bill, the Judicial Accountability Bill, the Whistle Blowers Bill, the Grievance Redressal Bill and the Public Procurement Bill - which are at various stages of consideration by Parliament.

The paper says the e-mails mentioning the huge amount of wealth in Swiss accounts “were mischievous and baseless.” However, it is useful to mention one estimate of the amount of Indian deposits in Swiss banks, the paper notes. The Swiss National Bank spokesperson stated that at the end of 2010, the total deposits were 1.945 billion Swiss Francs (nearly Rs 9,295 crore). The Swiss Ministry of External Affairs confirmed these figures when a reference was made by the Indian Ministry of External Affairs to them. These deposits of Indians in Swiss banks have decreased from Rs 23,373 crore in year 2006 to Rs 9,295 crore in year 2010.

Deposits of Indians in Swiss banks constitute only 0.13 per cent of the total bank deposits of citizens of all countries.

“From these figures, it can be safely concluded that the common belief that Indians hold the maximum deposits in Swiss banks is not correct”, the White Paper says.

The paper makes an interesting point that there is a “strong likelihood that substantial amount of money transferred abroad illicitly might have returned to India through illicit means”.

Global Financial Integrity (GFI) has estimated that from 1948 to 2008 a total of $ 213.2 billion has been shifted out of India through illicit outflows and the adjusted gross transfer of illicit assets by residents of India amounts to $ 462 billion as of end-December 2008.

The paper’s view is that this money has at least partly already returned to India. This may have been happened through FDI route and stock markets.

The Vodafone tax case provides an instance of the misuse of corporate structure for avoiding the payment of taxes, the paper says.

To curb the generation of black money, a four-pronged strategy - reducing disincentives against voluntary compliance, reforms in vulnerable sectors of the economy, creating effective credible deterrence and supportive measures - is being worked out. On the need to curb this menace in vulnerable sectors like real estate, the provision of deducting tax at source on payments made on real estate transactions and mandating it as a pre-condition for registering of the transacted property could be considered.

Large number of transactions in bullion and jewellery are unaccounted and there is also urgent need to improve the reporting and monitoring systems in this sector. On the informal sector and cash economy, the paper says there is a need to amend laws to check keeping very large amounts of cash. Another important measure could be the promotion of banking channels, including use of credit and debit cards through tax incentives, since they leave adequate audit trails and hence disincentivise black money generation. Levying tax at source at a low level on cash purchases may also be considered as a possible policy option.

There does not seem to be much progress on repatriation of black money abroad. The White Paper says that the government has been working on bilateral treaties. However, these treaties do not have provisions for repatriation of undisclosed assets. “Without international consensus on this issue it is difficult to implement domestic law on repatriation of assets located abroad”, says the paper.

On the issue of amnesty schemes including gold deposits, the stance is cautious given the moral hazard and public sentiment in view.

"Expansion of the information exchange network at the international level is a major step in curbing cross-border flow of illicit wealth and in facilitating its repatriation"

— Pranab Mukherjee, Finance Minister

in black & white

  • To curb black money, a four-pronged strategy — reducing disincentives against voluntary compliance, reforms in vulnerable sectors of the economy, creating effective credible deterrence and supportive measures — is being worked out
  • Encouraging the use of credit and debit cards — as they leave adequate audit trails — could also help in preventing black money generation, says the paper
  • It also proposes improved reporting and monitoring systems to track bullion and jewellery transactions and wants close tabs on real estate deals

White Paper like a bikini: BJP

New Delhi: Describing the government's White Paper as "disappointing", the Opposition BJP said it is "like a bikini" as it hides essential information and reveals only the less significant details.





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