{"id":3511,"date":"2015-05-13T16:45:16","date_gmt":"2015-05-13T11:15:16","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=3511"},"modified":"2015-05-13T16:45:16","modified_gmt":"2015-05-13T11:15:16","slug":"what-arun-jaitley-did-not-tell-us-about-black-money","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2015\/05\/13\/what-arun-jaitley-did-not-tell-us-about-black-money\/","title":{"rendered":"What Arun Jaitley did not tell us about black money"},"content":{"rendered":"
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\nThe finance minister Arun Jaitley said a few interesting things regarding black money in a <\/span><\/span><\/span>written reply to the Rajya Sabha recently<\/span><\/span><\/a><\/span><\/span><\/span>. \u201c<\/span><\/span><\/span>No black money account details have been provided by Switzerland, UK or Spain,\u201d<\/span><\/span><\/span> Jaitley said.
\nThis isn’t surprising at all given the banking laws in place in these countries. Further, there is an impression that Switzerland is living on the black money that comes into its banks from all over the world. As Cambridge University economist Ha-Joon Chang writes in <\/span><\/span><\/span>Bad Samaritans\u2014The Guilty Secrets of Rich Nations and the Threat To Global Prosperity:<\/i><\/span><\/span><\/span> \u201cSwitzerland is <\/span><\/span><\/span>not <\/i><\/span><\/span><\/span>a country living off black money deposited in its secretive banks…It is, in fact, literally the most industrialized country in the world.\u201d
\nWhat this means is that if a country which is not dependent on black money to run its economy is not ready to share black money account details with us, why would countries which are dependent on black money coming into their economies share any details at all?
\n<\/span><\/span><\/span>There are around 70 tax havens all over the world. And black money that has left Indian shores could have gone to any of these tax havens. An estimate made by the International Monetary Fund suggests that around $18 trillion of wealth lies in international tax havens other than Switzerland and beyond the reach of any tax authorities. Some of this money must have definitely originated in India.<\/span><\/span><\/span> Many of these tax havens are dependent on the black money that comes into their banks. And they have absolutely no incentive in sharing these details with the Indian government.
\nJaitley also told the Rajya Sabha that the previous government had asked three institutes, <\/span><\/span><\/span>the National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM), to make an estimate of the black money within India and that which had left the shores. <\/span><\/span><\/span>\u201c<\/span><\/span><\/span>Reports received from these institutes are under examination of the government,\u201d he told the Rajya Sabha.
\nIn fact, none of these reports are currently in the public domain. Nevertheless, <\/span><\/span><\/span>The Hindu newspaper had accessed the NIPFP report <\/span><\/span><\/a><\/span><\/span><\/span>in August 2014. The NIPFP puts the size of the black money economy at around 75% of the gross domestic product(GDP). This estimate is much bigger than the previous estimates. The last official study for estimating black money had been carried out by NIPFP way back in 1985 on the request of the finance ministry. The study put the size of the black money anywhere between 15-21% of the GDP, as can be seen in the following table.
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