This report on black money was ready by December 2014 but its existence has been kept under wraps.
A secret study commissioned by the finance ministry concluded in 2014 that between 90 to 97 per cent of unaccounted wealth, or black money, was lying within India and not outside. This report, according to sources, was among the inputs that likely prompted the Narenadra Modi government to go ahead with its November 2016 decision of invalidating, or ‘demonetising’, around 85 per cent the currency in circulation.
On November 8, 2016, night when PM Modi delivered the shock demonetisation announcement, he had said that the move would help weed out black money.
India Today TV has accessed this “secret” government report, which is actually an assimilation of studies conducted by three premier economic institutes. This report on black money was ready by December 2014 but its existence has been kept under wraps.
The three institutes that form part of this black money report differed in their assessments and top officials warned that the findings were inconclusive. However, the report has startling details.
Sample this: The National Institute for Public Finance and Policy (NIPFP) — one of the three institutes whose findings are part of the report — concluded that between 1997 and 2009 the flow of illicit money out of the country was between 0.2 per cent to 7.4 per cent of India’s Goss Domestic Product (GDP).
The second institute — the National Council Applied Economic Research (NCAER) — concluded that the total amount of illicit wealth, or black money, accumulated outside India between the years of 1980 and 2010 was in the range of $384 billion (approximately Rs 27 lakh crore at today’s exchange rate) to $490 billion.
These notes no longer exist. The old Rs 500 banknotes were invalidated during the demonetisation exercise, which the government said would weed out black money (Reuters photo)
The NCAER also concluded that capital outflows (stock) are taken into account then the total amount of black money lying outside was an estimated $498 billion, which would be 2.8 per cent of the GDP.
On the other hand, the institute — National Institute of Financial Management (NIFM) — estimated that the total outflow of black money between 1990 and 2008 was Rs 9,41,837 crore, or $217 billion. The NIFM’s estimation was based on current values.
So in short, the three institutes whose finding are part of the secret government report on black money arrived at different conclusions:
- The National Institute for Public Finance and Policy gave a wide range for how much black money was present outside India: 02 to 7.4 per cent of the GDP
- The National Council Applied Economic Research concluded that illicit money amounting to 2.8 per cent of the GDP was lying outside India
- Meanwhile, the National Institute of Financial Management said that the black money lying outside India amounted to 10 per cent of the Indian economy
However, the institutes were unanimous in concluding that the proportion of black money lying within India was much higher than what was present outside. The secret government report estimated that up to 97 per cent of the total black money was within India.
REPORT KEPT SECRET FOR FOUR YEARS
This secret report was the result of a study that was undertaken between 2011 and 2014.
In 2009, the parliamentary standing committee on finance had observed that it had “become imperative that ministry of finance conducts a thorough assessment/survey of unaccounted income/wealth… Particularly bringing out the nature of activities engendering money laundering both inside and outside India.”
A year later, then finance minister Pranab Mukherjee gave an in-principle approval for the study on October 28, 2010. However, the issue dragged on till 2011.
Finally, on March 21, 2011 the finance ministry roped in the National Institute for Public Finance and Policy, the National Council Applied Economic Research and the the National Institute of Financial Management and signed agreements with them to carry out the studies.
The three institutes submitted their findings in December 2013, July 2014 and August 2014, respectively. The final report was prepared in December 2014.
WHY THE REPORT IS IN FOCUS NOW
In 2017, after the shock 2016 demonetisation exercise (which may have been promoted by this report, among other factors) the standing committee on finance quizzed the finance ministry about the report.
The report was finally sent to the Lok Sabha Secretariat and then to the standing committee on finance on July 25, 2017. Since then, the report has been with the head of the standing committee, M Veerappa Moily.
During the just-concluded Parliament Budget session, Biju Janata Dal MP Bhartruhari Mahtab and Baratiya Janata Party MP Nishikant Dubey raised the issue of this ‘secret report’ in lok Sabha and demanded that the report should be made public.
Finally, on Thursday (today) the chairman of the standing committee on finance, Moily, called a meeting to discuss the fate of the report. The chairman may decide when — and if — the report may be circulated in public.
Proportion of total black money lying within India much higher than outside the country. Up to 97 per cent of the total black money within India
– Secret govt report
Two factors are apparently responsible for the delay in the report being made public: One, the inherent inclusiveness of the report and two, the unwillingness of both the ruling BJP and the opposition Congress in letter the report become public.
Members of the standing committee on finance claim both the BJP-led government and the Congress were not keen on making the black money report public since it covered a period when both were in power.
The report’s findings identified 1997-2010 as a period when there was a spurt in black money generation and its flow out of the country. Both the Congress and the BJP were in power during these years.
Then there is the matter of how conclusive the findings of the report are. Even the chief economic advisor, to whom the report was forwarded, flagged the inconclusiveness of the report.
The CEA observed that there existed large variations in numbers and in the estimation of black money with respect to the GDP. The CEA also said that there was no scope for arriving at a common estimate of the amount of unaccounted wealth, or black money, by combining the three varying estimates.
- Secret report on black money estimated that a large chunk of unaccounted money was within India
- Report may have been among the factors that prompted the Narendra Modi government to carry out demonetisation
- Both BJP and Congress were apparently unwilling to make the report public since it covered a time both were in power
- Top officials also warned that the report’s findings were inconclusive and that the estimates varied widely
via More black money present within India than outside: Secret govt report – India News