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Rediff.com  » Business » Modi's task force to bring back Rs 692,328-crore black money!

Modi's task force to bring back Rs 692,328-crore black money!

June 03, 2014 13:46 IST

Image: The amount of black money stashed away by Indians alone is a little over Rs 692,328 crore (Rs 6,923.28 billion).
Photographs: Reuters Vicky Nanjappa in Bengaluru

Bringing back black money stashed away in foreign banks was one of the biggest election promises made by Narendra Modi.

The new Prime Minister was prompt in keeping his word and entrusted the Financial Unit of the Intelligence Bureau with the said assignment soon after assuming office.

The amount of black money stashed away by Indians alone is a little over Rs 692,328 crore (Rs 6,923.28 billion).

A special task force which would comprise the Financial Intelligence Wing, enforcement directorate, directorate of Revenue Intelligence and the Income Tax department, has been set up for the purpose.

There is a lot of excitement among the members of the task force.

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The image is used for representational purpose only

Modi's task force to bring back Rs 692,328-crore black money!

Image: US dollars.
Photographs: Lee Jae Won/Reuters

According to experts, if this amount is brought back, Indian government could be run successfully without anyone paying taxes for the next 20 years.

The task force team would not restrict itself only to bringing back the black money stashed away.

It will also trace the hawala dealings that take place daily.

The estimated sum earned through hawala is about Rs 73 lakh crore (Rs 73 trillion).

The unit has been given a lot of teeth to deal with the matter and has been instructed to bring back the money irrespective of whom it belongs to.

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The image is used for representational purpose only

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Modi's task force to bring back Rs 692,328-crore black money!

Image: A couple of meetings will be held with the Prime Minister and Finance Minister Arun Jaitley before this force gets cracking.
Photographs: Rupak De Chowdhuri/Reuters

Do not worry about the big names, just bring it back, the instruction reads, said an Intelligence Bureau officer.

A couple of meetings will be held with the Prime Minister and Finance Minister Arun Jaitley before this force gets cracking.

Professor R Vaidyanathan of the Indian Institute of Management Bangalore, who was part of a committee constituted to study the issue, said that the job of tracking and bringing back the black money is not an easy one.

However, this can be tackled easily if there is a political will, he said.

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The image is used for representational purpose only

Modi's task force to bring back Rs 692,328-crore black money!

Image: A cashier counts currency notes at one of Syria's commercial banks in Damascus.
Photographs: Khaled Al Hariri/Reuters

There is a need for the force handling this issue to distinguish between black money obtained through tax evasion and funds linked to smuggling, terrorism or drug peddling.

“I feel there needs to be a joint session of parliament where a resolution is passed stating that funds held abroad by Indian nationals illegally should be brought back”, Vaidyanathan said.

This resolution will give the force more teeth and the task force thereafter can go all out to retrieve the money.

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The image is used for representational purpose only

 

Modi's task force to bring back Rs 692,328-crore black money!

Image: A black market currency trader shows off US and Zimbabwean bank notes in the capital Harare.
Photographs: Reuters

The road ahead

Currently, there are 70 tax havens in the world and the well known ones are Switzerland, Liechtenstein, Luxemburg and Channel Islands.

Money into these tax havens reaches through various ways.

These include under and over-invoicing of exports and imports, kickbacks from defence contracts, hawala, gold and drug smuggling, arms trade etc.

When such transactions are conducted, the money is sent to these tax havens.

An officer with the Financial Intelligence said bringing the black money back would be a difficult job.

People who have kept money in banks abroad are well aware of the legal loopholes and they take full advantage of them.

As Professor Vaidyanathan points out, it would be good if a resolution in Parliament is passed.

This would give the entire probe a great deal of momentum, the officer added.