From telling the gullible masses that ₹15-20 lakh would be deposited in the bank accounts of the poor once the black money stashed abroad by some of corrupt Indians was brought back to confessing in Parliament that the Indian government has no estimates regarding this black money, Prime Minister Narendra Modi and his government have done more acrobatics than an accomplished trapeze artiste in a Russian circus.
It took none less than Amit Shah, Home Minister of India, to dispose of the notion that Indians would get ₹15 lakh from the recovered money as a Jumla (a fast one) pulled off by “sahib” (read Narendra Modi) in the heat of the electoral battle in 2014. That might also explain why it is only in India that it’s possible for a bald man to set up a business selling hair rejuvenation therapy that brought traffic to a halt.
On March 18, the Minister of State for Finance, Pankaj Chaudhary, informed Parliament that “there is no official estimation regarding the amount of black money held by individuals or entities within and outside India.” The minister was responding to a set of questions raised by the All-India Trinamool Congress (AITMC) Rajya Sabha MP, Sushmita Dev.
On the issue of recovery of black money, Chaudhary said that the government had realised ₹2,476 crore since 2015. “Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, during the period of three months’ compliance window closed on 30th September 2015, 648 disclosures involving undisclosed foreign assets worth ₹4,164 crores were made on which total of ₹2,476 crores have been collected in form of tax and penalty,” the minister submitted. According to Chaudhary, as of September 30, 2024, the Modi government had raised a total tax and penalty demand to the tune of ₹31,840.10 crore since the enforcement of the Black Money Act in 2015.
Among all the current-day politicians, Modi has crowed the loudest from many a bully pulpit about his burning desire to eradicate the menace of black money. His government and his party have never missed an opportunity to drone on about how previous governments, especially the Congress-led ones, failed to get a grip on black money. Yet, the Modi government’s inability to come up with a definitive estimate of the quantum of black money stored either in India or other countries even after 11 long years is a measure of its failure to walk the talk. But that is not surprising. Whenever Modi’s government, over its three terms, has been confronted with any uncomfortable question, it has ducked under the safety of the “no-data-available” cover. Little wonder that the NDA government is often referred to as a No Data Alliance in the power corridors of Lutyens’ Delhi.
The Modi government’s approach towards tackling the issue of black money has been a game of smoke and mirrors. When it fell upon the late Arun Jaitley, then finance minister, to defend Modi’s ill-fated demonetisation of November 8, 2016, he wheeled out an entire range of arguments—depending on the day of the week—to justify the insanity of depriving people of their own money as some sort of a masterstroke by an economics genius to eliminate black money and corruption. He spoke in many tongues both inside and outside Parliament. On March 20, 2018, Jaitley tabled a written response in which he said: “Demonetisation, besides serving other objectives of eliminating fake currency, stopping terror financing, promoting formalization of economy, promoting digital payments, also succeeded in unearthing black money and preventing corruption.” Outside Parliament, his acolytes in the media faithfully regurgitated the same talking points and projected a figure of ₹3 lakh crore in cash that would not return to the banking system as proof of the extinguishing of the black money scourge due to demonetisation.
However, in reality these grand predictions turned out to be just stifling air. According to parliamentary data, by June 30, 2018, after reconciliation, the Reserve Bank of India stated that 99.31% of the demonetised currency notes returned to the banking system, leaving just 0.69% (₹10,720 crore) of the total demonetised high-value currency notes in circulation as ‘extinguished’. Today, instead of the cash economy shrinking, which the Modi government wanted people to believe is significantly black, it has staged an even bigger comeback. As of January 30, 2025, the total cash in circulation stood at a staggering ₹35.99 lakh crore compared to ₹15.42 lakh crore on November 8, 2016—an increase of 133.4% and rising.
It is true that pre-2014 governments also admitted to the lack of black money estimates, but they did not adopt a holier-than-thou yogic posture. The only formal and scientific study undertaken to assess the extent of black money generation was conducted way back in 1983-84 by the National Institute of Public Finance and Policy (NIPFP) on behalf of the Central Board of Direct Taxes.
In the report, titled “Aspects Of Black Economy In India”, which was submitted to the Ministry of Finance during Rajiv Gandhi’s Congress government in 1985, the NIPFP quantified black money as totalling between ₹31,584 crore and ₹36,786 crore, amounting to 19%-21% of the GDP at that time. The report acknowledged the limitations of the various models that were used to calculate the size of India’s black economy and said that several of its assumptions could be challenged. Notwithstanding the disclaimers, the NIPFP report till date remains the only authentic document on the contentious issue of black money.
Since the publication of the NIPFP report, sporadic attempts have been made by past governments and non-governmental organisations, especially those aligned with the BJP and the Rashtriya Swayamsevak Sangh (RSS), to gauge the extent of black money generation in India and stored outside the country. For example, in 2012 the Finance Ministry under Pranab Mukherjee published a white paper on black money. The paper, while accepting the wider definition of black money as provided by the NIPFP in its 1985 report, surprisingly conceded that its estimation is difficult due to the lack of “uniformity, unanimity, or consensus about the best methodology or approach to be used for this purpose. There have also been wide variations in the figures reported, which further serves to highlight the limitations of the different methods adopted.”
It was expected that the Modi-led BJP government would do a better job of recovering black money allegedly stored abroad since it has been on the party’s political agenda since at least 2008 when L.K. Advani set up a four-member task force on black money. It had retired Intelligence Bureau (IB) head and a known RSS sympathiser, Ajit Doval, who later founded the Vivekananda International Foundation (VIF) in December 2009 and is the current National Security Adviser (NSA), RSS ideologue and chartered accountant S. Gurumurthy, former professor of finance at IIM-Bangalore R. Vaidyanathan—both part of the core team of VIF—and advocate Mahesh Jethmalani. The task force submitted a two-part report to the party: the first part in April 2009 and the second in January 2011.
The two reports, produced without a single instance of primary investigation and relying completely on published secondary sources, came up with a fantastical figure of $500 billion of black money stashed in foreign banks, which translated to ₹24 lakh crore in 2011’s average exchange rate of ₹48 to a dollar. The second part of the report came against the backdrop of infamous audit reports produced by the Comptroller and Auditor-General (CAG) under Vinod Rai. The CAG reports that were selectively leaked to the press before they were tabled in Parliament were cleverly leveraged by the BJP to whip up national hysteria against Manmohan Singh’s second UPA government.
Modi’s ascendancy to power rests squarely on the popular groundswell manufactured by the India Against Corruption (IAC) movement. Rai’s CAG reports served the purpose of lighting the fuse of the purported anti-corruption movement. It’s now well known that the agitations against the alleged corruption of the two-term UPA government was reportedly shaped at the VIF, then headed by Doval, and allegedly supported by the RSS, which reportedly provided the manpower and financial resources through its various frontal organisations with the help of donations from India and abroad. 
In April 2011, the VIF organised a two-day seminar on black money. It was attended by all the leading lights of Anna Hazare’s agitation such as Arvind Kejriwal, Subramanian Swamy, Kiran Bedi, Baba Ramdev, and K.N. Govindacharya, besides Doval as the head of VIF and Gurumurthy. It was at this meeting that the decision was taken to catapult Hazare, an ageing activist little known outside Maharashtra, who once served in the Indian Army, as the mascot of the agitation. In reality, he was just a cut-out of an operation that was run by a bunch of retired intelligence operatives reportedly led by Doval. Reports also suggest that some serving Home Ministry and intelligence officers at that time were also “clandestinely part of it.”
As the outsized media coverage of Hazare’s agitation blasted out of television sets, the UPA government seemed paralysed in its tracks. It was a crucial inflection point in India’s politics. It opened a window of opportunity for Modi. He exploited it to manoeuvre himself into a position from where he could project himself as the messiah who would slay the demon of corruption and eradicate black money. The anti-corruption movement eventually paved the way for Modi’s march to the capital of India.
The BJP in its 2014 election manifesto stated that it would set up a task force to repatriate black money stored in foreign banks and tax havens. In May 2014, after the first cabinet meeting, the Modi government announced the formation of a Special Task Force for the purpose headed by retired Justice M.B. Shah. That was the last anyone heard of the task force that generated hundreds of blazing headlines at the time. Contrary to Modi’s expansive public posturing in his first flush of power, his government’s actions in the subsequent years point to a tale of inertia.
Modi’s inaction on the data released by a Geneva-based whistleblower who worked in multinational bank HSBC, that came to be known as #SwissLeaks—and was investigated by the International Consortium of Investigative Journalists (ICIJ)—point to his lack of intent to tackle both corruption and the menace of black money. Similarly, his government has not taken up any substantial investigation into the Pandora Papers (2021), Panama Papers (2016), and Liechtenstein list (2008) revelations.
The sheer lethargy displayed by the government in pursuing the HSBC Swiss Leaks case is appalling. More than 60,000 files handed over by the whistleblower to French authorities contained the names of some of India’s biggest industrialists. The origin of the leak goes back to 2006-07, when Hervé Falciani, working in the IT section of HSBC, surreptitiously copied banking data of clients who carried out suspicious transactions of allegedly ill-gotten wealth with the bank. Though he was arrested in Switzerland, he managed to escape to France while on bail, where he handed over the data to French investigators. The French authorities turned down extradition requests by the Swiss and launched an independent investigation of the data.
In 2010, the French authorities informed governments around the world, including the then Indian government, about the details of suspected account holders. In 2014, a French court charged HSBC with “illicit financial and banking practices”. In 2015, the ICIJ, in collaboration with 45 news organisations around the world, conducted a detailed investigation of the banking data and released its findings. In India, the Indian Express was the partner organisation for the ICIJ’s investigation.
On February 9, 2015, the Indian Express published the articles of the Swiss Leaks case and a list of the top 100 Indian account holders. The list reportedly featured Mukesh Ambani, Anil Ambani, Kuldip Singh Dhingra and Gurbachan Singh Dhingra of Burger Paints, politician Anu Tandon, whose late husband, Sanjay, worked for Reliance, after quitting the Indian Revenue Service, diamond merchant Shaunak Jitendra Parikh, and Pradip Burman of Dabur, among others. Mukesh Ambani through Reliance and Burman through Dabur claimed that their accounts were not “illegitimate.” According to the Indian Express list, the top 100 accounts held more than $567 million in 2007.
In 2017, the Swiss government, following the information becoming public, signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters agreement, with various countries, including India. The OECD (Organisation for Economic Co-operation and Development) initiative that was launched in 2010 for global tax compliance. India became a signatory to the global convention in 2012. Under the terms of the agreement, countries that are part of it no longer need to send requests for information about their citizens. Swiss banks will send information about account holders to signatory countries, provided the data remains confidential. India was supposed to start receiving the annual information from 2019. It is not known if the Modi government has been receiving the information since then.
It is understood that all moneys held by Indians in Swiss banks might not be illegitimate, but the Modi government’s failure to separate legitimate holdings from illegitimate wealth stored in foreign banks points towards its inability to deliver even on matters on which Modi stakes political capital.
The Speech of Narendra Modi on Demonetisation 0n 8th November 2016. 22:08 IST
https://pib.gov.in/newsite/PrintRelease.aspx?relid=153404
Journalist | Editor | Allahabadi
