Millions Of Crores Of Black Money Flowing Out Of India: HSBC Whistleblower

Al Arafat Sherfuddeen

November 4th, 2015

Image Source: worldradio

In the back drop of revelations from the HSBC whistle blower Herve Falciani, we look into who he is and how Black Money which leaves India and also how it makes its way back into the Indian economy.

Herve Falciani
Who is he ?
HSBC whistle blower Herve Falciani is the one who leaked information & details of bank account holders in Geneva branch of HSBC – a list which later reached French government that was inturn later shared with India.

Why is he in the headline now?
Herve has alleged yesterday that huge amount of Black money is flowing out of India and he has offered to co-operate with the Indian Investigative agencies on the questions pertaining to Black Money. However he has sought protection for the same.

If it is flowing out, why and how it is flowing back into India?Black Money goes out of India for the reason of evasion of tax, however the money which flows out get’s negligible earnings on interest rates hence it flown back into India by various means to make an even bigger earning. One of the important ways in which Black Money flows back in is the FDI route.

Why would a country like Mauritius, which is primarily dependent on tourism and sugarcane able to contribute to about 40 percent of our FDI inflows? Black money which flows out, goes into a Mauritian subsidiary of a Indian (any national) company and comes back into the stock market through FDI route. This is what is called as Round-tripping ie the whole conversion of Black Money into capital investments and returns.

Is FDI the only route for round-tripping?
Participatory Notes (instruments for foreign investors invest in Indian stock markets) and Gold are other means by which Black Money makes its way back into the Indian economy.

Conclusion

In the light of recent revelations and the means by which Black Money makes its way back to India, it is worthwhile asking, if there is any Black Money to be bought back to India as promised by the government or is it already circulating in India as investments in stocks and firms reaping valuable tax benefits meant for foreign investments? The eventuality of the latter is increasing by every revelation of whistle blowers.

 

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