The Swiss banks, for a long time, have been accused of aiding black money transactions and being a popular and safe place for people to park illicit funds and thus avoid paying taxes. This was mainly because of their strict guidelines on maintaining confidentiality. Not anymore. The Switzerland authorities have agreed to share data regarding the account holders’ funds held in their banks in an attempt to help countries tackle this problem of money laundering and tax evasion.
This is good news indeed, especially for our country. There have been unconfirmed reports that some of the largest depositors in Swiss banks are Indians, with an estimated Rs. 9000 crores in deposits. But, this is just the tip of the iceberg. The actual amount of black money transactions in the country which go unreported is likely to be a much larger figure.
The reasons behind this could be manifold- rampant corruption, ineffective political system, and a recent sting operation even claimed that three of the largest private sector banks in the economy were running money laundering rackets by routing illegal unaccounted for money in to their insurance and investment products.
The size of the Indian black money market is estimated to be between 23 % to 26 % of the GDP. Contrast this with the 21% – 22 % of Indians below poverty line (BPL), i.e earning less than USD 1.25 per day !
Makes me think, is India really a poor country or is it just the unequal distribution of wealth?