All the unaccounted funds on which no tax is paid is referred to as black money. In India, this concealment of unaccounted money or Black Money is becoming a popular trend. All the criminals, tax evaders, smugglers, hoarders and many other anti-social groups who are not scared of being punished inhibits black money. However, the total amount of black money in India is unknown but some reports claim that India has US$100.6 trillion is illegally held in Switzerland. According to a report in 2018, the amount of Indian black money held in a Swiss bank is US$1500 billion or 90 lakh crores.
This rising issue is caused because no strict laws are made and no serious punishments are given to the offenders. A huge amount of money is given to the higher authorities as a bribe to hide their corrupt activities. The offenders who commit this serious offend are none other than Indian politicians, cricketers, celebrities, and businesspersons. Countries like Singapore, Hong Kong, and UAE are tax havened where all the exports are done on under-invoicing and imports done on over-invoicing. This common practice of tax mispricing helps the exporters and importers to earn a handsome amount of money.
Another way in which black is money is whitewashed is through the practice of round-tripping. This action involves the money getting out of India and sending it to places like Mauritius and Singapore all dressed up to look like a foreign capital but returns back in the face of profits. Investment in the Indian Stock market and Overseas Derivative Instruments is another factor that helps in converting the black money into white money. The most famous way is the gold smuggling, which is an official channel that runs the exchange of black into white.
According to the reports of 2011, the highest depositors of illegal money in Swiss Bank are Indians. An estimate of $500 billion is claimed to be kept illegally in Switzerland especially by the Indian ministers.
A new report came in 2015, which released the names of 1195 Indians who held their balances in HSBC’s Geneva branch and some media reports claimed that HSBC helped their clients in invading taxes. 2016, Panama Papers leak is the biggest information on Black money in Indian history. The list included the names of 500 Indians who flouted rules and regulations. The famous names amongst them were Amitabh Bachchan, Aishwarya Rai, K.P Singh, and Niira Radia.
To tackle this issue of black money, the BJP held it as their manifesto. The speeches of Narendra Modi had all kinds of promises to bring back the black money to India and deposit 15 lakhs into the account of every poor farmer. To cure this disease, on 8th November, Modi is his sudden address to the nation about the demonization of Rs.500 and Rs.1000 notes. This decision was taken to crack down the black money and rising corruption that is responsible to destroy India. However, banks and citizens of India were not adequately prepared to face this problem. As a result, Indians are still facing many issues including the currency shortage.
Apart from demonetization, many other measures have been followed. Economic liberalization in which the license for economic activities would be easier to obtain than before. Earlier, obtaining this license took plenty of time and to overcome this issue many bribed the authorities or used the illegal ways of carrying out their economic activities.
Moreover, many Indians hold US dollars in the form of black currency. This resulted in the deprivation of INR against Dollar. Thus, the government has tightened the laws against those who are holding foreign currency.
Along with this measure, many reports suggested that public awareness initiatives should be launched. Support of the public for reforms and policies regulations would help in succumbing the black money from the society.