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LATEST NEWS UPDATES | Jury’s still out on amount of black money stashed abroad

Jury’s still out on amount of black money stashed abroad

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published Published on Feb 15, 2012   modified Modified on Feb 15, 2012
-ENS Economic Bureau
 
Estimates on black money stashed away by Indians is still very much a grey area. So when the CBI Director emphatically declared on Monday that $500 billion of illegal money belonging to Indians was deposited in tax havens abroad, the figure caused more than a mild flutter.
 
Mainly because the information currently available on the black money economy is way too disparate and vague. Considering the available evidence, the question being asked is whether AP Singh had anything substantive to back his claim? The first study on unaccounted money was conducted by the National Institute of Public Finance and Policy (NIPFP) way back in the early 1980s and a paper was subsequently published in 1985, but the estimate very critisised for being unreliable. Following this, in 1999, Jawaharlal Nehru University (JNU) professor Arun Kumar undertook an independent study that tried to assess the various aspects of India’s black economy.

More recently, in 2010, Washington-based Global Financial Integrity (GFI) came out with a report titled ‘The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008’, which pegged losses on account of illicit financial flows due to tax evasion, crime and corruption at $462 billion. This figure has been used extensively by the opposition parties, especially the BJP, as ammunition for cornering the government during debates on the black money issue.

On its part, the government has set up two study groups to look into the issue. A high-level committee under the chairmanship of former CBDT (Central Board of Direct Taxes) chief MC Joshi was appointed in June last year to study the generation and curbing of black money. The draft report of the panel has reportedly refrained from putting an exact figure on the size of India’s black economy.

Around the time the Joshi-led panel was announced, the Centre, in March 2001, commissioned another in-depth study to quantify unaccounted income and wealth stashed within and outside the country. Work on the study is being undertaken by the National Council for Applied Economic Research (NCEAR), NIPFP and National Institute of Financial Management (NIFM) and they have been given a 16 month time-frame. “So far, there are no reliable estimates of black money generated and held within and outside the country,” the Finance Ministry said categorically at that time the study was commissioned.

On December 14, during the course of the debate on the black money issue in the Lok Sabha, the Finance Minister Pranab Mukherjee repeated the government’s position on the issue and stopped short of hazarding a guess on the exact amount of money stashed abroad, claiming that as FM, he did not have the liberty to quote any random figure.


The Indian Express, 15 February, 2012, http://www.indianexpress.com/news/Jury-s-still-out-on-amount-of-black-money-stashed-abroad/912110/


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