New Delhi: The Centre could bring up to $500 billion of black money if it issues elephant bond, a high-level trade panel has suggested in its recent report. This money then could be used towards funding various infrastructure projects in the country, the report said.
What’s the elephant bond? It is an avenue for people to bring their money stashed offshore without fear of being prosecuted. Once they declare their offshore money, they will be asked to invest 40 per cent of that amount in these elephant bonds. A fixed coupon security will be issued.
“The HLAG estimates that creation of elephant bonds could help fund (approximately) $500 billion worth of infrastructure projects,” stated the HLAG, as quoted by The Indian Express. The HLAG was set up under the Ministry of Commerce and Industry last year and chaired by an economist and former member of the Economic Advisory Council to the Prime Minister, Surjit S Bhalla.
“If we get even $300 billion, that would solve our infrastructure finance problem and finance the gap between investment and savings. It will bring about an immense lowering of the real interest rate…it will also have a tendency to strengthen the rupee,” Bhalla told The Indian Express.
According to reports, while 45 per cent of the wealth brought in by subscribing to these elephant bonds will be credited with the depositor, the remaining 15 per cent will be collected as tax deducted at source by the government. Of the amount invested in the bonds, the HLAG has recommended that 75 per cent of the interests earned be collected as tax.
India has recently received the first tranche of Swiss bank account details of its nationals under a new automatic information exchange pact. Since many countries are now cooperating with each other in exchanging information in this regard, elephant bonds stand a chance to work out.