At G20, Modi walks the talk on black money
At the recently concluded G20 summit, Prime Minister Narendra Modi's strong and substantial intervention on black money, which also won the endorsement of the influential grouping of developed and developing nations, is proof of his commitment to the issue.
It is also a slap on the face of his detractors at home who were quick to pan him and his Government for supposedly soft pedalling on the matter. last month, the Centre refused to make public the identity of those who hold black money in foreign banks, on the ground that such a revelation would violate the due process of law. Union Minister for Finance Arun Jaitley painstakingly sought to clarify that the Government would continue with its efforts to prosecute the guilty (and that the names would be made public at the right time) but, of course, these statements fell on deaf ears.
Habitual critics of Mr Modi and the BJP, forever desperate to find fault with the Government, were only too delighted with what they saw as a reversal of an election promise, to pay any heed to the facts on the ground or the law of the land. During his election campaign, Prime Minister Modi had vowed to bring back black money stashed in foreign banks and plugged transparency and accountability in governance as one of his major poll planks. He had also criticised the Congress-led UPA regime for not doing enough to clamp down on black money flows.
Once in power, the revelation of alleged black money holders would have brought Mr Modi and his Government some cheap brownie points in the short term but would have hurt the due process of law in the long run. His intervention at the G20, however, has the potential to bring about real change on a global scale. It also shows that he is more than willing to walk the talk.
On Sunday, Prime Minister Modi focussed attention on the Base Erosion and Profit Shifting system which, he hoped, would address the concerns of developing economies which often seem to be marginalised within the global financial framework. Simply put, the BEPS aims to modernise the international tax system, so that profits are taxed in the same country where their causal economic activities generate value. Upon Mr Modi's intervention, the final G20 communiqué was amended to add a transparency clause in this regard.
Additionally, Mr Modi also offered his full support to the new global standard on automatic exchange of information, which he said would be “instrumental in getting information on unaccounted money hoarded abroad and enable its eventual repatriation”. He noted that even though every country had its own domestic priorities, greater coordination between states would help all players in the long run. More specifically, he urged tax havens, notorious for shielding the suspects, to fall in line in accordance with their international treaty obligations. The global Common Reporting Standard for the Automatic Exchange of Tax Information on a reciprocal basis was also endorsed by the G20. If the needed legislative procedures are completed as planned, the G20 member states are expected to start exchanging information automatically with one another and with other countries by 2017 or end-2018. This would be a landmark development to control cross-border tax evasion.