Recently in the G-20 Summit in April 2009 , our Prime Minister Dr.
Manmohan Singh urged the G-20 leaders to bring down the so called tax
havens and non-cooperating jurisdictions under close scrutiny as part
of implementing a strict & tighter global financial
revelations. The hitherto unheard of price of one lakh rupees a square
yard in a metropolitan house-site by the side of the unaffordability of
an apartment by the middle class, threatens us today with dire
socio-political consequences any day. Black-money and corruption that
can spread into the hitherto respected institutions like the judiciary,
the army and the bureaucracy in India may, one day, by moral
degradation lead to a failed state. This black-money lends free access
to the criminal, anti-national, and anti-social elements going beyond
the control of the laws in place.
What is surprising is that our Prime Minister has made no
mention of the black-money circulating inside India. This should have
been mentioned as the first problem to be tackled as this inside money
appears to be no lesser in quantity than its outside component. All the
evil criminal politics, corrupted election that makes a mockery of
democracy, the irreconcilable hiatus between the life-style of the rich
and the middle class and the poor, are all traceable to the
unprecedented quantity of black-money circulating in our country.What
is meant is the world’s unaccounted black – money in havens like the
Swiss Banks has to be brought under scrutiny. In the case of India,
recent estimates of such Indian money outside India reached 7.5 million
crores. Laying our hands on this money is not in the power of the
Indian government at the moment.
Today, we have three eminent economists at the helm of
affairs in our country and our Prime Minister is one of them.
Strangely, he touched upon this problem towards the end of the present
government’s term instead of at its beginning. Feigning ignorance of
this dominating evil is dangerous.
Today’s civilized world has accepted the phenomenon of hiding
money in Swiss banks as not illegal, obviously because the cream of
society in the world owns that money. If that is so, we have no other
way than adopting the same or similar method of inviting the
black-money in India into a specialized bank without pain of punishment
and then adopt ways of channelising it into the country’s accounted
money by taxing it in phases. By making suitable laws these specialized
banks may protect the confidentiality of these depositors who are the
corporate and the non-corporate private sector. These specialized banks
can route the money through the nationalized banks for a low rate of
interest into the national economy. In turn, the specialized bank can
pay much lower interest to the depositor as an incentive. The deposited
money can go into the regular accounts paying the taxes to the
government in a period of five years from the date of the deposit by
annual installments. The tax collected in the process enriches the
country’s Budget, providing enough funds for development and productive
planning. The taxation for the revealed deposits could be as high as
25%. The lock-in period of the deposit could be 5years at the end of
which the withdrawn amount could go into the purview of the Income Tax
department. Even the depositor would take loan in the meanwhile for a
higher rate of interest for an industry etc. These specialized banks
would not be permanent in the country, but can function for a time
horizon, fifteen years at the most.
By providing a safe, painless and attractive incentive, we will
obviously ease the inflow of the Indian money into India from outside
havens like Swiss banks.
The physical receipt of cash by the specialized bank would
automatically facilitate the elimination of counterfeit money.
Unrealistic prices would certainly come down. The tax rates can be
brought down in the general Budget.
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