Bringing back black money

On his first day as PM, Modi set up the SIT to go after black money. But after this, things seem to have slipped back

How much black money have Indians stashed abroad? The truth is nobody really knows. An estimate in 2011 of $80 billion was questioned by Manmohan Singh, who said it was excessive. The highest body of India’s chambers of commerce, Assocham, says the black money figure was $2 trillion, meaning more than India’s GDP.

The columnist Swaminathan Aiyar says it is unlikely the number is significant because interest rates are much lower in Switzerland than in India and it makes no economic sense for people to send their money abroad.

There is confusion even over the primary understanding of what exactly black money is. Black money is that on which income tax is not paid. By this definition, a very large proportion, and perhaps, even the majority, of adult Indians has black money. However, many believe, because of the Bharatiya Janata Party’s (BJP) promises and allegations against the Gandhi family, that ‘black money’ is the sum collected as bribes here and sent abroad. And so, wild political claims, some guesswork, and a reckless media have made Indians angry on the issue. It was picked up by the BJP, first by L K Advani and then by Narendra Modi. In the BJP view, black money was a problem that was linked to corruption and something that could be solved easily with a change in government.

During his campaign, Modi made this claim, which can be seen on his YouTube channel, uploaded on January 9 this year. At a rally Modi says: “Ek baar yeh jo chor-looteron ke paise videshi bankon mein jama hai na, utne bhi ham le aaye na, Hindustan ke ek ek gharib aadmi ko muft main 15-20 lakh rupaiye yoon hin mil jayega. Itne rupaiye hain. Yeh hamare MP sahab keh rahe the railway line. Yeh kala dhan vapas aa jaye jahan chaho wahan railway kar sakte ho. Yeh loot chalai hai. Aur besharam ho kar ke kehte hain. Sarkar aap chalate ho aur poochte Modi ko ho — ke ‘kaise layein?’ Jis din Bharatiya Janata Party ko mauka milega, ek ek pai Hindustan ki vapas lai jayegi. Aur Hindustan ke gharibon ke liye kaam lai jayegi.”

(Once the money these crooks have deposited in foreign banks is brought back, every poor Indian will get Rs15 lakh to 20 lakh. There’s so much of it. Our MP was talking about the railway line. If this black money is brought back, we can build railway lines wherever we want. They’ve allowed loot, and now shamelessly ask — they run the government but want answers from Modi — that ‘how should we bring it back?’ The day the BJP gets a chance, every paisa will be brought back and put to use for India’s poor.)

His claims on both the figure and on bringing it back should have been challenged by the media, but in that magical campaign, facts were swept away.

The BJP has got its chance from the people as Modi asked, but has not been able to bring dramatic change. On his first day as prime minister, Modi set up the Special Investigation Team (SIT) to go after black money. But after this, things seem to have slipped back to the old ways, according even to people inside the BJP, like Subramaniam Swamy and Ram Jethmalani (neither of whom, admittedly, comes across as being particularly balanced).

The SIT has been working on a list of people holding accounts abroad, which India received under the Congress government. The list has a few hundred people, but half of them are thought to hold accounts legitimately (as non-resident Indians). In April, the government released 18 names of people holding illegal accounts (of whom 15 were Gujaratis).

Under pressure from the Supreme Court, which is active on the issue, three more names have been made public as those against whom action is being taken. However, all three have disputed the allegations and none of them is particularly wealthy. It has not been said how much money they have kept and how much the government will recover.

It is becoming clear that the government is slowly detaching itself from its earlier promises of recovering and redistributing lacs. My prediction is that television channels, which were reckless in promoting claims and made people angry, have become frustrated and will turn on Modi when it becomes clear that he promised something he cannot deliver.

Published in The Express Tribune, November 2^nd, 2014.

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