By Tirath Saini: How the Black Money is generated in India & then siphoned out abroad through various means & for which Swiss Government is busy in preparing List of Indians , with Suspected Black Money in Swiss Banks & Our Govt. should strive its best to immediately bring back the “Black Money” stashed in these off shore Banks , like Swiss Banks. :——-
In a major boost to India’s fight against black money, Switzerland has prepared a list of Indians , suspected to have stashed un-taxed wealth in its banks and the details are being shared with Indian government.
The names of these Indian individuals and entities have come under scanner of the Swiss authorities during an ongoing exercise to identify real beneficiary owners of funds held in various banks operating in Switzerland, a senior Swiss government official said.
“These individuals and entities are suspected to have held un-taxed money in Swiss banks through structures like trusts, domiciliary companies and other legal entities based out of countries other than India,” the official said.
He refused to divulge the identity of these persons and entities, as also the quantum of funds held by them in Swiss banks, citing confidentiality clause of the bilateral information exchange treaty between the two countries.
The official further said that Swiss authorities were very keen to work with the new government in India and they would also provide all necessary support to the newly set up Special Investigation Team (SIT) on black money.
He, however, dismissed claims that black money stashed in Swiss banks by Indians could be trillions of dollars, as the latest Swiss National Bank data pegs the total foreign client money across 283 banks in Switzerland at US $1.6 trillion.
When asked about rise in Indian exposure to Swiss banks at 2.03 billion Swiss francs (Rs. 14,000 crore), he said these are the funds held by clients who have declared themselves as Indian and therefore were unlikely to be ill-gotten wealth.
While declining to be named, as he is not authorized to speak to media, the senior official further said the details are being shared with India on a ‘spontaneous’ basis and are different from the information sought earlier by the Indian authorities on the basis of ‘leaked’ or ‘stolen’ lists of certain banks, including the so-called ‘HSBC list’.
Conditions under which Black money is generated in India & Sources of Black Money :—-
If we are to have any meaningful impact in curtailing or eliminating the scourge of black money, we must first start by understanding why black money has become so all pervasive, and why, by some accounts, the size of the black economy is estimated to be orders of magnitude larger than the regular economy.
The primary reason why black money has such a stranglehold on our economy, is because our system not only allows, but in fact encourages the siphoning out of illicit funds abroad, laundering those funds through tax havens, and re-investing the same in India, as legitimate investment through non-transparent instruments such as participatory notes, and anonymous investments through companies registered in tax havens. This allows individuals to first transfer their black money into foreign accounts through Hawala transactions, and then bring it back into the country, usually as investments in their own companies or trusts, by way participatory notes, or anonymous investments by banks or other shell companies situated in tax havens. All of this is unfortunately given legal sanction by the domestic laws of our country, which run counter to several provisions of the UN Convention Against Corruption. The recent disclosure by the Swiss authorities that India is ranked 58th among the countries in the volume of accounts held in Switzerland by citizens of various countries and that this amount is only 2 billion Swiss Francs, shows that most of the Illicit money which may have been deposited in Swiss banks has been moved out and has been brought back and legalised by way of FDIC through non transparent instruments like P notes and investment by companies registered in Tax havens like Mauritius etc. which allow the holders of this money to remain anonymous.
How the huge amount of Black money gets generated here in our country , usually comes from the following sources :—-
1. Money illegally obtained by way of bribes and gratification by public officials, or private individuals/middlemen, involved in government transactions.
2. Money obtained by sale of property, or services by individuals or corporations and shown on paper as transactions of a much smaller amount. This is reflected as under/over-invoicing of products and services, and allows money to be siphoned out of private corporations illegally by individuals.
Remedial Measures—-By making few simple changes to the existing laws of our country , we can hope to severely curtail the flow of black money in this economy. If we are serious about tacking this problem in an effective manner, then we have to incorporate stringent & mandatory changes/ amendments , which are required to be made in our current legal framework , so as to prevent generation of Black Money & then it’s out flow in to Swiss Banks etc.
Moreover , Our Govt. should strive its best to immediately bring back the “Black Money” stashed in these off shore Banks , like Swiss Banks etc. , in the interest of Nation , so as to revive our own ailing economy , to utilize the same for floating & implementing various social welfare schemes for various segments & to increase the value of Rupee in International Market.