Tackle the cause for money going abroad, getting it back is secondary
Sunanda K Datta-Ray / New Delhi May 09, 2009, 00:40 IST
When the Reserve Bank asked Grindlays Bank, the premier British banking institution in India in the sixties, now, alas, lost in the chaotic maws of Standard Chartered, to disclose accounts held by Indians, it received a pithy reply from Lord Aldington. How could the bank tell, countered the chairman whose family once owned Grindlays, whether Mr Patel was British, Indian, Pakistani, Kenyan, Ugandan or Tanganyikan?
Just as money has no colour, it has no nationality or politics. So, the question of repatriating funds siphoned out of India’s economy and salted away abroad should be part of a national consensus, not a matter of scoring electoral points. In fact, I remember Manmohan Singh telling a European journalist when he visited Singapore as the finance minister in 1994 that he was trying to mop up such funds by making it more attractive for rich Indians to keep their fortune at home. But though the BJP government’s Resurgent India Bonds were a great success, they were of limited usefulness in this respect since they applied only to NRIs, not to Indians at home who sent their money out by hook or by crook, usually crook.
I would have thought therefore that the real challenge is to establish why Indians remit money abroad and to make it unnecessary for them to do so. A parallel exercise would be to identify the channels of transmission and block them. But the first is by far the more important task. It’s the motive that must be tackled. If motive remains, human ingenuity will sooner or later find another escape route. As R Vaidyanathan, the professor of Finance at Bangalore’s Indian Institute of Management whom L K Advani wants on his black money repatriation task force, rightly says, “When you want to indulge in adharma, hundreds of ways are open!”
Various estimates suggest that Indians must have deposited an awesome $1.4 trillion or Rs 71 lakh crore in foreign banks since independence. Vaidyanathan claims on the basis of the 2006 Global Financial Integrity study that an average of $27.3 billion (Rs 136,466 crore) was stashed away every year between 2002 and 2006.
This implies that no matter what politicians boast, India Shining is a myth. As in all banana republics — a term that is bound to raise the hackles of patriotic readers — the rich feel their money is safer in Switzerland, Liechtenstein, Luxembourg or any of about 70 other tax havens. No indictment of India could be more devastating.
But whipping up a frenzy over the symptom will not cure the malaise. Nor can anyone seriously believe, as Vaidyanathan says, echoing Advani and Narendra Modi, that “India will be in the top five league if all the ill-gotten money is brought back.” Is money the only factor that prevents us from soaring ahead as global leader? We must provide food, shelter and clothing for the 30 per cent of Indians below the poverty line and adequately paid jobs for millions of others. We must solve problems of drought and flood to transform agriculture, ensure that enough schools with good teachers, good libraries, well-equipped laboratories and sound curricula make compulsory schooling meaningful and that the young can afford to attend them instead of having to slave for wages. Our myriad needs include technical training, a secure social security net with proper medical and unemployment benefits, urban renewal, better roads, railways, coastal shipping, women’s rights, freedom from religious dogma and a liberal climate that encourages productivity. Money is not the root of all evil but is not the sole answer to all these problems either.
A professor of Finance should also know that bringing back these funds won’t stop present and future flows. That will happen only when there is no incentive to fudge invoices, demand kickbacks, smuggle gold or indulge in hawala operations. Vaidyanathan’s point about adharma leads to the crucial question: For all our self-righteous religiosity, are Indians more adharmic than others?
Advani and Modi could have initiated a debate on this and sought ways of preventing black money being both generated and spirited out. Instead, they raised a hue and cry over bringing back secreted hoards and organised a bogus referendum with much fanfare. Their showmanship might impress a gullible few but Vaidyanathan let the cat out of the bag when he warned “that a lot of Indians don’t just go to Switzerland to ski.” No wonder Congressmen are screaming for a White Paper on Modi’s own two reported trips. More than one can play at the game of cheap gimmickry.
I have been wondering what has been said by Advani about Swiss money that has riled Congress/Sonia/Rahul/Singh/Chidambaram/Ramesh and their bhompus in our media - a lot as plentiful as Indian money abroad - such as BS edit page, AV Desais, Datta-rays, etc so much? Why so much mocking and contempt for that one suggestion? And, if it was a gimmick, why are these worthies so scared and spending so much of the limited media space on a supposedly gimmickry? This makes no sense unless daal me kuch kaala hey! And, about gimmicks, Datta-ray Sir, your recent columns in variopus papers are the mother of all gimmicks.
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