Anand: Stating that nobody knows the exact amount of black money stashed away in overseas tax havens, RBI Governor Raghuram Rajan stated that lower income tax rates will help curb generation of such illicit funds.
"We need to focus on how to stop this practice (of parking money outside the country). We need to bring down tax rates to incentivize the upper class," Rajan said when asked about his views on curbing black money being stashed in tax havens. He was here to deliver the third Dr Verghese Kurien Memorial Lecture.
In reply to a question on how to stop people from parking money outside, "No one knows how much black money is stashed outside the country, as there are many speculations doing the rounds." As another measure to curtail generation of black money, Rajan said, "We need to cut the black money at source and make it difficult for them to hide their ill-gotten wealth.
"High possibility of being caught will bring down black money. We also need to improve the system and bring that money into formal system with the compulsory use of PAN card or Aadhaar card," the RBI Governor said. Meanwhile, uproar marked the first working day of Parliament today with opposition alleging that nothing had been done to implement BJP's poll promise of getting back black money in 100 days and forcing the government to agree to a debate on the issue tomorrow.
Rajan parried a query on what is in store on December 2 as pressure is mounting on RBI to slash interest rates. The RBI Governor will unveil the fourth bi-monthly monetary policy on December 2 amidst falling inflation and tepid economic growth. After assuming office in September 2013, he has increased key rates thrice to 8 per cent to fight inflation.
