Days after India’s supreme court expressed alarm at the illicit flow of wealth to foreign countries, the Indian government says it is taking steps to stop the illegal transfer of money to foreign banks. Private businesses and corrupt politicians are believed to have siphoned off billions of dollars.
Finance Minister Pranab Mukherjee said Tuesday the government is tightening regulations and negotiating tax pacts with foreign countries to track money parked by rich Indians and companies in tax havens.
He says the government has detected tax evasion worth $ 3.3 billion in the past 18 months.
The government’s statement came after the supreme court said that illegal money stashed overseas was a mind boggling crime and amounted to "pure and simple theft of national wealth." The court’s observation was made in response to a petition which has charged the government with inaction in stemming the flow of illegal money overseas.
Finance Minister Mukherjee says the government has nothing to hide.
"Like any well intentioned persons of society, government is equally interested in unearthing the black money, bringing the money to the country, if possible, as and when possible, and at the same time to take steps to plug the loopholes through which these evasions have taken place," he said.
The minister says there are no reliable estimates of money illegally funneled overseas, but it is thought to be between $500 billion and $1.4 trillion. A study by U.S.-based Global Financial Integrity recently estimated that $460 billion had been taken overseas in the past six decades. The study blamed tax evasion by private businessmen and corrupt politicians for the illicit transfers.
The government has been under pressure to name those guilty. But it has refused to disclose the identity of 26 Indians who allegedly hold secret bank accounts and whose names were recently handed over by the German government to Indian authorities.
Mukherjee cited a confidentiality clause to explain why the government could not do so.
"Today if I divulge the secrecy, day after tomorrow the other countries will not give us information," he said. "They will raise accusing fingers against us that you do not meet international commitment."
But the government’s clarifications did not satisfy the opposition Bharatiya Janata Party. A BJP spokesman, Ravi Shankar Prasad, charged the government with being vague about the measures being taken on crack down on illegal wealth amassed in foreign banks.
"The country wants meaningful action and not evasive replies," said Prasad.
The government has been under pressure to address issues of illegal wealth and crack down on graft after a series of corruption scandals were exposed in recent months.