The Modi government has been wishfully chasing the Golden Fleece on black money forever. Unfortunately this obsession has been most unsuccessful. Several attempts at unearthing black stash have come unstuck. Embarrassingly.
Now there is a new twist. An understanding that all money overseas cannot be black money seems to have dawned on the Modi administration. Remember that under the Liberalised remittance scheme, Indians are allowed to remit up to $250,000 individually to buy property etc abroad. Cabinet ministers Arun Jaitley and Piyush Goyal reactions seem to be defensive in nature and lack the aggression the government usually displays on black money.
Having come to power on an anti-corruption plank with the promise to bring back black money lying in numbered Swiss Bank accounts, these statements indicate a climb down. Let us not forget for a moment the BJP election manifesto promise of 2014 when the party promised to bring black money of Indians lying in foreign accounts within first 100 days.
Earnest attempt perhaps were made by Modi government to confiscate unaccounted funds and illicit assets made out of tax evasion that’s lying abroad. But, there’s very little that can be shown in terms of actual numbers.
On the back of it, a Swiss National Bank report suggesting 50 per cent jump in Indians’ deposits in Swiss banks at Rs 7,000 crore has come as an inconvenient truth for the ruling NDA. Massive decline in fresh Indian deposits during last three years has just got reversed. For instance, a 45 per cent drop in deposits made by Indians in Swiss banks at Rs 4,500 crore, was the lowest since 1987.
Offering meek explanations on these fresh deposits seen in 2017 may not help. Actually, Rs 7,000 crore — little over $ one billion in dollar terms — may not be very huge quantitatively.
The very jump in deposits abroad especially in Switzerland has given enough ammunition to opposition Congress for taking on the government. For Arun Jaitley, to claim that not all money lying in foreign banks was not black or illicit may not work. This has always been the case irrespective of $100 billion plus black money claim made by BJP in last Lok Sabha elections.
Second argument that 40 per cent deposits were due to liberalised remittance scheme introduced by then finance minister P Chidambaram also may not stick. If the scheme to allow Indians deposit up to $250,000 annually was faulty, why did the BJP government continue it at all? Were there no deposits into foreign accounts these last three years? Both Jaitley and Goyal will have to come up with a more credible explanation about the 50 per cent jump in Swiss bank deposits by Indians.
Only valuable point made by the ministers was that real time information flow from Swiss authorities would commence in January 2019 and the culprits could not escape the long arm of Indian government for too long.
It may be too late for government to demonstrate the result of its campaign, as it gets ready to wind up its term. Politically also, Swiss authorities information may come handy as the Lok Sabha elections will be round the corner in April 2019.
Whatever may be the outcome of this government’s campaign against black money within and outside the country, not many may willingly accuse Narendra Modi of being party to or lax in its drive against black money. Otherwise, how would one explain the two major campaigns against tax evaders? Why would Modi stake his entire goodwill by demonetizing large currency notes which led to massive demand destruction just when the consumption economy was turning the corner after two successive droughts? Setting up the Special Investigation Team (SIT) against black money under Justice AP Shah was his first cabinet decision in May 2014.
On-going campaign against top officials in different banks that swung sweet heart deals with friendly corporates at a price is an extension of Modi’s project against black money. However, the obsession has hardly paid handsome dividends primarily because of draconian laws and penal provisions which have deterred black stash holders from coming forward both in the overseas and domestic amnesty schemes, once again throwing into stark relief the intellectual bankruptcy regarding such measures.