The amount of black money stashed abroad could be anywhere between $3.6 billion to $490 billion, three government reports stated, giving such a wide range that the government concluded it was not possible to measure the amount precisely.
The reports also said the black money estimates could well be the tip of the proverbial iceberg because the larger part of the unaccounted wealth is held within the country.The reports, submitted to the Union finance ministry in July and August 2014, are the latest estimates of black money and are believed to have provided critical inputs to the Narendra Modi government before it took the decision to invalidate all old high value currency notes on November 8, 2016.
The previous United Progressive Alliance (UPA) government asked three institutions, the National Institute of Public Finance and Policy (NIPFP), National Council for Applied Economic Research (NCAER), and the National Institute of Financial Management (NIFM), to conduct studies to “assess unaccounted income both inside and outside the country”.
With the three reporting wide variations, the government concluded that “the unaccounted income and wealth inside and outside the country do not appear amenable to credible estimation in the context of India.”
Or put simply: there is a lot of black money, but it isn’t really possible to measure it accurately.
A government note added: “It does not appear feasible to compare the estimates of unaccounted income and wealth outside the country, arrived at by these institutes through different methods, and different time periods taken by them leading to estimates at considerable variance.”
Combating the menace of black money has been a major political plank of the ruling Bharatiya Janata Party (BJP)-led National Democratic Alliance. As part of its 2014 campaign, the party promised to bring back black money held abroad. Soon after coming to power, the Modi government formed a Special Investigation Team to look into the issue. The government also entered into several agreements with other countries to stop the flow of unaccounted wealth even as the Opposition regularly reminded the BJP of its poll promise of bringing back the unaccounted wealth.
The NCAER said in its report that the quantum of black money outside India could be between $384 billion and $490 billion between 1980 and 2010. The report added that there was a “declining trend” in the 1990s and that the quantum bottomed out around 1998 but witnessed an “increasing trend thereafter”.
NIFM, an autonomous body under the finance ministry, said in its report: “Results of estimation suggest that total illicit outflow at present value [including opportunity cost] from India in the reform period [1990-2008] is ~941,837 crore ($216.48 billion).”
The NIPFP’s report, submitted in December 2013, didn’t give any specific value of black money but pegged it at 0.2% to 7.4% of India’s Gross Domestic Product (GDP). That translates to between $3.6 billion and $133.2 billion at the then prevailing exchange rates.
According to the NIFM and NCAER reports, illicit wealth stashed abroad is in the range of just 2.8% to 10% of the total black money generated in India. NCAER added, “It appears that a greater proportion of the concealed wealth is lying within the domestic economy and only a small fraction is outside the country.”
Lawmakers such as Biju Janata Dal’s Bhartruhari Mahtab and Trinamool Congress’s Saugata Ray have demanded that the three reports be made public, while the ministry maintained that a copy of those reports are with the chairman of the standing committee on finance, Congress leader Veerappa Moily.
Mahtab has also demanded that the finance panel prepare a report on the issue of black money and submit it before the 16th Lok Sabha ends in June. On Thursday, the issue was again debated at a meeting of the finance panel. Some BJP members, however, expressed reservation about the utility of any report prepared by the panel as no more sessions are left in the ongoing Lok Sabha.
But Moily, sources added, finally asked the revenue secretary Ajay Bhushan Pandey to release the report. “The panel has also decided to bring its own report on black money based on these three findings,” said a lawmaker.