India’s Black money in foreign countries

India’s Black money in foreign countries

Black money refers to funds earned on the black market, on which income and other taxes have not been paid. The total amount of black money deposited in foreign banks by Indians is unknown, but one estimate by R Vaidyanathan, a Professor of Finance, estimated the total at over Rs 7,280,000 Crores (US$1.4 trillion).

Black money in Swiss banks

While official numbers are not available, Swiss banking officials have said that the largest depositors of illegal foreign money in Switzerland are Indian.

 In August 2010, the government revised the Double Taxation Avoidance Agreement to provide means for investigations of black money in Swiss banks. This revision, expected to become active by January 2012, will allow the government to make inquiries of Swiss banks in cases where they have specific information about possible black money being stored in Switzerland.

Court cases

In January 2011 the Supreme Court of India asked why the names of those who have stashed money in the Liechtenstein Bank have not been disclosed.  The court argued that the government should be more forthcoming in releasing all available information on what it called a "mind-boggling" amount of money that is believed to be held illegally in foreign banks.

Tax Information Exchange Agreement

To curb black money, India has signed TIEA with 10 countries - Bahamas, Bermuda, the British Virgin islands, the Isle of Man, the Cayman Island, the British island of Jersey, Monaco, St. Kitts and Nevis, Argentina and the Marshal Islands - where money is believed to have been stashed away.

Prominent cases

In April 2011, Hasan Ali Khan was arrested on charges of stashing over Rs. 36,000 crore in foreign banks. He is the person of Sonia Gandhi’s Political Advisor Ahmed Patel. 

India topping the list with almost $1500 Billion black money in swiss banks, followed by Russia $470 Billion, UK $390 Billion, Ukraine $100 Billion and China with $96 Billion.

It’s embarrassing for any country to top the list of black money holders. The money which belongs to the nation and it’s citizens, is stashed in the illegal personal accounts of corrupt politicians, IRS, IPS officers and industrialists. An amount which is 13 times larger than the nation’s foreign debt. Every year this amount is increasing at a rapid speed but the Indian government seems to be silent over this matter from a very long time. The total black money accounts for 40% of GDP of India, if all the money comes back to India then that could result in huge growth burst for India.

A nation where more than 450 million live below the poverty line, which means they make less than $1.25/day and could probably use an easy cash advances from somebody. By bringing back the black money back to the country there is so much which can be done for the development of the nation and the people who live below poverty line. India will also be able to clear all their foreign debts in 24Hrs. Even if all the taxes are abolished, the government can maintain the country easily for 30 years.

It’s been found that about 80 thousand people travel to Switzerland every year of which around 25 thousand travel frequently. Those travelling on regular basis must be doing it for some reason.

The Supreme Court in India ordered to Central Government to take serious steps to get the money back to India which is stashed in Swiss banks. They should work to find out the names of account holders in Swiss banks and also pressurize Swiss bank to get the black money back to the country. This has also become a matter of pride of nation and if the Congress led Manmohan Singh government still keeps silence about this issue then they will only be making themselves a laughing stock for the entire world.

A new report released by Global Financial Integrity (GFI), states that illicit financial flows from India between 2000-2008 were approximately $104 billion ie. 4800000000000 (Rs. 4.8 lakh crore).

This report has coincidentally come at a time when Supreme Court has clearly given instructions to authorities to disclose the names of Indians with money deposited in foreign banks, renewing the interest in bringing back Indian money stashed in foreign accounts.

To be honest, the figure might be much higher that what the report reveals, but just to give you a perspective of reported figure, it is more than 10 times the total allocation to education in 2010-11.

One of the interesting aspects of the report is that India is 15^th in the overall list which is headed by China which has cumulative illicit outflows in region of 2.18 trillion. If you see most of the top countries are oil producing nations !

There is no doubt that Government needs to take strict action against these black money hoarders, unfortunately the problem is – Government itself comprises of people who run this black economy and benefit from it ! There are rumors that UPA Chairperson & Congress President Mrs. Sonia Gandhi’s family has deposited huge amounts of black money in foreign countries. So the Indian Government didn’t take any strong action against black money in foreign accounts and bringing back to country.

On a lighter note, with the kind of numbers we are talking it has become imperative for us to adopt new accounting terminology for Black Money. This has been making rounds on Social Media sites

New Accounting Terminology

§  1 Cr = 1 Khoka

§  500 Cr = 1 Koda

§  1,000 Cr = 1 Radia

§  10,000 Cr = 1 Kalmadi

§  1,00,000 Cr = 1 Raja

§  10 Kalmadi + 1 Raja = 1 Pawar