The Kala Done a.k.a Kala Dhan
Well! Being frank, I love black! Black has always been a good color. Even black people have 300% more oxygen than white folks… (pun intended) which makes them better athletes than any other human race. I am not trying to be racist but the issue of black money has been over hyped since the new government; some to curb it, some to curb them and some because there are no other issues left (or colors)!
Jokes apart, the question of the moment is do we really need to break our nuts over the black money issue? Is it really that bad? Are we simply a bunch of obsessed people working our way to hate the new government also? Or we love the issue because there’s no fairness cream available for the black money?
The Black Economy
There’s a booming black economy in India since a long time and the issue rose only after the Government of India started deducting tax as high as 60%. This was before the concept of liberalization and globalization came into existence. Now you can imagine a man earning 100,000/- rupees per annum giving off 60,000/- to Indian government! He had to make his ends meet with 40k for the rest of the year. This is when our true hero the black money came to our rescue; many people started evading tax and illegally stashed the earned money in some foreign banks! Unregistered monetary transactions have been taking place, mainly due to no faith in formal banking system and mostly as a measure of tax avoidance. Added to this, various elements like the ‘hawala’ operators give a fillip to such measures by the rich people of India. I am not saying everybody does that, but most of the income is unregistered and the bare minimum is registered, just enough to avoid scrutiny by the IT officials. Smuggling is also a huge problem owing to a large sea boundary and not enough customs personnel.
Corruption is the icing on the cake! Many transactions usually occur smoothly by giving bribes to concerned officials. Adequate oversight is lacking and the officials cannot cope up with innovative ways of smugglers and money launderers. A major cause of this black money is the multiple ‘Double Tax Avoidance Agreements (DTAA)’ that we have signed with many countries.
It is said and believed that most of the laundered money returns to India as FDI, FII and Promissory Notes! P-notes are especially notorious as there is no way of knowing the name of the owner of the P-notes. The black money was routed back into India via tax havens, by investing in legit companies. Let me tell you how.
For example, assume I am a corrupt entity and have amassed a wealth of 1000 Crore rupees. I send it to a ‘hawala’ operator who will ensure that my money is sent to the gulf or any other country (usually with lax tax laws or reduced tax oversight). The operator in that country discreetly invests the money (in parts, not full) in various banks and asks the banks to invest the money in India via p-notes; which is a perfectly legit form of investment. The result is that my money is safe elsewhere and I keep on getting the amount I want via that hawala operator in my country, who in turn receives it from his counterpart in the foreign country.
Another mechanism is that the person in other country invests in an MNC who is about to enter or expand in the Indian market. The MNC will route funds tax havens where India has signed a DTAA. My money will thus come back to India, totally white and a legit form of investment, though without my name on it, of course. I reap the benefits of that investment in the same way as previously mentioned. Over the course of years, the invested money slowly gets converted in my name, without arousing any suspicions within the Income Tax offices.
Lo and behold! I have 1000 Crore rupees totally tax free, and if the money is not sent outside, it may have been used by politicians themselves or by corporate lobbyists in order to secure re-election during election year. At least, this was thought to be happening till now!
With so many loopholes and ways to circumvent the taxation system, the black money seldom stays at one place. It almost always finds its way back in the economy, of India or some other country. Very little amount is kept in foreign banks like in Switzerland or Germany or others. If the banks were to release data of money stored in their accounts (which they will vacillate, but then comply), you wouldn’t find the black money, only a fraction of it.
The question here is not whether Narendra Modi will be able to bring back black money, the question is whether he will think of an innovative way to curb black economy and merge it into mainstream.
The Necessary Evil?
Still many people think that black money must be brought back to India! My question is how? I already got my money back, tax free and white! My money helped this government make their dream of so called the development into reality.
Still, if you all think that black money has to be brought back by the present government, then I must say, “go to sleep, dear”! Because you are simply the ones who’ll be in a loop; hardly 3% of the Indians pay tax but 30% need jobs! 67% are never in the game as they never create enough income that could ever be taxed; also they are the ones who live on the blessings of the government who ultimately shower their health benefits or subsidies.
What if there wasn’t black money? Hmmm, since I have been so pro black for a while now let me tell you that the above work of goodies can be done without black money as well but only if all of us paid our taxes on time with authenticity.
And before we end, if you think that the rich and famous must have transferred their amount to some place secure before releasing few names to the SC! Hmmm…remind yourselves that they must have already got their money converted to white by the above mentioned circumnavigating economic policies! Hehehehe, that’s I why I love black coffee with some sugar of course!
Article Contributed By Nitesh Mishra. He is currently the student of Lokmanya Tilak College Of Engineering (Mechanical Engineering). He loves reading, researching, hot headed arguments and always in a search of something creatively new. Hates prejudicing and order. Loves to read between the lines and see the other side of the coin. Also a cold hearted procrastinator who works only under pressure or too open environment!
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