Black money stashed outside India is estimated at $216-490 bn, say studies

MPs’ panel: There’s huge variation in estimates of black money circulation from 7% to 120% of GDP

Various studies and estimates have pegged black money circulation in India anywhere between 7 per cent and 120 per cent of the country’s gross domestic product (GDP) in 2009-10 and 2010-11. This was revealed by the standing committee on finance, quoting various studies and estimates. It highlighted the lack of a reliable estimation of unaccounted income and wealth. Given that the GDP stood at Rs 64.5 trillion in FY10 and Rs 76.7 trillion in FY11 (in old series), black money could amount to Rs 4.5-77.4 trillion in FY10 and Rs 5.3-92.08 trillion in the following year.

These estimates were given by the National Institute of Public Finance and Policy (NIPFP), the National Council of Applied Economic Research (NCAER), and the National Institute of Finance Management (NIFM). The previous UPA government had commissioned studies by these institutions. The report, submitted to Parliament on Monday, also quoted these studies, estimating that the black money stashed away by Indians abroad was in the range of $216.48 billion to $490 billion between 1980 and 2010.

Besides, the committee, chaired by former law minister Veerappa Moily, pressed for the earliest introduction of the direct taxes code (DTC) in order to simplify and rationalise direct tax laws in the country. Moily told Business Standard that the Income Tax Act, due to its various amendments, had become a ‘fountain of black money generation’, and hence the entire Act needs to be simplified instead of making adhoc amendments.