Black is Back

Black is Back

Indians love many things about Switzerland: chocolates, watches, Bollywood movie locales and secret bank accounts. No wonder trillions of dollars are satcked away in secure vaults in the scenic Alps. A recent conservative estimate by the US-based group Global Financial Integrity Index pegs illicit capital flows between 1948, a year after Independence, and 2008, at $462bn - an amount that is twice India's external debt. India's underground economy today is estimated to account for half of the country's GDP. The issue of black money is a national shame.It is one of the biggest loot witnessed by the country, the loot of the “aam aadmi”.

Thanks to opposition and public ire over a series of corruption scandals, "black money" is back in the spotlight. The Supreme Court has been chiding the government for not doing enough to unearth illicit money. "Is there no basis to figure out black money?" the court wondered on Thursday. "What is the source of black money, which has been stashed away in foreign banks? Is it from arms dealing, drug peddling or smuggling?" Strong words indeed. But they may not be enough to uncover India's biggest and longest-running scandal. This week, Finance Minister Pranab Mukherjee unveiled what critics said was a laundry list of dreary platitudes and non time-bound plans to check the "menace of black money". This includes joining a "global crusade" against it, creating appropriate legislation and institutions to deal with such funds and imparting skills to officers tasked with detecting such funds. In effect, what the government is saying is that after 63 years of independence, we have no institutions or trained people available to curb a brazen and thriving underground economy which rewards tax evaders, humiliates tax payers and widens inequity. The government also talks about a new amnesty scheme for "black money", which is really a slap in the face of the honest tax payer.
Despite the government's recent noises, "black money" will continue to blot us and our economy. For one, it is a systemic problem. Those who stash away illicit money overseas comprise the political and professional creme de la creme - politicians, bureaucrats, businessmen, doctors, lawyers, chartered accountants and judges. That the government is not keen upon cracking down on illicit capital flows was evident, when, in 2008, it refused to accept a compact disc from Germany containing names of account holders in a Liechtenstein bank. Last year, under opposition pressure, the government accepted the CD, but refused to disclose the 26 names of Indian account holders in it. By this time these intelligent and powerful people would have closed their account and transfered all funds to other places without leaving any trail.
What we need to do is build strong cases against people it suspects are guilty of tax fraud and graft. Unless there is political will to dig out black money, nothing will happen.