After a gap of 25 years, the government has set the ball rolling again for estimating black money in India as well as the causes of its generation and has sought proposals from national institutes on the subject.
Finance Minister Pranab Mukherjee has asked four institutes to send their suggestions for undertaking a study to estimate the quantum and nature of unaccounted money in the country.
The National Institute of Public Finance and Policy (NIPFP), the Indian Statistical Institute (ISI), the National Council for Applied Economic Research (NCAER) and the National Institute of Financial Management (NIFM) were told to submit their proposals by the end of this month, a key Finance Ministry official said.
“Such a study would have a duration of one year and also include officials of the Central Board of Direct Taxes (CBDT), Central Board of Excise and Customs (CBEC), Enforcement Directorate and the Department of Economic Affairs, including the Federation of Indian Export Organisations,” he said.
Besides, officials from the Ministry of Home Affairs, Ministry of External Affairs, the Cabinet Secretariat and the Ministry of Statistics and Programme Implementation would also be involved.
The Parliamentary Standing Committee on Finance had earlier mooted the proposal for this kind of study.
The first study on unaccounted money was conducted way back in 1985.
The proposal for the new study assumes importance in the wake of a report by Dev Kar, economist from the US-based Global Financial Integrity, which showed that $ 462 billion (over Rs 20 lakh crore) was drained out of the country between 1948 and 2008.
The report said that nearly 50 per cent of the total illegal outflows have occurred since 1991 and around a third of the money exited the country between 2000 and 2008.
The official said, however, that there was no connection between the report and the proposal for the study.
He said the study would analyse both, black money generated in India as well as parked outside.
“The survey will try to find details like the amount of unaccounted money in India and whether it leads to money laundering inside and outside the country,” the official said.
The study will identify main sectors in the economy where unaccounted money is generated and threat to national security from such a situation.
It will also examine methods used for generating unaccounted money and “its conversion and recycling in the mainstream economy”, the official added.
“The study will also be asked to suggest ways and means for detecting unaccounted money and devising ways for taxing it,” the Finance Ministry official said.
If sanctioned, this will be the second study of its kind.
The first study on unaccounted money was conducted way back in 1985. In it, the NIPFP had put the estimate of black money amount between Rs 31,584 crore and Rs 36,786 crore, in 1983-84, which was 16.53 per cent of the Indian economy then.
As such, the actual amount of black money, after liberalisation, may well be captured by the proposed study.
The new study will also assume importance, since India’s economy has grown about 31 times to Rs 6,231,171 crore during 2009-10, against Rs 222,485 crore during 1983-84, for which the first study was conducted.