Foreign Media on PM Modi's Black Money Hunt: 'He Tried Everything'

Income tax officers in India will be burning midnight oil Friday. With a four-month window to declare undisclosed assets ending this month, Prime Minister Narendra Modi has asked officials to work into the night to handle a last-minute rush of declarations.

Black money, a colloquial term for income that has illegally escaped taxes, has been a hot political issue in India — Ambit Capital has estimated the country’s black economy at 30 trillion rupees ($450 billion).

Modi struck a chord with 1.3 billion Indians in the 2014 national polls by promising to give the impoverished as much as 2 million rupees each from such funds stashed abroad. A one-time chance to come clean on the foreign funds led to declarations of only about 25 billion rupees in tax last year, and the program for local cash ending this month might not be much different. 

“What is probably stopping people is the 45 percent tax they have to pay instead of 30 percent (plus surcharge),” said Amarpal Chadha, a partner with EY India, a unit of one of the world’s biggest accounting firms. “The government has clarified enough it won’t take any action against the people who make declarations. Despite that, we have not seen a huge response.”

A jack-up in tax revenue through voluntary disclosures of secret assets would help Modi improve India’s dismal tax-to-gross domestic product ratio as he seeks to narrow Asia’s widest budget deficits. It would also help him score some political points, especially before the assembly elections in India’s most-populous state, Uttar Pradesh, next year.