$1.87 trillion. That is the value of India’s GDP from the last fiscal year. In comparison, $1.34 trillion is the amount of money that Indians have allegedly stored overseas in Swiss bank accounts in order to avoid paying taxes, dubbed by the government as “black money.”
Up until now, that reported $1.34 trillion seemed practically unreachable due to legal barriers and a lack of effort from politicians in power. However, with the recent election of Prime Minister Narendra Modi, the search for Indians’ hidden funds seems to have taken a new direction.
Last month, in one of the largest democratic elections ever recorded, India elected Modi, the former chief minister of the Gujarat state, as their new prime minister and his Bharatiya Janata Party (BJP) as their ruling party. With the BJP’s overall domination in these elections and combined with a populous that is starving for change, Modi is expected to bring the spark that India has been searching for as they strive to become a more developed country.
Modi began this campaign less than 24 hours after being elected, when he announced that he would create a special commission tasked with the location and retrieval of India’s infamous black money.
Since about two-thirds of India’s GDP rely solely on cash, black money has been a commonly overlooked issue in India. But Modi has vowed to locate these hidden funds and use them to revitalize their developing economy. As of June 30, he had already made a request to certain banks in Switzerland (where the money is believed to be held in) asking for specific bank details and names of Indians who have unaccounted money stored in their facilities.
According to Arun Kumar, author of ‘The Black Economy in India,’ the investigation will “send out a loud and clear signal to all tax evaders.”
Many, like Sukant Singh from OneIndia News, believe that once the black money is found it will help revitalize the Indian economy. Singh points towards India’s massive foreign debt which is leading to high fiscal deficit in the country. According to Singh, if the black money was recovered, all of India’s foreign debt could be repaid within 24 hours.
But for some, Modi's moves are not enough. Blogger Shrinidhi Hande criticized all the hype instead of actual action:
Why give so much publicity to the issue and so little action? Is it not possible to send an envoy to Switzerland, make the Swiss Bankers pull out the list from their computers, simultaneously raid those people back in India, freeze their accounts and seize their properly till further investigation? Is it not the right way to act? Of course Swiss bankers may not be willing to comply- but with some diplomatic and international pressure, it is very much possible.
Soutik Biswas, a blogger affiliated with BBC News, feels that the cause of the lack of action on the issue stems from the politicians themselves and their corrupt policies:
[The government] also talks about a new amnesty scheme for ‘black money,’ which is really a slap in the face of the honest tax payer. Since independence, the government has offered ‘voluntary disclosure schemes’ six times, most recently in 1997. Less than $1bn was declared, which most experts believe was a fraction of the black money in the market at that time. India’s autonomous federal auditors once remarked that the disclosure schemes encourage people to become “habitual tax offenders”, knowing full well that they can hoard money without paying income taxes.
However, some people such as Chandrahas Choudhury from Bloomberg View believe that Modi is embarking on a pointless search which will not end in the “fairy tale” fashion that Choudhury believes many Indians are holding out for.
Choudhury dispelled the popular assumption that recovery these funds could be the key to ending all of India’s problems as they would be considered a national asset and would go straight into the hands of the state. He pointed to a recent report that cited that Indians held no more than $2 billion in the Swiss banking system: a fraction of the original estimate.
The widely debated issue of the hunt for the black money funds has been become even more intense in the past few weeks. The issue has not only been debated on various news outlets, but also within social media as well. There are many Indians who are not only curious as to how the hunt will end, but where the money is actually being held to begin with.
A public policy commenter tweeted:
This bringing black money from foreign banks is a wild goose chase. Focus on measures tht ensure no new creation of black money; stamp duty?
— हम भारत के लोग (@India_Policy) July 8, 2014
Sameer Bhagat, a member of the Indian National Congress, believes that the black money that India is searching for is actually hiding in plain sight:
— Sameer Bhagat (@iSameerBhagat) July 7, 2014
Others, such as Amrita Dasgupta, a resident of Varanasi and Delhi, are seeking answers from the politicians who are directly involved in the investigation:
— Amrita Dasgupta (@amritdasgupta) July 7, 2014
While it is unclear how the hunt for black money will end, the idea of finding $1.34 trillion in hidden funds has definitely caught the attention of many. For the Indians who may have black money stored overseas themselves, they will have to wait and see how the money ends up getting used by the government. Until then, most Indians can only speculate if the new prime minister will follow through on his promise and find the black money that has been haunting India for far too long.