"Indian Money in Foreign Banks - Retrieving it"
- A Confiscatory Tax regime and Anti-Business bias of the early decades after Independence motivated the then wealthy to get their wealth out of the Country.
- Corruption in the Political and ‘License Raj System’ created more undeclared wealth, most of which was also moved out of the Country.
- A pragmatic way of bringing this wealth back into India must be worked out, perhaps as suggested below.
- A pragmatic and broad based tax regime and domestic investment opportunities must be worked out to make such money transfers out of the Country unattractive and hence unnecessary in future.
- Indians have the most money in Foreign Banks, over 3 times that of the Russians who are next.
- Income Tax is paid by less than 3% of our Population and most of such Tax payers are in Government Service (where it is only a case of moving money from one Government pocket to the other).
- The cost of monitoring and collection of Tax is is a very major part of the revenue collected as Income Tax and thus the actual net revenue is that much less. Likely such costs, including the current market value of the capital assets and the maintenance costs thereof etc also incurred, will be more than the Tax collected from the non-governmental tax payers / employees.
To create an opportunity to attract maximum inflow of long term, low cost Fund flow from legitimate sources outside India, into India in order to enable us to take up the provision of additional and urgently needed facilities for fundamental needs (Primary Health & Education), and other essential Infrastructure Projects (Water, Power, Roads, Irrigation, Rural Development and Urban Renewal etc).
The amount of India’s wealth lying idle in accounts in Foreign Banks is variously estimated to be 73 Lakh Crores or 95 Lakh Cores – either is, by any measure, an astounding sum of money. Many times the amount of our present Budget, this money, if brought back and put to productive use in the Country, would change the face of India tremendously. This amount is equivalent to 13 times our foreign debt. The interest earned on this amount will be more than our annual budget. The Government should thus forget about levying any tax thereon and just concentrate on getting the money back into the Country and put it to productive use. Time is of essence as the need is urgent and also as the value of money drops over time.
But how can we get this money back into the Country? There seems to be no realistic way to get all the Foreign Banks to give us all the details of all such account holders and getting only a very few names would really serve little purpose and perhaps not even be cost effective. The only practical answer to this conundrum is to make the very Account holders want to bring their funds back into the