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The dominating evil of black money
K. SIVANANDA MURTY
In the recent G-20 Summit in April, our Prime Minister Dr. Manmohan Singh urged the G-20 leaders to bring tax havens and non-cooperating jurisdictions under close scrutiny as part of implementing tighter global financial revelations. 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. Black money circulating inside India appears to be no lesser in quantity than its outside component.
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. Black money lends free access to the criminal, anti-national, and anti-social elements, going beyond the control of the laws in place.
Today’s civilised 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 specialised bank without the pain of punishment.
Specialised banks
By making suitable laws these specialised banks may protect the confidentiality of these depositors who are the corporate and the non-corporate private sector. These specialised banks can route the money through the nationalised banks for a low rate of interest into the national economy.
In turn, the specialised bank can pay much lower interest to the depositor as an incentive. The deposited money can go into regular accounts paying the taxes to the government in a period of five years from the date of the deposit by annual instalments.
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 per cent. The lock-in period of the deposit could be 5 years at the end of which the withdrawn amount could go into the purview of the Income Tax department.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 specialised banks would not be permanent in the country. 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 specialised bank would automatically facilitate the elimination of counterfeit money. Unrealistic prices would certainly come down and tax rates can be brought down in the general budget.
A scheme on these lines presented in 2001 did not evoke practical response. An updated scheme with the help of a qualified economist was once again presented recently. Let all thinking citizens pay heed to this scheme.
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