The steps taken to eliminate domestic black money should be such that they do not impact the economy, R. Vaidyanathan, retired professor of Finance at IIM, Bangalore, said.
His book ‘Black Money and Tax Havens’ was launched on Friday at an event organised by Chennai International Centre.
The book was released by R. Thyagarajan, chairman, Shriram Group of Companies, and the first copy was received by S. Gurumurthy, Editor, Thuglak .
“Black money accounts for 2% of our GDP and we need to be cautious while taking steps to curb black money. Though it is not a healthy thing, it should be seen to that these measures don’t impact the economy,” Mr. Vaidyanathan said.
Simple definition
“Many people argue black money is that which is not taxed and that [which] has escaped the tax net. It is a simple definition applicable to most of the countries, but not to India. Because by law, we don’t tax agriculture. Roughly, 18% of our GDP comes from agriculture. So 18% is outside the tax net”.
There was a large of amount of income generated not liable to be taxed. So that could not be termed as black money, Mr. Vaidyanathan, currently Cho S. Ramaswamy Chair Professor of Public Policy at SASTRA University, said.
He pointed out that corruption led to black money, but not all black money was due to corruption.
The professor further said that people thought a lot of black money was stored in the form of land and gold. However, even if that conversion took place, the counter party would have the cash and that way cash would never be extinguished, he said.
Later, in a conversation with Raghuvir Srinivasan, Senior Associate Editor, Business Line , Mr. Vaidyanathan said taxing rich farmers could be attempted, but it needed political will.
