India’s underground economy is estimated to account for 50% of GDP Authorities in India have arrested a stud farm owner accused of illegally stashing more than $8bn in Swiss banks.
Hasan Ali Khan was detained in Pune in the western state of Maharashtra. He was later taken to Mumbai.
Officials from India’s Enforcement Directorate carried out multi-city searches at his home and offices.
Last week, the Supreme Court criticised the government for not having the “will power” to act against those illegally funnelling wealth overseas.
The court said the practice was a “pure and simple theft of national money”.
It also asked what the government was doing to retrieve the “black money” being held in foreign banks.
“I am innocent. I haven’t done anything wrong,” Mr Khan told reporters after his arrest on Monday night.
The arrest followed an angry outburst by the Supreme Court last week asking the government why Mr Khan and others were not being taken into custody and questioned.
“What the hell is going on in this country?” the judges asked using unusually strong language for court.
The court set a deadline of 8 March for the government to inform it how it proposed to tackle “black money”.
US-based group Global Financial Integrity estimates that India has lost more than $460bn in such illegal flight of capital since Independence.
It says the illicit outflows have increased after economic reforms began in 1991.
The report says that almost three-quarters of the illegal money that comprises India’s underground economy ends up outside the country.
India’s underground economy has been estimated to account for 50% of the country’s GDP – $640bn at the end of 2008.
Authorities say the government is taking measures to bring back the illegal money, but say there are difficulties in sharing the information because of confidentiality treaties between countries.
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