As his government faces criticism over the black money issue, Prime Minister Manmohan Singh says there is a need to create an environment at home where Indians who have stashed illegal money abroad have an “incentive” to bring back the funds.
Dr. Singh made a pitch for this strategy while stating that India is a land of opportunity and that therefore it is no longer necessary for people with surplus money in India to think of greener pastures outside.
“We have to create an environment, in which our people would have, themselves, an incentive to bring back this money at home; that India is a land of opportunity; that, therefore, it is no longer necessary for people with surplus money in India to think of greener pastures outside,” he told reporters in Cannes on Friday evening at the end of the sixth Summit of the Group of 20 leading economies.
Dr. Singh thought this is the only secure, long-term way to create an environment in which the country will discourage the flow of such money to tax havens abroad.
The Prime Minister’s comments came in response to a question on how effective will be the G20 endorsement of India’s call for increased banking transparency in bringing black money back home.
In a major gain for India, the G-20 Summit in its Communiqué asked tax havens to adopt prudential norms for sharing of tax information to check money laundering and funding of terror failing which it threatened action.
The grouping, which accounted for 85 per cent of the world’s output, also warned of action against jurisdiction and entities that will not cooperate in ensuring transparency in tax frauds.
“We underline the importance of comprehensive tax information exchange and encourage work in the Global Forum (of OECD) to define the means to improve it,” the Communiqué said.
Prefacing his reply to the question with “I am no astrologer”, Dr. Singh said India has to operate in a world where things are not entirely to its own liking.
“We are dealing with sovereign countries, and they will cooperate with us only to the extent that their laws permit them to do so. We are trying to negotiate new agreements: information exchange agreements(Tax Information Exchange Agreements), tax agreements(Double Taxation avoidance Agreements). It is a work-in-progress,” he added.
The Prime Minister said he did not know what is the magnitude of the so-called black money lying abroad. Also, he said he really did not know that India had a fool-proof mechanism to ensure that it can bring back this money within a short period of time.
Dr. Singh hailed the Communique saying it endorsed India’s call for increased banking transparency and exchange of information to combat tax fraud and evasion and other illicit flows. “This was an important part of our agenda,” he said.
The Communique’s stand on the issue assumes significance in the context of raging debate in India on the black money stashed away abroad and the government’s attempts to bring it back from tax havens.
The document also called upon the nations to “adhere to the international standards in the tax, prudential and Anti Money Laundering/ Combating the Financing of Terrorism (AML/CFT) areas”.