Chief Economic Advisor Arvind Subramanian suggesting systemic changes to check generation of black money has said that the current system of chasing illicit funds is actually compounding the problem because the taxation rules are being seen as arbitrary. He has asked the Centre to focus on the origins of black money rather than chasing it in all corners of the globe if it wants to avoid giving out a 'wrong perception about India'.
He also said that the perception of the tax system being somewhat arbitrary can play a role in this regard. Subramanian said that “For me black money is much more important in terms of what it signals...Arbitrariness, tax rules, discretion and corruption, all these things. We need to be very serious about addressing them. What we are doing currently that gives rise to black money.”
Subramanian said that one of the problems in addressing the issue of black money was that India's tax system was perceived as being arbitrary and added that the danger is that in trying to address that, you could actually compound some of the perceptions about India. He said that it was more important to understand why we create black money in the first place and address those things. Black money, he said, needed to be thought of as a stock problem rather than a flow problem.