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Govt says black money figures much inflated, a lot of it has come back as investments

NEW DELHI: The government has suggested in its first-ever official document on black money that a lot of the illicit cash stashed away overseas over the years may have come back into the country asinvestments, seeking to debunk the commonly-held notion that hundreds of billions of dollars of Indian money was held illegally in Swiss banks.

The document listed participatory notes (PNs), foreign direct investment (FDI) flows routed through low-tax countries and complex corporate structures as possible contributors to the scourge, but steered clear of naming offenders or putting an estimate on black money, provoking critics to slam it as more of a whitewash than a white paper.

The White Paper on Black Money significantly singled out the Vodafone tax case as an example of misuse of corporate structure to avoid paying taxes, further proof of the intensity of the finance ministry’s feelings on its tax dispute with the UK firm and suggesting a compromise was unlikely.

Presented by Finance Minister Pranab Mukherjee in Parliament, the document said illicit money parked outside India may have been brought back as FDI through Mauritius and Singapore and via stock market transactions involving participatory notes and global depository receipts, indicating a tighter scrutiny of these inflows in the future.

The release of the white paper, a day before the third anniversary of the UPA government, comes when the ruling coalition has been mostly on the defensive in its second term in office, buffeted by a series of scandals, popular anti-corruption agitations and scathing court judgments.

Not helping the government is the commonly-held notion that hundreds of billions of dollars have been spirited out of the country and stashed away overseas. US-based Global Financial Integrity, a non-profit research body that has long crusaded against illegal capital flight, said in 2010 that India had been drained of $462 billion between 1948 and 2008.

But the white paper said some of these numbers were over the top and baseless.

“Some of the widely-circulated figures about black money of Indians stashed abroad are baseless exaggerations,” it said.

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Posted by on May 22 2012. Filed under Business India News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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