Despite public pressure over the issue of black money, Pranab Mukherjee, Union Finance Minister, took a safe path over the issue without giving any concrete assurance. Some firm steps were expected in the union budget of coming fiscal but he did nothing except some time buying announcements. Although, he expressed concern over the issue but instead of taking any quick steps, he preferred to take a long way with no assurance over the expected result of getting stashed money back. While delivering budget address, Mr. Mukherjee said, “Government has put into operation a five-fold strategy which consists of Joining the global crusade against ‘black money’; Creating an appropriate legislative framework; Setting up institutions for dealing with illicit funds; Developing systems for implementation; and Imparting skills to the manpower for effective action.”
India seems to be trying hard to check the problem of black money. In fact, there is a consensus over the issue at global level. USA and other countries are playing hard on the issue. Even, few countries are pressing tax heavens to disclose the name of those account holders who belongs to their country. The government of USA forced and got names of more than 4000 American clients of UBS bank from Switzerland by sheer geopolitical force, after persuasion first, threat next and related legal actions later. France and Germany did same. Germany even officially bribed the Lichtenstein Bank officials to get the secret names of Germans and others who had stashed away their black wealth in LGT bank of Lichtenstein. But, India did nothing on this front. In fact, German Finance Minister once announced that he will be happy to provide the details to any country after getting official request to get the name of their citizen holding an account in LGT bank.
In these regard, Mr. Mukherjee informed about India’s efforts. He said, “We secured Membership of the Financial Action Task Force (FATF) in June last year. This is an important initiative of G-20 for anti-money laundering. We have also joined the Task Force on Financial Integrity and Economic Development, Eurasian Group (EAG) and Global Forum on Transparency and Exchange of Information for Tax Purposes.” “During the year, we have concluded discussions for 11 Tax Information Exchange Agreements (TIEAs) and 13 new Double Taxation Avoidance Agreements (DTAAs) along with revision of provisions of 10 existing DTAAs. To effectively handle the increase in tax information exchange and transfer pricing issues, Foreign Tax Division of CBDT has been strengthened. A dedicated Cell for exchange of information is being set up to work on this agenda,” Mukherjee added.
The loopholes in money laundering legislation is said to be responsible for the generation of black money. Hasan Ali case is a relevant and latest example. He was operating a multi billion Swiss bank account. In his budget speech, Mukherjee mentioned, “the amendment in our Money Laundering Legislation in 2009 has significantly increased its scope and application. The number of cases registered under this law has increased from 50 between 2005 and 2008 to over 1200 by January this year. The strength of the Enforcement Directorate has been increased three-fold to deal effectively with the increased workload.”
Despite any firm announcement to adopt a mechanism to get black money back, Mukherjee proposed something else. He said, “the Ministry of Finance has commissioned a study on unaccounted income and wealth held within and outside our country. It would suggest methods to tax and repatriate this illicit money.” The issue of drugs and arms trafficking is also linked with black money. However, Mr. Mukherjee expressed concerns over the issue of drugs trafficking but kept silence on the issue of arms trafficking. He said, “ Trafficking in narcotic drugs is also a contributor to the generation of black money. To strengthen controls over prevention of trafficking and improve the management of narcotic drugs and psychotropic substances, I propose to announce a comprehensive national policy in the near future.”
Those who are raising the issue of black money are of the view that the problem cannot be checked without the awareness of the common people of the nation. They kept suggesting that the strengthening of the Right to Information act and spreading awareness over its use will do a lot in the direction of addressing the problem. It doesn’t mean that there is no need of structural change in the existing establishment. And keeping the reluctance of the government and the policymakers to make such changes, it’s high time to make public pressure over the issue of black money.