BLACK MONEY

BY:
DAKSH VERMA
CHIRAG JAIN
 WHAT IS BLACK MONEY ??

Assets or Resources that have neither been

reported to the public authorities at the time of
their generation nor disclosed at any point of time
during their possession
HOW IS BLACK MONEY GENERATED ??
 BLACK MONEY

ILLEGAL LEGAL
(Risky) (relatively)
ILLEGAL(criminal component):
Racketeering, trafficking in counterfeit and contraband
goods, smuggling, production and trade of
narcotics, forgery, illegal mining, illegal felling of forests,
illicit liquor trade, robbery, kidnapping, human
trafficking, sexual exploitation and prostitution, cheating
and financial fraud, embezzlement, drug money,
bank frauds, and illegal trade in arms.
Money Laundering
THROUGH LEGAL ACTIVITIES

1.TAX-EVASION (SIMPLE AND VULNERABLE)

2.MANIPULATION OF FINANCIAL RECORDS AND ACCOUNTING
(SOPHISTICATED APPROACH)
THROUGH LEGAL ACTIVITIES
VULNERABLE SECTIONS OF ECONOMY

1. Land and real estate transactions

2. Bullion and jewellery transactions
3. Non-profit sector
4. Financial market transactions
5. Public procurement
6. External trade and transfer pricing
External Trade and tranfer pricing

Tax havens : low or nil taxation

Offshore financial centres
ESTIMATION OF BLACK MONEY
INPUT - OUTPUT METHOD
A second line of text could go here

It consists of using the input/output ratio along with the input

to calculate the true output.

EXPECTE BLACK ACTUAL

D
OUTPUT MONEY OUTPUT
 CIRCULATORY APPROACH
Based on the fact that money is needed to
circulate incomes in both the ‘black’ and accounted
for economies.
MONEY
OFFICIAL BLACK IN
ECONO
MONEY CIRCULA
MY
TION
SECTORWISE APPROACH
Black
component in
primary
sector
Black Black
component in componenet
Tertiary in secondary
Sector sector

Total
Black
Money
 SURVEY APPROACH
Consumption patterns are identified for
different samples of population
Then the total consumption is compared
with the summation of these sample
surveys
ILLEGAL(criminal component):
Racketeering, trafficking in counterfeit and contraband
goods, smuggling, production and trade of
narcotics, forgery, illegal mining, illegal felling of forests,
illicit liquor trade, robbery, kidnapping, human
trafficking, sexual exploitation and prostitution, cheating
and financial fraud, embezzlement, drug money,
bank frauds, and illegal trade in arms.
NIPFP ESTIMATES
ESTIMATION OF BLACK MONEY ABROAD
 CHAIN EMAIL

A chain Email, which first started circulating on the Internet in early

2009, states that Indians have more money in the Swiss banks than
all other countries combined. It claims that as per a Swiss Banking
Association report in 2006, bank deposits in the territory of
Switzerland by nationals of a few countries are as under
#1 ..India- US$1456 billion,
Russia- US $470 billion,
UK-US$390 billion,
Ukraine-US$100 billion,
China-US$96 billion.
GFI’S REPORT
SWISS NATIONAL BANK SPOKEPERSON
“INDIA” V/S “THE WORLD”
ILLICIT FLOWS
IF BLACK MONEY COMES BACK
 IF BLACK MONEY COMES BACK
This amount is about 13 times larger than the
country’s foreign debt

Our fiscal deficit would reduce

Inflation can be controlled

INDIRECT EFFECTS
 IF BLACK MONEY COMES BACK
(BLACK SIDE)
1.If the black money comes back to India, will it not
create inflation? Too much liquidity chasing too few
goods?
2. When we pay off all our external debt and our
currency appreciates as a result of that, will not our
exports be severely affected and imports become very
costly - which again will lead of inflation?
3. If people who deposited the money in foreign banks
bring it back, will it not create more inequaities in
India? Some people will become very, very rich and
some still remaining the same?
 IF BLACK MONEY COMES BACK
(BLACK SIDE)
4.Rupee may get devaluated.

5. Will not availability of huge black turned white

money in the open market economy will affect Indian
banking systems negatively?
 GOVT.’S PROBLEM
IMHO, the Government has got a bigger problem, viz.,
1. They should get the details from the Banks abroad.
2. They should get the details of the assets held
abroad by Indians
3. They should trace the origin of all the FII
investments happening in India to ensure that it is not
the black money which is coming back through this
route.
4. They should tax all the four things mentioned
above.