Black money amounts to 10% of GDP

A study commissioned by the government last year on quantifying black moneygenerated in the country has estimated that the illicit wealth is likely to exceed 10% of GDP or anywhere above Rs 10 lakh crore, given the size of the economy. 

The 1,000-page report was submitted to the finance ministry by the National Institute of Public Finance and Policy (NIPFP) in the last week of December. The finance ministry is taking a view on it before deciding to table it in Parliament, sources said. 

The study was headed by R Kavita Rao, head of NIPFP's tax policy and research, and included former director general of income tax investigation S S Khan. The report has given sectoral break-up of the scope of black money such as the real estate sector, telecom, mining etc. 

The last such study carried out at the instance of the finance ministry was by NIPFP in 1984 when the latter had estimated black money generated in the country to the tune of 19% to 21% of GDP or up to Rs 36,000 crore. 

After major ruckus in Parliament and a civil society movement, the government had in March 2011 selected three thinks tanks to estimate the quantum of black money — National Council for Applied Economic Research (NCEAR), NIPFP and National Institute of Financial Management (NIFM). The first report has been submitted by NIPFP while officials in the finance ministry refused to disclose status of other two reports. 

The NIPFP had earlier carried out studies in 1976 and 1981 when it had estimated black money generated in the country to be around 15% to 18% of GDP and 18% to 21% of GDP respectively. 

In a white paper on black money tabled in Parliament last year, then finance minister Pranab Mukherjee had listed tax evasion through transfer pricing as one of the major areas of generation of black money. He had said it was largely invisible to the public and difficult and expensive for tax officers to detect. The white paper had quoted a private study report saying "developing countries may be losing over $160 billion of tax revenues a year, primarily through transfer pricing strategies" . 

The white paper had said, "The illicit money transferred outside India may come back to India through various methods such as hawala, mispricing, foreign direct investment ( FDI) through beneficial tax jurisdictions , raising of capital by Indian companies through global depository receipts (GDRs) and investment in Indianstock markets through participatory notes."

Petroleum Ministry presses for fuel price hike to wipe out subsidy

·        Petroleum Ministry presses for fuel price hike to wipe out subsidy Pressing ahead with the Khelkar Committee recommendations and grappling with massive under-recoveries, the Petroleum and Natural Gas Ministry has initiated a Cabinet note to raise the cap on subsidized LPG supply from six to nine cylinders a household a year, and increase diesel, LPG and kerosene prices in phases.

 

·        As the Finance Ministry refused to share the subsidy burden of the oil marketing companies, the Petroleum Ministry is pressing for a phased price increase to cut the subsidy down to the bare minimum during the next two-four years.

 

·        Based on the Khelkar Committee’s recommendations, the Ministry has proposed that the oil companies be allowed to increase LPG price immediately by Rs. 50-Rs. 100 and raise the rate every quarter till the subsidy is wiped out.

 

·        Of the estimated fuel subsidy of Rs.1,66,000 crore during 2012-13, the Finance Ministry sanctioned Rs. 30,000 crore and released the first installment of Rs. 10,000 crore to the oil marketing companies last week.

 

·        The government favors increasing the cap on LPG supply to nine cylinders. At the same time, it wants to raise the price to compensate for a subsidy of Rs. 8,000 crore the rise in the cap would entail on it.

Rajiv Takru is new Financial Services Secretary

Rajiv Takru, now Additional Secretary and Financial Advisor in the Ministry of Health and Family Welfare, has been appointed as Financial Services Secretary in the Finance Ministry.

A promotion for the 1979-batch IAS officer (Gujarat cadre), Mr. Takru will take over as Secretary, Department of Financial Services, from Dinesh Kumar Mittal, who retires on January 31.

Suraj Sharma gets Bafta nomination

 

Lending an Indian flavour to this year’s prestigious Bafta awards, which are regarded as Britain’s equivalent of the Oscars, is actor Suraj Sharma, who has been nominated for the Rising Star award for his role in director Ang Lee’s acclaimed film Life of Pi .

The teenaged actor from Delhi, who beat more than 3,000 contenders to land the starring role, is the only male actor nominated in this category along with five female artistes — Juno Temple, Andrea Riseborough, Elizabeth Olsen and Alicia Vikander.

The film, based on Yann Martel’s Man-Booker-Prize-winning novel, is in contention for the Best Film with four others, including Steven Spielberg’s Lincoln , and Kathryn Bigelow’s Zero Dark Thirty , which is based on the capture of Osama bin Laden.

Life of Pi has received the second-largest number of nominations — nine — after Lincoln , which leads the pack with ten, including ‘Best Actor’ for Daniel Day-Lewis. Lincoln dwells on the last months in the life of Abraham Lincoln, as the United States President struggled to end the Civil War and pass a constitutional amendment banning slavery.