Government suggests four pronged strategy to curb black money

White Paper suggests four pronged strategy to curb black money

The government tabled a White Paper on black money in Parliament as promised by the Finance Minister at the beginning of the Budget session. Tabled by Finance Minister Pranab Mukherjee in the Lok Sabha,the White Paper, made a strong case for setting up Lokpal and Lokayuktas to deal with the menace.

The minister categorically informed the House that there was no exact estimation of the black money generated in the country but refuted the reports that Indians held the largest deposits in Swiss banks by providing data.

The Government in the White Paper also stressed the need for more research to arrive at reliable estimates of extent of black money and sought the cooperation of the state governments too in addressing the problem. The 97-page document, however, pitched for fast-track courts to expeditiously deal with financial offences and deterrent punishment for offenders.

It has also suggested tax incentives for encouraging use of debit and credit cards as these leave audit trails. On the possibility of any tax immunity scheme, especially gold deposit scheme, to deal with black money, it said, the issue of complete tax immunity needs to be examined in the light of other policy objectives.

The Paper suggested four-pronged strategy to curb generation of black money. These include more incentives for voluntary compliance of tax laws, reforms in vulnerable sectors of economy and creation credible deterrence. It mentioned that reform of financial and real estate sectors would help in reducing generation of black money in long term as freeing of gold imports had helped in checking smuggling.

In order to curb black money in the real estate sector, which accounts for 11 per cent of GDP, the Paper suggested that government should develop a nationwide data base, introduce TDS on sale of property and set up electronic payment system.

The document seeks to dispel the impression that government was not doing enough to deal with black money and talks about various policy options and strategies it has been pursuing to address the issue of corruption in public life. In order to check the menace of black money, Mr.Mukherjee in his foreword to the Paper said, the government has brought five bills the Lokpal Bill, the Judicial Accountability Bill, the Whistle Blowers Bill, the Grievance Redressal Bill and the Public Procurement Bill, which are at various stages of consideration by Parliament.

He said the expansion of information exchange network at the international level will help in curbing cross-border flow of illicit wealth, adding while these measures will set the tone for an equitable, transparent and a more efficient economy, there is much that we could do, both individually and collectively, to strengthen the moral fibre of the society.