By Krishna Jha
The spilling over of information, from a major chink in Swiss deposits about the huge illegitimate stash amounting Rs 7,000 crore, has proved to be beginning of a sharp decline in the support base for the ruling regime. The BJP led government had got a massive mandate since it made loud claims to get back the black money from foreign lands and flow it in the bank accounts of people, but now when the reality of black money has come alive, prime minister Narendra Modi has refused to act. His betrayal has led to a downward turn in his vote bank, decisively, as the masses are increasingly getting disillusioned.
The government, in the name of hunting for the black money, took the step of currency scrapping, when it went for demonetizing Rs 500 and Rs 1,000 notes constituting 86 percent of the currency in circulation. However in reality, it was a step towards whitening the black money only as the reports have proved. The notes of Rs 500 and Rs 1,000 denominations poured in from the coffers of BJP big wigs and were converted within the stipulated five days by banks that were under their control. Yet, the amount of domestic black money does not stand anywhere compared to that stashed in foreign banks. The black money within the country is reported to be around Rs 15 lakh crore, a good amount of which could be in the form of assets such as real estate and financial investments. On the other hand, stashed in banks abroad, the amount could be around Rs 65 lakh crore or more.
A mine of gold, kept under layers of secrecy, with no code words to reveal its glitter to the world, in the coffers of the Swiss banks known for their reluctance to share details with authorities of other countries, are exactly the merits for which those keen to stash their dark side earnings, opt for them. The wealth thus safely stored there costs a hefty premium for secrecy, unavailable in most other financial institutions the world over.
The money stashed thus, however does not remain static. Its graph keeps moving, upwards and downwards both, despite the fact that the walls protecting it remain beyond reach. In 2017, the funds stashed reportedly swelled by over 50 percent, the highest ever, up to CHF (Swiss franc) 1.01 billion (Rs 7,000 crore), according to the official data released by Swiss National Bank (SNB), the central banking authority of the Alpine nation. Interestingly, one year back, in 2016, Indian money in Swiss banks fell by 45 percent, a landmark plunge, underlined as lowest ever yearly downward fall, to CHF 676 million (about Rs 4,500 crore). Never ever since 1987, when they had started publicizing their data, it had taken such a steep nose dive, according to the report, though climbing new heights only within a year.
The very quality of impregnability of the stashed wealth, adds a touch of uncertainty to the entire affair. The claim that all the money deposited in Swiss banks is not always black, raises another query. Why run all the way to Switzerland to deposit money when all the facilities are available within the country itself? The reply could be in the available option of secrecy despite the heavy premium.
These are the factors that lead the governments and investigative agencies all over the world to term the wealth stashed thus as ‘suspected black money’ when they refer to various tax havens including Swiss bank deposits.
Meanwhile, as the controversy rises over the Swiss Bank deposit leak, minister without portfolio Arun Jaitley came out with a statement saying that it was not possible to conclude that ‘…Money in Swiss Banks is Black’. Jaitley’s remark came at a time when the Modi government is facing criticism after latest data from the Swiss National Bank showed that money parked by Indians in Swiss banks rose over 50 per cent to Swiss Franc (CHF) 1.01 billion (Rs 7,000 crore) in 2017. But then if Swiss Money is ‘white’, where is ‘Black Money’?
A promise to bring back black money stashed away in foreign banks was a key promise made by PM Modi at election rallies in the run up to the 2014 elections. He had said, “If all the black money from the Swiss banks are brought back, every person will have Rs 15 lakh in his bank account.” But the promise remained as elusive as the black money itself.
The funds, described by SNB as ‘liabilities’ of Swiss banks or ‘amounts due to’ their clients, are the official figures disclosed by the Swiss authorities and do not indicate to the quantum of the much-debated alleged black money held by Indians there.
SNB’s official figures also do not include the money that Indian NRIs or others might have in Swiss banks in the names of entities from different countries. It is also true that Swiss banks are not the only tax havens; there are others like in Singapore, Mauritius and Hong Kong.
In fact there has been leaks through the international media on tax evaders. But, so far as taking steps within the country in locating and acting on black money, very little has been done. There were the Panama Papers, the HSBC list of tax evaders and the more recent Paradise papers. On all of these dark truths, there is a studied silence. Tax evaders in the country continue to rely on tax havens as a better option and Modi government is aware of it.