Five-fold strategy to deal with black money menace: Pranab Mukherjee

Expressing 'serious concern' over the generation and circulation of black money, finance minister Pranab Mukherjee today said the government has adopted a five-fold strategy to deal with the menace.

"The generation and circulation of black money is an area of serious concern. To deal with this problem effectively, the government has put into operation a five-fold strategy which consists of joining the global crusade against black money," Mukherjee said in his budget speech.

The finance minister also said trafficking in narcotic drugs also contributes to the generation of black money and the government proposes to announce a national policy in this regard.

"To strengthen controls over prevention of trafficking and improve the management of narcotic drugs and psychotropic substances, I propose to announce a comprehensive national policy in the near future," he added.

During the year, the government has concluded discussions on 11 Tax Information Exchange Agreements (TIEAs) and 13 new Double Taxation Avoidance Agreements (DTAAs), along with revision of provisions of 10 existing DTAAs.

"To effectively handle the increase in tax information exchange and transfer pricing issues, Foreign Tax Division of CBDT has been strengthened. A dedicated cell for exchange of information is being set up to work on this agenda," he added.

He also said the finance ministry has commissioned a study on unaccounted income and wealth held within and outside the country to suggest methods to tax and repatriate the illicit money.

Mukherjee added that the amendment in the Money Laundering Legislation in 2009 has significantly increased its scope and application.

"The number of cases registered under this law have increased from 50 between 2005 to 2008 to over 1200 by January this year. The strength of the enforcement directorate has been increased three-fold to deal effectively with the increased workload," he added.

The finance minister said that India secured the membership of the Financial Action Task Force (FATF) in June last year.

"This is an important initiative of G-20 for anti-money laundering. We have also joined the Task Force on Financial Integrity and Economic Development, Eurasian Group (EAG) and Global Forum on Transparency and Exchange of Information for Tax Purposes," he added.

Of the Rs46,963 crore revenue loss due to under-recovery during April-December 2010-11, Rs21,000 crore has come as cash assistance from the government while another Rs15,654 crore was provided by upstream firms like ONGC.

The remaining Rs10,309 crore has been absorbed by oil marketing companies (OMCs).

In 2009-10, Rs26,000 crore in cash assistance was provided by the government to make up for over 56 per cent of the total Rs 46,051 crore revenue loss.

Upstream firms provided Rs14,430 crore and the remaining Rs5,621 crore was absorbed by OMCs.

Petrol prices have risen Rs10.44 per litre this fiscal in eight instalments. Petrol on April 1, 2010 had cost Rs47.93 a litre while today it costs Rs58.37 per litre.

Diesel prices are however lower at Rs37.75 a litre as compared to Rs38.10 per litre on April 1, 2010.

Fuel consumption is projected to rise by 4.74 per cent to 144.35 million tonnes current fiscal from 137.8 million tonnes in the previous year. During April-December, the consumption was 105.268 million tonnes.