The problem of ‘black money’ has plagued India for a while and has become a major political issue in the recent past. In this brief piece, we examine the measures the Government of India (GOI) seeks to implement to address this problem and how this fits into a larger and a more global problem of tax evasion. To those unaware with the concept of black money, ‘black money’ essentially refers to undisclosed funds and monies, on which income and other taxes have not been paid. There are also additional concerns on the acquisition of such funds and the underlying activities through which such funds may have been realised. Recent reports have thrown up astronomical figures to quantify India’s ‘black money’ economy but even on a conservative estimate, one could peg this at INR. 28 Trillion (approximately USD 40 billion), a staggering 30% of India’s gross domestic product.
Most of India’s black money is concealed in offshore jurisdictions and may have been typically exported in violation of India’s foreign exchange control regime. The Swiss National Bank estimates that in Swiss banks alone, deposits by Indian citizens aggregated to INR. 92.95 Billion (over a billion USD) by the end of end of 2010.