What Are The Major Causes For Black Economy Economics Essay

This report discusses about the widespread black economy of India and how it is hurting our growth story. It looks at the various sources of generation of black money in the country and their implications. It analyzes various measures to estimate black money and their credibility. It looks at the various implications of black money.

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INTRODUCTION:

One of the most critical challenges that developing economies like India face is corruption. Corruption rears its ugly head in various forms like bribe, embezzlement, nepotism and extortion.Transparency International, the global anti-graft body, puts India 84th on its corruption perception index with a 3.4-point rating, out of a best possible score of 10(note). The effect of corruption has several dimensions related to political, economic, social and environmental effects.  In political sphere, corruption impedes democracy and the rule of law. It may also lead to unrest in the society through increased social disparity. The economic effects of corruption involve depletion of national wealth through creation of a black economy. Black economy refers to the creation of a parallel economy that is illegally undeclared either as a result of payment in kind or as a means of tax avoidance.In recent times, much has been made about the hoarding of money by Indians in foreign accounts. It is viewed as a severe loss to the Indian economy with various figures being quoted, ranging anywhere between $500 billion to $1.5 trillion(http://blogs.ft.com/beyond-brics/2012/05/01/indias-latest-foot-dragging-move-to-fight-black-money/#axzz25G65JqSm).A November 2010 report from the Washington-based Global Financial Integrity estimates that over a 60 year period, India lost US$213 billion in illicit financial flows beginning in 1948; adjusted for inflation, this is estimated to be 462 billion in 2010 dollars, or about $8 billion per year ($7 per capita per year)( note ) . It estimated the size of India’s underground economy at approximately US$640 billion or roughly 50% of the nation’s GDP. We can clearly see that black money is not just an issue of tax-evasion and bribery but a cancer in the nation’s economy.

Opposition parties, social activists and media have been continuously urging the Government to take measures to prevent illegal hoarding of money that would rightfully belong to Indian economy. However, the government in its defense claims that the value of the money stashed away abroad is significantly overinflated.

Indian Prime minister Dr.Manmohan Singhwhen faced with questions on black money said – “The problem is there but there are no magic solutions available. I think it is going to be a slow process” acknowledging its significant ill-effects while also heeding to the thought process that proper control mechanisms need to be devised to curb black money.

What is Black money?

The National Institute of Public Finance and Policy (NIPFP) in its 1985 report on Aspects of Black Economy, definedBlack money as “the aggregates of incomes which are taxable but not reported to the tax authorities’Further, black incomes or unaccounted incomes are ‘the extent to which estimates of national income andoutput are biased downwards because of deliberate, false reporting of incomes, output and transactions for reasons of tax evasion, flouting of other economic controls and relative motives'”.( note )

Sources of black money:

The three major sources of creation of black money have been crime, corruption and business(note).

Crime : The money raised through anti-social criminal activities such as trafficking, smuggling, embezzlement, illegal drugs and arms trade and prostitution

Corruption : monetary transactions involved in bribery and theft by people holding public office – such as in mandated government spending programs (Ex : MNREGA ) , speed money to acquire business contracts and circumvent normal government procedures in their favor

Business : major source of black money in corporate sector results from activities like accounting frauds and tax evasion – activities like overinflating expenses , underreporting revenues , benami entities , misinterpretation of documents on sale of fixed assets and scrap material in industries .

What are the major causes for black economy?

In a developing country like India, Corporate sector comprises only 15 % of the GDP whereas informal sector accounts for large parts of the economy which is difficult to regulate. Extremely high rates of taxation and excessive regulation bureaucracy in India have been a major cause for circulation of black money. A recent survey by KPMG have listed India as one of the countries with highest income tax rates in the world(note)India has high marginal tax rates and numerous regulatory bodies with the power to stop any citizen or business from going about their daily affairs . India has the third highest taxation burden in the world when it comes to selling commercial propertyaccording to a study conducted by Taxand, an independent global tax advisory. The study, conducted across 23 countries measures the total incidence of taxation for various categories of real estate, taxes to develop and sell commercial property will swallow up 15.5% of the value in India.(http://articles.economictimes.indiatimes.com/2011-03-10/news/28675470_1_tax-rate-commercial-property-global-tax) Complicated tax-laws and licensing systems causes serious difficulties in filing tax returns and this encourages people to evade tax. Excessive controls and regulations in securing government licenses and permits force people to circumvent them through black money. The very system of licensing and regulations to curb irregularities have been the most critical reason for circulation of black money from the lower levels to the top-most levels of the economy .Black money also arises from political activities such as elections where candidates spend well above the ceiling prescribed by the Election Commission.Lack of transparency in Government paperwork allows room for maneuver for both the demanders and suppliers black money. Whenever objective standards and transparent processes are missing, and subjective opinion driven regulators and opaque/hidden processes are present, the conditions encourage corruption and blackmoney (note) The laws governing the motion of black money exhibit peculiar trends. Returns on white money investments are discouraging poor and slow. But black-money multiplies at a fantastic rate. Returns on black-money investments are often to the order of 200 to 300 percent. Since money thus generated is re-invested in such activities as hoarding and smuggling, it fetches still higher returns. Once black-money is converted into black wealth it is very difficult to track it down. Perhaps the most important reason is deterioration in the moral standards of people effecting in tax evasion and other illegal activities.

Black Money in India – how much is there?

Several attempts have been made for estimating the amount of black money in India but it is almost next to impossible to account for the same in a fair and transparent manner. The main difficulty arises on account of the fact that the ‘black’ economy exists in the shadows. There is, therefore, wide variation in the figures reported as estimates are required to be made in indirect ways. Various individual methods like input/output method, monetization approach, fiscal approach, survey approach, etc. are used by the following committees for quantifying the black income.

I. Kaldor’s Estimate: Although the Taxation Enquiry Commission had examined the structure of Indian Taxation, a review by Prof. Nicholas Kaldor was desired by the Government in late 1955 “in view of the larger dimensions assumed by the problems of resources for the plan since the commission reported (Important Events 1946‐61).” Prof. N. Kaldor in his report on Indian Tax Reform estimated the non‐national income (i) wages and salaries (ii) income of self‐employed and (iii) profit, interest and rent. After making the rough adjustments, according to Wanchoo Committee, “the estimated income on which tax has been (black income) would probably be Rs.700 crores and Rs. 1000 crores for the years 1961‐62 and 1965‐66 respectively. Projecting this estimate further to 1968‐69 on the basis of percentage increase in national income from 1961‐62 to 1968‐69, the income on which tax was evaded for 1968‐69, the income on which tax was evaded for 1968‐69 can be estimated at a figure of Rs. 1800 crores”.

II. Wanchoo Committee’s Estimate: Shri K.N.Wanchoo, retired Chief Justice of the Supreme Court of India, as chairman explained what the term black money meant in its final report submitted in December, 1971. This committee estimated non‐salary income for 1961‐62 of amounting Rs. 2686 crores and non‐salary income actually assessed to tax as Rs. 1875 crores, thus, tax escaped for Rs. 811 crores. Therefore, in 1961‐62, black money was of amounting Rs.700 crores which rose to Rs. 1000 crores in 1965‐66 and further Rs. 1400 crores in 1969‐70. Very lately it was accounted to be 4.4 percent of GNP.

III. Rangnekar’s Estimate: D.K. Rangnekar as a member of the Wanchoo Committee submitted his report in 1982 (India Today, 2005). According to Rangnekar, tax evaded income for 1961‐62 was the order of Rs. 1,150 crores, as compared to the DTEC estimate of Rs. 850 crores. For 1965‐66, it was Rs.2,300 crores, as against Rs. 1,216 crores estimated by DTEC. The projections of black money for 1968‐69 and 1969‐70 were Rs. 2,833 crores and Rs. 3,080 crores respectively.

IV. Gupta’s Estimate: Government of India formed a committee under Poonam Gupta and Sanjeev Gupta in 1981 for calculating black money in India. They used Feige’s method of transaction income ratio to estimate black money in a country. They used average of three years viz. 1949‐50, 1950‐51 and 1951‐52 as the bench mark for estimating black money for the year of 1967‐68 to 1978‐79. They estimated that it was 19.8% of GDP at market price. The black money increased for Rs. 3034 crores in 1967‐68 to Rs. 46867 crores in 1978‐79. The main findings of studies on black money were: (a) A buoyant economy offers more opportunities for unaccounted income; (b) The ratio of unaccounted income to assessable non‐salary income has gone up after 1973‐74; (c) Increase in prices leads to an increase in black money; (d) Funds are diverted to agriculture to convert black money into white money; and (e) One per cent increase in overall taxes leads to more than 3 percent increase in the black economy relation to the official economy.

V. NIPFP Study

National Institute of Public Finance and Policy (NIPFP) conducted a study under the guidance of Dr. S. Acharya. The study defines ‘black’ money as aggregate of incomes which is taxable but which is not reported to tax authorities. The study, however, gives a broader definition of ‘black’ income and calls it as “unaccounted income” for purposes of clarity. As there is lack of sufficient data, the NIPFP study follows “the minimum estimate approach” that is to say, not being able to ascertain the most probable degree of under-declaration or leakage, the study uses a degree of under-declaration which could safely be regarded as the minimum in the relevant sector. In several cases the study has also made use of a range rather than a single figure of under-estimation.

While preparing the estimate of ‘black’ income, the study excludes incomes generated through illegal activities like smuggling, black market transactions, acceptance of bribes, kickbacks, etc. To prepare a global estimate of black income, the study confines itself briefly into six areas:-

(i) Factor incomes received either openly or covertly while participating in the production of goods and services; (ii) ‘black’ income generated in relation to capital receipts on sale of asset;

(iii) ‘black’ income generated in fixed capital formation in the public sector; (iv) ‘black’ income generated in relation to private corporate sector; (v) ‘black’ income generated in relation to export; and (vi) ‘black’ income generated through over-invoicing of imports by the Private sector and sale of import licenses.

NIPFP study concludes that “total black income generation of Rs. 36,784 crore or in round numbers Rs. 37,000 crore out of a total GDP at factor cost of Rs. 1,73,420 crore seems to be on the high side, although it turns out to be less than 30 per cent of GDP as against some extravagant estimates placing it at 50 or even 100 per cent of GDP. Taking out lower estimate, what we would say with some degree of confidence is that black income generation in the Indian economy in 1983-84 cannot be placed below 18 per cent of GDP at factor cost or 16 per cent of GDP at market prices.”

While the NIPFP Report estimates the extent of ‘black’ economy (not counting smuggling and illegal activities) at about 20% of the GDP for the year 1980-81, Shri Suraj B Gupta, a noted economist, has pointed out some erroneous assumptions in NIPFP study. He estimated ‘black’ income as 42% of GDP for the year 1980-81 and 51% for the year 1987-88. Shri Arun Kumar in his book has pointed out certain defects in NIPFP study and Gupta’s method. He estimated the extent of ‘black’ income to be about 35% for the year 1990-91 & 40% for the year 1995-96.

GFI study

A November 2010 report from the Washington-based Global Financial Integrity estimates that over a 60 year period, India lost US$213 billion in illicit financial flows beginning in 1948; adjusted for inflation, this is estimated to be 462 billion in 2010 dollars, or about $8 billion per year ($7 per capita per year). The report also estimated the size of India’s underground economy at approximately US$640 billion at the end of 2008 or roughly 50% of the nation’s GDP.

Thus, it can be said that though ‘black’ money exists to a substantial extent in our economy, its quantum cannot be determined exactly.

Seriousness of the Black money issue in the Indian economy

Extent of black money in India –

According to the estimated data provided by the Swiss bank, India has more black money than rest of the world combined. India topping the list with almost $1500 Billion black money in swiss banks, followed by Russia $470 Billion, UK $390 Billion, Ukraine $100 Billion and China with $96 Billion. An NIPFP (National Institute of Public Finance and Policy) study estimates that the total black money stashed abroad is about Rs 45 lakh crore which is about 50 percent of India’s GDP, and is nine times the size of India’s fiscal deficit. Global Financial Integrity (GFI) – a non-profit research organisation working in the area of

tax havens – has reported that nearly 40% of our national income is held outside the country. From these reports, we can see that a huge portion the Indian money is locked up outside the country which hinders our economic progress. GFI also states that more than two-thirds of this amount were held outside India only after the liberalisation of the Indian economy in 1991.

Comparison of money held in Swiss bank by various countries –

According to an article in ‘The Hindu’ dated 17th, June, 2012, “India has been ranked 55th on legal foreign money in Swiss bank”. The article says that “India accounts for only 0.14 percent of total foreign money in Swiss bank”. Whereas UK accounted for the largest share of 20 percent, followed by U.S which accounted for 18 percent.

These figures released officially do not include mention about the alleged black money held by Indians or other nationals. Also, they do not include the accounts held by Indians or other nationals in other names.

Nevertheless, these figures provide a appreciable hint to the extent of black money that India has stacked in comparison to other countries. This article also mentions that “the total funds held by Indian individuals and entities include 2.025 billion Swiss francs held directly by them and 158 million held through ‘fiduciaries’ or wealth managers”.

The funds held by Indians directly in the Swiss banks increased by about 370 million Swiss francs to 2.025 billion Swiss francs (Rs 11,800 crore) in 2011. On the other hand, the funds held through ‘fiduciaries’ nearly halved to 158 million Swiss francs (about Rs 900 crore) in 2011.

It also needs to be taken into consideration that Indian holders have been moving their funds to the places like Mauritius and Dubai which are seem to have foreign capital-friendly regulations. The number of tax havens and secrecy jurisdictions have now grown to 70 and there are millions of dummy corporations that shield the owner’s identity.

The countries placed above India in terms of total funds in Swiss banks also include Ireland, Spain, Israel, Canada, Brazil, Greece, China, Egypt, Thailand, Philippines, South Korea and New Zealand. Those ranked below India include Qatar, South Africa, Pakistan, Bahrain, Kenya, Nigeria and Iran. Though a number of countries are placed above India, the illegitimate amount that is stashed away in these tax havens are estimated to be humongous. Other developed nations do have black economy, however, people of our country are more harassed and impacted by the black economy.

Who holds the major chunk?

The black incomes are concentrated only in the hands of 3% of the population of the country who are the elite of the society and belong to the group of policy makers and the preservers of law. The rest of the population which include people working as peons, clerks, daily-wage workers, etc generate small amounts of black money but these do not add up to much. Since these illegality helps the elite people to become even more richer, the chance for the rest of the people to come out of this downward spiral of black economy is very less. This makes the issue of black economy even more serious.

Threat to national security –

These elite people have links with criminals to help them in their activities and hence, these criminals also enter into some legitimate businesses also. Using these business as cover, they also involve in illegal activities like money laundering, smuggling and drug- trafficking. The entry of such criminals in normal businesses posses a serious threat to national security. Some sensitive information about our national are also sold by such people for money. Black economy has the strength to bring the national security on its knees.

Economic Impacts

Loss of taxes: The direct effect of black money is the loss of revenue to the state exchequer since tax is not paid on this money.

Hinders country’s economic growth: Due to lack of funds with the government, the government cannot fund appropriately the sectors which require attention, which leads to poor performance of these. Also, the Government is forced to take debt from foreign institutions like the World Bank, which increases the fiscal deficit and thus burdens the Government.

An obstacle to a country’s development metrics: Due to the existence of black money in the society, a country is unable to evaluate it’s success accurately. Precise calculation of savings-to-income proportion and sector-wise make up of country wide income is not possible due to the presence of unaccounted incomes. Black money is the income that is unaccounted. Hence, it results in the underestimation of India’s GDP.(6111) Also, black money is generally stored in some tax haven nation. Thus, unknowingly, acting as investments for a richer and more advanced nation.

Inflation: People tend to spend their black money extravagantly. This creates an unnecessary demand for commodities. This results in an increase in aggregate demand and hence, prices of products. Thus, presence of black money leads to inflation. (325)

Illegal Transfer of Funds: Black money is transferred to foreign countries. This is done illegally through clandestine channels. These transfers violate exchange laws. Eg: Under-invoicing of exports and over-invoicing of imports. (scribd)

Inaccurate assessment of country’s progress

Due to presence of black economy, the official estimates of how large the economy is, are lower than the actual figures. This is a combination of the following factors:

Impact on the Savings Rate

Impact on the Level of Investment

Impact on the Level of Output

Impact on the Rate of Growth of the Economy

Estimation of Poverty

Estimation of unemployment

Social Impacts

Fosters anti-social elements: Black money requires corrupt accounting experts, liaison officers etc. to survive. People are finding out new ways to generate black money, thus degrading our ethics and morals. Also, money earned this way is generally spent in undesirable and vulgar manner. Virtues like hardwork and honesty are underestimated. This is corrupting the entire social and political fabric of India.

Improper use of profitable assets: Flow of black money widens the gap between the rich and the poor. People at the higher rungs have easier access to unaccounted income, which is evident from news we see every day. Also, these people have the money to bribe officials and politicians to protect their black money.

Raised the crimes in India: Presence of black money has led to the reduction of employment opportunities in India. This has indirectly led to an increase in crimes. Also, the widening gap between the rich and the poor (a direct effect of black money), is another reason for the crimes in India.

Increase in the lands and houses prices: A high percentage of black money is invested in property. Hence, this has led to an increase in the demand of property. As a result of this, the prices of land and houses have increased beyond the reach of a common man. Nowadays, owning a house is a dream, most people cannot fulfill their entire life.

Reputation of India: Black money and corruption deteriorate India’s reputation to the foreign world. Many big businessmen do not want to invest in India owing to the corruption prevalent here. This in turn affects India’s economy.

MEASURES TO TACKLE BLACK MONEY

Institutions dealing with Black Money

The institutions currently in place responsible for dealing with black money issues are:

Central Board of Direct Taxes (CBDT)

Enforcement Directorate (ED)

Financial Intelligence Unit (FIU-IND)

Central Board of Excise and Customs (CBEC)

The coordinating agencies include:

The Central Economic Intelligence Bureau (CEIB)

National Investigation Agency (NIA)

High Level Committee (HLC) act as coordinating agencies.

The White Paper on Black Money

The White Paper submitted by Finance minister in Lok Sabha on May 21, 2012 proposes a 4 pillar strategy to curb black money generation from legitimate activities:

• Reducing disincentives against voluntary compliance – This involves measures like rationalization of tax rates and reducing transaction costs by providing electronic and internet-based services to pay tax.

• Reforms in sectors vulnerable to generation of black money – It proposes various policy initiatives to prevent black money generation in certain vulnerable sectors of the economy. For example, the Paper proposes deducting tax at source on payments made on real estate transactions. In the cash economy, the Paper recommends that the Government provide tax incentives for use of credit/debit cards.

• Creation of effective credible deterrence – The Paper believes policies should create enough disincentives for black money generation. The introduction of the Goods and Service Tax (GST) will be an important step in this process. Other measures proposed include strengthening the direct tax administration, strengthening of the prosecution mechanism and enhancing exchange of information.

• Supportive measures – some of the measures suggested by the Paper include creating public awareness and public support, enhancing the accountability of auditors and participating in international efforts. With regards to repatriation of money overseas, the Paper suggests a onetime partial benefit of immunity from prosecution for voluntary disclosure.

Major concerns of Black Money are:-

Its generation

Its consumption and laundering back to mainstream economy.

The remedy of prevent generation of black money from crime or corruption does not lie merely in legislative or enforcement domains but also in finding much deeper socio-economic solutions. There may not be any need to have new law to deal with black money; various existing laws need to be comprehensively reviewed by the concerned administrative ministries on a regular basis keeping in view the changing economic scenario, and provisions dealing with violations need to be strengthened accordingly.

Strategy to tackle black money: From our study on how to tackle Black Money, we have found that The Committee formed by Ministry of Finance, Government of India has identified the following strategy to tackle black money:-

Preventing generation of black money

Discouraging use of black money

Effective detection of black money

Effective investigation & adjudication

There must ensure transparent, time-bound & better regulated approvals / permits, single window delivery of services to the extent possible and speedier judicial processes.

We have to reinforce value / moral education in the school curriculum and build good character citizens, particularly highlighting the ills of tax evasion and black money.

The Public Procurement Bill, 2012 intends to ensure transparency, fair and equitable treatment of bidders, promote competition, and enhance efficiency and economy

Direct transfers to the accounts of beneficiaries can provide a solution.

UID and direct transfer of subsidies will stop leakages in some sectors. Accordingly, social audit should be made mandatory for all social sector schemes that do not involve direct transfer of credit to the bank account of the beneficiary.

There should be a dedicated training center for all law enforcement agencies dealing with financial crimes and offences, as this requires special skills.

The central government should establish a regulator (under Company law / Income Tax law) to empanel auditors in different grades & randomly assign them to the private sector firms, based on category & payment capacity, with mandatory rotation & maximum tenure of 2 yrs.

The proposed national level GST regime should be expeditiously implemented

At present, no government agency has complete database of NPOs. CBDT has the largest database about this sector. It is desirable that CBDT be assigned the role of a centralized agency with which every NPO would require to be registered and would be allotted a unique number. This would be in line with the decision taken by the Government in the light of possible misuse of the sector in undesirable activities.

There should be sharing of real-time data under Foreign Contribution Regulation Act (FCRA) and DGIT (Exemption) & coordination amongst various enforcement agencies.

In the recent investigations by Income Tax department on the mining industry in Karnataka, it came to light that state law allows unregistered dealers (URD) to trade in minerals, possibly as a measure to raise revenue. This is contrary to the central Mines and Minerals (Regulation and Development) Act, 1957 and encourages illegal mining and unregulated trade in minerals. This situation requires immediate remedy and all laws relating to licensing and regulation in mining need a thorough review.

The Accounting Std no.7 should be modified by ICAI to be made applicable to real estate developers also. AS-7 & AS-9 should be notified under the Income Tax Act, 1961.

State governments may consider levy of agricultural income tax with facility for computerized processing and selective verification. This will on the one hand enhance revenues of state governments, and on the other hand prevent laundering of black money in the garb of agricultural income.

The regulation and enforcement of KYC norms in the co-operative sector should be strengthened by the State Governments as well as the Central Government.

The RBI could consider stricter implementation of KYC norms and limit number of accounts that can be introduced by a single person, the number of accounts that can be maintained in the same branch by any entity and alerts about same address being used for opening accounts in different names.

The government should consider introducing alternative financial instruments to reduce the attraction of gold as savings instrument. It should revise customs duties, as graded wealth tax, on gold and jewellery to discourage investments in unproductive assets.

Use of banking channels and credit /debit cards should be encouraged in trade practices

Income Tax Department, should immediately set up the Directorate of Risk Management for proper data mining and risk analysis. The third-party reporting mechanism of the Income Tax Department should be made computer-driven

The oversight mechanism for the financial markets must have trained manpower with proper domain knowledge of financial investigation.

Foreign entities -banks, financial institutions, fund transfer entities – have set up businesses in India. Indian tax residents have been having substantial monetary transactions through these entities or with their branches abroad. India should insist on entities operating in India to report all global transactions above a threshold limit.

In India, a witness protection law may be enacted expeditiously and witness protection program should be implemented by all law enforcement agencies.

DRI maintains constant interaction with its Customs Overseas Intelligence Network (COIN) offices to share information through Diplomatic channels on the suspected import / export transactions, which are intricately linked with tax evasion and money laundering. The scope and reach of COIN offices should be further expanded and strengthened.

Institutions of Lok Pal and Lokayukta may be put in place at the earliest, in centre & states, respectively, to expedite investigations into cases of corruption & bring the guilty to justice.

More administrative and financial autonomy must be expeditiously devolved on CBDT and CBEC for formulating tax policies in keeping with the overall government views on economic growth and development, for better tax administration and for providing tax-payer services.

Inter-agency coordination is critical in the fight against black money. There is a need to evolve an effective coordination mechanism that identifies the law violators.

The information and intelligence gathering mechanisms of various economic agencies need to be more broad-based so that the entire gamut of economic activity is captured in an electronic manner. All the agencies need to continuously get technologically upgraded too.

Intelligence sharing is one of the most critical areas for effective law enforcement. For this purpose, there should be effective sharing of intelligence / information between central and state agencies. Information exchange among various economic law enforcement / intelligence organizations should become technology driven. At the same time data-security should be ensured to prevent unauthorized access to information.

Effective battle against black money cannot be ensured unless the judicial machinery to deal with it is specialized and the trial of offences is expeditious and punishments exemplary.

Government may consider creating an all-India judicial service for specialized judiciary in different laws to achieve uniformity of application.

A professional National Tax Tribunal, with representation from the tax administration also, should be immediately formed to deal with all tax litigation.

Improvements in the matter of reporting, analysis and communication need to be achieved by further upgrading the computerization programme of the judicial system.

For criminal trial of economic offences, the High Courts may consider setting up exclusive economic offences courts with special summary procedure.

Under economic laws, different punishments are prescribed for different offences (TABLE-F1). Minimum punishments should also be prescribed for economic offences, to have greater deterrence. Certainly, corruption cannot be treated as less diabolical than drug-related offences or money-laundering. Therefore, maximum punishment in serious cases of corruption should be enhanced to 10 years. Similarly, the minimum punishment for different offences of corruption should be enhanced from present 6 months to 1 year

One of the ways to get assets/money held abroad into the national mainstream is through a compliance scheme. With the above recommendations it would be possible to get information regarding assets held abroad as well as check the generation of black money within the country and its illicit transfer abroad.