Can Big Data help track Black Money in the Indian market?

By Onkar Sharma

The Modi-led NDA government’s move to ban the circulation of old Rs 500 and Rs 1000 notes brought black money again into the spotlight. The ban is believed to bring down the stashing of cash, outside the banking system and ensuring transparency in  the economy. It is easier said than done. However, the government can use more effective tools to fight corruption as well as black money. It can use new age tools such as big data and analytics.

The government has already put a lot of stress on Digital India which is centred around connecting all 600k villages over the high-speed fibre network. Since most of the transactions related to disbursement of subsidies/funds, land records, land deals and others would be done digitally, the government will have a fair chance to keep eye on everything.

The use of big data analytics in order to track transactions can give government insights into the financial malpractices in real time. The government will have to further the use of DBT (direct benefit transfer) and transfer all kinds of subsidies into the bank accounts opened either under the Jan Dhan Yojna (JDY) or otherwise. In many states, the government is already transferring the LPG and PDS subsidy into the bank accounts. Further enhancement of DBT will give the government an upperhand in its fight against corruption.

“With the financial backbone that can collect information on all the financial activities also in place, Big Data Analytics can be extremely effective. It can easily spot unusual activities at any level of aggregation: regional, branch or even at individual level. It is the right time to deploy Big Data Analytics to make this detection of unwanted financial activities faster, easier and more targeted,” suggests Himanshu Gupta, Director of Strategic Accounts, Fuzzy Logix.

The cash that remains out of the financial systems will start diminishing, but even this cash leaves a digital trail, either at the point of consumption or at the point of supply.

India is not the only economy which is facing a challenge to uncover the black money hoarders. According to a fresh estimate by a trio of senior economists from the Bank of Italy, from the $6-7 trillion worth of black wealth lying hidden in tax havens across the world, Indian’s share is estimated at $152-181 billion, which makes up a sizeable portion of Indian economy. For effective use of big data analytics, the successful implementation of Digital India in all government departments (States and the Center) including all the banks will have a far reaching impact.