“Black money” was the hot favourite topic of the then opposition parties in Lok Sabha election campaigns. No opposition party let go UPA Government on the issue of its failure in bringing much hyped black money lying at Swiss banks. BJP went one step ahead and even promised to put culprits behind bars and seize illegal black money stashed at foreign banks. Four months after having formed the Government, NDA issued a list of 3 Indians who were alleged to have parked illegal money at foreign banks.

Many of you must be feeling that the Government has betrayed you on this issue. After all, it is tough to believe that there are only 3 Indians hold money illegally outside India. The Government wasted no time in clarifying that, it had handed over a list of 627 “suspects” who could have hoardedmoney at foreign banks. Later, the Swiss Government remindedIndian Government about the terms of treaty for sharing information pertaining to bank accounts.Supposedly the treaty restricts the Government to disclose “in principal” account information even to the court. Whether India really recovers tax evaded money which has been dumped at foreign banks, remains to be seen. However, considering the time lapsed till now, it may not come as surprise if the actually recovered money amounts much lower than estimated previously. The simple reason is, till the Government takes actions, black money might flow out by other means. Read further it’s interesting…

Recently, India reported a massive jump in gold imports. In the month of September, India imported Nearly Rs 23,900 crore worth gold of which, almost 64% has been brought in from Switzerland. Gold constituted almost 6.26% of total imports in September. Now it is being speculated that, the black money which was lying in Swiss accounts has been channelised in gold and has been sent to India. However, Jewellers and a few others have a contradictory view. They opined that, recent upsurge in gold was on account of pre-diwali buying from bullion traders and stockiest. Jewellers also claimed that, most of imported gold was exported. Since many refiners are from Switzerland, importsare higher from Switzerland. It is also being said that, with falling prices, demand for gold is rising in India.

PersonalFN is of the view that, the speculations about black money being sent to India by way of gold exports can’t be ruled out. In fact, it highlights that, more the time is wasted in bring black and illegal money back in India, more that be regularise by bending laws and taking advantage of loopholes. PersonalFN believes India has lost the opportunity of recovering most of illegal money. Political compulsions and restrictions of international treaties may severely incapacitateIndian Government in achieving any meaningful success in bringing black money back. Having said this PersonalFN also believes, gold imports might keep surging if tax evaders find channelising black money into gold and exporting it to India easy and effective.

India has currently imposed heavy import duties on gold besides putting several import curbs. This has given rise to smuggling which has gone up unprecedentedly over a last few years. For a moment if we assume that recent surge in gold imports is on account of channelising of black money, it leads us to another possibility that there could be similar rise in gold smuggling. This may create undesirable results. One can’t be sure that, they gold may not be en-cashed for channelising it further in real estate which is barely regulated in India.

PersonalFN thus believes other assets may also be affected with such developments. Inflation may also shoot up if gold is circulated within India. PersonalFN advises their investors not to speculate on price movement of any asset for this very reason. You never know who is speculating which asset class when. It is always better and safe to focus on your own goals. Asset allocation based on your goals should be your basis of investments.
 

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