Methods for Curbing Black Money Menace

Methods for Curbing Black Money Menace

Question: Black money is a drain for the economic growth and development of the country. Discuss what methods should be adopted to combat this economic evil?

• Black money is a distortion of priorities in investment as acquisition of luxury goods with black money fields higher rate of return on investment

• Forward trading in agricultural commodities by speculators leads to price fluctuations and hoarding of agricultural products

• Generating black money sub-optimises public sector infrastructural products through tender manipulation

Methods to Combat Black Money

• First, the CBI/ED should register an FIR on receipt of information of illegal accounts via intelligence sources and obtain a letter of request under CPC from the court

• Agency can then seek Swiss cooperation through Law On International Judicial Assistance in Criminal Matters

• Second method is through German or French method of obtaining records of certain banks whereby monetary inducements are used to recover the wealth

• The third method is the US method whereby senior bank officials of Union Bank of Switzerland and Credit Suisse were arrested to get Swiss authorities to cooperate and reveal names of US citizens hoarding ill gotten wealth

• Fourth method involves invocation of the Resolution of the UN Convention against Corruption, adopted by the UNGA in 2005 and ratified by India in 2011

• This needs the Parliamentary law or ordinance to nationalise bank accounts of Indian citizens in the 90 nations where black money is hidden, and bilateral discussions with each of these countries provides further details of bank accounts hoarding the cash

• SIT should also obtain a report from the Financial Intelligence Unit of the Indian government on what is done regarding suspicious transactions reported by banks

Facts and Stats

• An estimated INR 120 lakh crore is stashed as black money abroad

• Amount is estimated to be 60 times the annual revenue from income tax within the Union Budget

• Black money hoarding is a systemic crime for denying financial system the proceeds of wealth

• Black money bill seeks to recover illicit wealth stashed in over 90 countries