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The Pak Banker - - OPINION -

lack money" -- the col­lo­quial name for a vast net­work of offthe-book cash trans­ac­tions and un­banked sav­ings -- is one of In­dia's big­gest scourges. Amount­ing to as much as $460 bil­lion a year, big­ger than the GDP of Ar­gentina, all that money lies be­yond the reach of the tax au­thor­i­ties, cred­i­tors and anti-cor­rup­tion in­ves­ti­ga­tors.

Ef­forts to bring it into the open have strug­gled. Iron­i­cally, though, they may be set­ting up In­dia to leapfrog past other, far more ad­vanced economies into a fu­ture with­out any cash at all.

In­dia's black money pile is un­usu­ally large for sev­eral rea­sons. First and fore­most, about half the coun­try's out­put comes from the small, in­for­mal sec­tor, where cash trans­ac­tions are the norm. Mean­while, taxes are cum­ber­some to pay and easy to avoid. To col­lect rev­enue, In­dia's gov­ern­ment has to rely on in­di­rect levies such as sales and ex­cise taxes, which are dis­tor­tionary and re­gres­sive, rather than on in­come tax. Di­rect taxes con­trib­ute only 35 per­cent of the take in In­dia, com­pared to the OECD ideal of two-thirds.

Tax eva­sion has been a hot-but­ton po­lit­i­cal is­sue in In­dia for at least a decade. The anti-cor­rup­tion cru­sader Arvind Ke­jri­wal -- now chief min­is­ter of the In­dian cap­i­tal Delhi -- made head­lines when he ac­cused top politi­cians and busi­ness­men of hav­ing il­le­gal off­shore ac­counts. Prime Min­is­ter Naren­dra Modi gave a se­ries of fiery speeches on the cam­paign trail in 2014 in which he promised to "bring back each and ev­ery penny de­posited abroad by In­dian cit­i­zens" and de­clared that "this money be­longs to the poor peo­ple of In­dia."

An in­ves­tiga­tive team of re­tired judges ap­pointed by Modi handed in the fifth of its re­ports last week. Like the pre­vi­ous ones, it was full of wor­thy sug­ges­tions. What grabbed head-

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