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Friday 10 July 2020

Black money worth $ 216-490 billion still stashed abroad

The studies have been conducted the sectors like real estate, mining, pharmaceuticals, pan masala, gutkha, tobacco, bullion, commodity, film, and education because these are the sectors where unaccounted income was found highest, said a report of the Standing Committee on Finance tabled in the Lok Sabha

New Delhi: The National Institute of Public Finance and Policy (NIPFP), the National Council of Applied Economic Research (NCAER) and the National Institute of Financial Management (NIFM) have urged Parliament to make the laws dealing with direct taxes simpler to address the problem of Indian black money illegally stashed abroad. The total amount of unaccounted wealth outside India held by Indians has been estimated in the range of $ 216.48 billion to $ 490 billion. This estimation pertains to the period 1980-2010.

The studies by the institutions named above, backed by a standing committee of Parliament, comes as a poor commentary on the ability of the Narendra Modi government to fight the scourge of black money stashed overseas even as the BJP-led NDA administration is hailed for providing the country with a corruption-free Union council of ministers for more than five years now, a departure from the UPA years.

The studies on black money have been conducted across the sectors like real estate, mining, pharmaceuticals, pan masala, gutkha, tobacco, bullion, commodity, film, and education because these are the sectors where unaccounted income was found highest, said a report of the Standing Committee on Finance tabled in the Lok Sabha on Monday.

According to the committee’s report “Status of Unaccounted Income/Wealth Both Inside and Outside the Country: A Critical Analysis”, there are no authentic estimates of black money generation or accumulation, neither is there an accurate well-accepted methodology for making such estimation.

“All estimates depend upon the underlying assumptions made and the sophistication of adjustments incorporated. Among the estimates made so far, there is no uniformity or consensus about the best methodology or approach to be used for this purpose,” the study report stated.

According to the study by the NCAER, the black money accumulated outside India is estimated to exist between $ 384 billion and $ 490 billion during the 1980-2010 period.

The NIPFP said that during 1997-2009, illicit financial outflows have been in the range of 0.2% to 7.4% of Gross Domestic Product (GDP).

The NIFM estimated that total illicit outflow at the current value (including opportunity cost) from India in the reform period (1990-2008) stands at Rs 9,41,837 crore ($ 216.48 billion). Black money outflows from the nation are estimated on an average at 10% of the estimated unaccounted income.

Earlier, the Finance Ministry had asked NIPFP, NCAER, and NIFM to conduct studies to assess and survey unaccounted income and wealth both inside and outside the nation, in March 2011. “It appears that the reliable estimation of unaccounted income and wealth inside and outside the country is a difficult task, this inference is validated by the widely varying estimates of the unaccounted income arrived at by these three institutes. The Chief Economic Adviser has suggested that there is no scope for arriving at a common estimate of unaccounted income by combining estimates from the three reports (studies),” the parliamentary panel’s report stated.

The parliamentary panel which was headed by M Veerappa Moily had submitted its report to the Lok Sabha Speaker on 28 March before the dissolution of the 16th Lok Sabha. After the general elections of 2019, 17th Lok Sabha has been constituted.

The committee reminded that only a limited number of stakeholders could be examined by it, owing to the paucity of time. They said that this report might be considered a preliminary report, pending examination of other witnesses including non-official witnesses or experts on the subject and after evidence replies of the finance ministry which are awaited.

“In the meantime, the committee would expect the Ministry of Finance (Department of Revenue) to continue their efforts with greater vigour to unearth and bring to book unaccounted income/wealth both within and outside the country including follow-up action on the seven reports of the Special Investigation Team (SIT) constituted on black money as well as the three study reports on estimation of money without account,” the committee said.

The committee prescribed the finalisation of a long-delayed direct tax code at the earliest and reintroduced in Parliament with a view to simplifying and rationalising the direct tax laws in the nation.

The committee and its reports would expect more fruitful outcomes on this count, both in terms of the much wider tax base as well as actual tax yield.

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