Secret wealth abroad
Switzerland has been accused of giving shelter to black money and there has been a lot of inflow of such wealth from India and other countries of the world.”
This is not L K Advani, on election mode, speaking last Sunday, but the Swiss ambassador to India briefing the media in Delhi last year.
The occasion was the 60th anniversary of Indo-Swiss Friendship Treaty. Admitting that Indian black money gets hoarded in his country, he added that the new law in Switzerland would, not stop it, but control it “up to a certain limit”.
The Swiss diplomat authentically answers the first of the FAQs, that is, whether a lot of Indian money is really stashed away in Swiss banks.
Swiss banks are not the only secret destination. There are 37 such shelters in the world, says US Inland Revenue. The secret owners of the secreted monies operate in secrecy — venal businessmen, corrupt politicians, public servants, drug lords, and criminal gangs like the D-company.
The slush monies are the financial RDX for terror, besides weapons of mass destruction of national and global finance. That there is secret money is no more a secret. Only the amounts and persons are secret.
But how much of India’s stolen wealth could be stashed in Switzerland? Specific estimates of this later. Before that, here is a sideshow, but a relevant one.
Illicit money is the dirty outcome of modern capitalism. But, after 9/11, the US realised that not just the buccaneers in business, but Osama bin Laden could also hide his funds in secret havens and use them to bomb the world.
Campaigns against dirty money as high security risk commenced with the path-breaking research done by Raymond W Baker, a Harvard MBA and a Brookings scholar.
He published his research as a book Capitalism’s Achilles Heel: Dirty Money and How to Renew the Free- Market System. The book was published in 2005. This set off intense debate in the US as the exposure linked dirty business and dirty money with terror and national security.
Raymond Baker had estimated, using authentic data, tools and reasons, the dirty wealth secreted in banks at $11.5 trillion to which, he found, one more trillion was being added annually. He added that in the process the West was getting an nnual bounty of $500 billion from the developing countries, India included.
Global Financial Integrity (GFI), a global watchdog headed by Baker to curtail illicit money flows, has recently brought out detailed estimates of the black wealth hoarded in secret havens from different countries. GFI research shows that during the period 2002 to 2006, annually $27.3 billion was stashed away from India, making a total of $137.5 billion for the five-year period.
That is, in just five years, Indian wealth amounting to Rs 6.88 lakh crore has been smuggled out of India.
This gives a clue as to how much Indian money would have slipped out of India in the last 62 years, particularly during the Nehruvian socialist regime when the income tax (97.5 per cent) and wealth tax (almost equal to the income earned on investments)together constituted double the income earned.
It is undisputed that the Nehruvian socialist model forced huge sums out of India. So the amount of Indian black wealth secreted away in the last 60 years — estimated at from $500 billion (Rs 25 lakh crore) to $1400 billion (Rs 70 lakh crore) — does not seem to be wide off the mark.
Economists call it flight of capital. This is the people’s money stolen from them.
See the consequence even if part of it is brought back. A portion of it would make India free from all external debts which is now over $220 billion;
India will transform into an economic superpower; some 10 or 15 Indian rupees could buy a US dollar which today 50 Indian rupees cannot; a litre of petrol on our roadside would cost Rs 15 or even less, against today’s 50 plus; the cost of imports in rupee terms would be down to a third or half; India’s entire infrastructure needs can be funded; India will become so energy efficient and costcompetitive that exporters may need no sops at all; India will lend to — not, as it does now, borrow from — the world;
Indian housing can be funded at affordable cost; rural poverty can be wiped out... The list is endless. But, then, is it possible to bring back the secreted monies?
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