Dinesh Kamath's Editorial 'Is the govt really serious about unearthing black money?' that was published in Newsband

Is the govt really serious about unearthing black money?

Narendra Modi’s government has appointed a Special Investigation Team (SIT) to unearth black money stashed away in tax havens abroad. The previous government was not serious about retrieving ill-gotten wealth deposited abroad.

SIT’s primary responsibilities include the investigation and prosecution of cases involving unaccounted money. It should be borne in mind that a significant chunk of the illicit assets stashed abroad may already have been laundered and round-tripped back to India as legitimate money. In some cases though the corrupt official/politician moves to a foreign destination to reside - London being a preferred one - but in other cases, the corrupt individual chooses to remain and use it in India, after the laundering.

Government of India needs unaccounted money. SIT should find out any unaccounted money and government should immediately bring them and put it in National development fund for creating infrastructure of roads, waterways, railways, ports, dams, canals, hydroelectric power plants, atomic power plants that will lead to prosperity of the country.

SITs of various stripes have come and gone but have little lasting effect to show. SITs and commissions are made after every riot, every incident that captures the public imagination and every scandal. And in the context of confiscation of black money, when politicians constitute a committee to enquire into stolen assets, that is akin to asking the fox to look after the chickens.

Indeed it is bold step towards bringing black money to India. There are enormous hurdles underneath. At the outset, SIT must come to know about places and sectors where black money is invested in foreign country. It is very difficult task to achieve. It has to get the cooperation of foreign countries in revealing the registered bank accounts.

This could be a futile endeavour done merely to convince a gullible public that something is being done to recover black money. Going by the experience of other countries which have tried to recover illicit assets, the cost of trying to recover these assets will often be a lot more than the value of the assets recovered. Few depositors deposit in their own names but rely instead on a complex web of offshore companies and untraceable nominees behind which they hide their assets. Tracing these assets, freezing them, confiscating and then repatriating them back to India will entail significant costs and need an honest, skilled and competent bureaucracy to do so. Whether such a bureaucracy exists in India is one question. But a more relevant question is whether black money, the very oxygen of Indian politicians will be allowed by politicians and their crony capitalist backers to be recovered.

Thus it is not clear whether the government, by appointing SIT, is really serious about unearthing black money.