Unearthing Black Money: Fact Checking NDA & UPA's Claims

Modi's surgical strike on black money

PM Narendra Modi’s announcement of demonetisation of Rs. 500 and Rs. 1000 may or may not immediately solve the issue of black money, but it has united the opposition for sure. Though they could not get hold of the PM in the parliament, they have constantly attacked demonetisation, calling it a great inconvenience for the citizens with low results in bringing actual black money hoarders in the tax net.

And not to be left behind, the Congress has been leading the charge both inside and outside the Parliament, calling demonetisation anti-people. Congress leader Jairam Ramesh took exception to Prime Minister Modi’s statements that the NDA has managed to unearth Rs 1.25 lakh crore of black money in 2.5 years.

Nearly 1 lakh 25 thousand crore of black money brought into the open in the last 2.5 years through such efforts. #IndiaFightsCorruption pic.twitter.com/McCEmBVJEa

— BJP (@BJP4India) November 8, 2016

Ramesh claims that there is nothing spectacular about NDA government’s work as the UPA had also unearthed Rs 1.33 lakh cr in the last two years of its governance without taking steps like demonetisation. For a party that lost power at the centre due to serious allegations of corruption like the 2G scam, coal scam, claims of having acted against black money sounds hollow until it is fact checked.

So is this indeed true? Let’s take a look at what government sources reveal:

Black money unearthed by UPA between 2012 – 2014 :

Source : Lok Sabha Unstarred Question 1961, dated 31.07. 2015

Note: Not all undisclosed income is black money. Calculations above are in accordance with government figures and claims.

So, in total UPA can claim to have unearthed Rs 1.32 lakh crore of black money in the last two years of its governance. For a change, UPA has got its claim right.

In contrast, when we look at what the NDA government has done over the last 2.5 years, the track record is not too bad. The Ministry of Finance answers a question regarding black money in the Lok Sabha on November 18, 2016 and gives us the updated amount of black money unearthed by the NDA government.

Black money unearthed by NDA between 2014 - 2016 :

Source : Lok Sabha Unstarred Question 559, dated 18.11. 2016

Note: Not all undisclosed income is black money. Calculations above are in accordance with government figures and claims.

Which means both Prime Minister Modi and the Congress party are correct when they say they have acted against black money. The only difference being that the UPA failed to highlight their work since they were under the cloud of corruption while the NDA government under Narendra Modi has succeeded in connecting with the electorate that they have indeed worked against black money better than the previous governments.

But having said that, Ramesh probably needs to answer why the Congress led UPA’s track record was patchy in the preceding years with published records showing less than Rs 50,000 cr being unearthed between 2009 to 2012. Its only in the run-up to the 2014 national elections that the previous government seem to have gone on an overdrive against black money.

But going by absolute numbers, does this mean that the NDA government has done nothing extraordinary? A look at the steps taken by the NDA reveal that following steps have been taken since 2014 which is likely to yield results in the coming years

Steps taken by NDA as per Lok Sabha Question on November 18^th, 2016

• Enactment of ‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ to detect and tackle money stashed abroad in tax havens. This provided a one-time compliance window up to September 30^th, 2015 and led to the disclosure of Rs. 4,164 Crore

• Setting up of an Special Investigation Team (SIT) on black money under two retired Supreme court judges

• Investigation of Panama leak papers by a team that included members from RBI, CBDT, Enforcement Directorate and Financial Intelligence Unit.

• Signing and renegotiations of DTAAs and TIEAs. Under NDA, the total number of DTAAs rose to 94 vs. 84 (UPA) with an on-going process of negotiations to facilitate exchange of information

• Joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA)

• Enabling attachment and confiscation of property equivalent in value held within the country where the property/proceeds of crime is taken or held outside the country by amending the Prevention of Money-laundering Act, 2002 through the Finance Act, 2015

• Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to enable confiscation of Benami property and provide for prosecution

• Initiation of the information technology of the Income Tax Department for non-intrusive information driven approach for improving tax compliance and effective utilization of available information.

An analysis of the track records of both the governments as portrayed by them shows that the UPA government did set the foundation, while NDA took it forward and focused on strict implementation of the policies. However even as politicians continue their game of one-upmanship, there is still a lot left to be done. According to various estimates, black money stashed outside India since independence ranges anywhere from $500 bn to $1 trillion. This means that collectively, both NDA and UPA have only managed to scratch the surface with enough left to be still unearthed and brought back to the country.