Is the money deposited in the Swiss bank by Indians—which saw 50 percent jump last year—is black or white? This question has set off a political debate that could escalate into a keen election issue in days ahead.
The opposition leaders got an opportunity to needle the government over the latest report of the Swiss National Bank which said money parked by Indians in the Swiss banks rose over 50 per cent to CHF 1.01 billion (Rs 7,000 crore) in 2017, reversing a three-year downward trend. The report came amid India’s clampdown on suspected black money stashed there.
Congress president Rahul Gandhi questioned government's claims of bringing back the black money, which it had promised during the 2014 election campaign. Other political leaders also hit out at the BJP in the wake of the latest report.
Fearing that the Swiss Bank report could turn out to be damaging for the government, its senior ministers Arun Jaitley and Piyush Goyal said the money deposited in the Swiss banks by Indians was through legitimate routes and that it was not black at all.
Jaitley said under the agreement with the Swiss government, information about the depositors will start coming in from January, 2019. “Any illegal depositor knows that it is a matter of months before his name becomes public and he will be subjected to the harsh penal provisions of the black money law in India,” he said raising questions over the way the latest Swiss Bank report on the increase in deposits was being interpreted.
Jaitley argued that the earlier investigation by tax authorities had shown that money held abroad could belong to persons of Indian origin who now hold a foreign passport, the non-resident Indians, or the resident Indians who have made legitimate investments abroad, including the transfer of money under the liberalised remittance schemes. These are legitimate ways of holding money.
“To assume that all the deposits are per se tax evaded money or that Switzerland in the matter of illegal deposits is what it was decades ago, is to start on a shaky presumption,” Jaitley added. He contended that Switzerland has taken significant efforts to get out of the image of being a tax haven.
Finance Minister Piyush Goyal also seconded Jaitley. "All the data will be made available to us from February 1, 2019, to the end of this accounting year. So, why to assume this is black money or illegal transactions?" said Goyal. He said that strict action will be taken against anyone who is found guilty once the information is out.
The government is trying hard to clear the doubts over the money stored in the Swiss Banks, but it will have to face an uphill task to convince the general public that the money is not illegal. In public perception, Swiss money has been known as illegally stashed away money. The technical arguments over the legitimacy may not be enough to convince people.
The current controversy undermines Modi government's strong argument of fighting against black money and bringing it back from abroad. As Parliament session is due to start next month, the government may find it tough to handle opposition’s charges.