I have written about these earlier too and I think the time is ripe to repeat the same. These are India’s biggest economic issues, yet, despite some voices here and there, nothing is being done about them on a red alert scale. Yes, I am talking about black money and corruption and how our politicians, hand in hand with bureaucrats and businessmen, have placed us at a shameful position with respect to these. If BJP really needs a unique differentiator to convince the electorate, then rather than just focusing on the economic development agenda, they should necessarily spearhead the fight against black money and corruption and not be just another voice speaking against these issues.
I collate out here various statistics that I’ve mentioned in some of previous editorials too, and you’ll see how pathetic India’s situation has become with respect to black money. As per various reports, the amount of black money stashed abroad by Indians is approximately $1450 billion, the largest in the world. If one wishes to compare, this is more than our entire national income. As per the same reports, while India is at number one in terms of the total black money stashed abroad, Russia comes in at the second place (at one third of the black money compared to the Indian figure), UK is at the third position, with Ukraine and China trailing it in the fourth and fifth position. As per media reports, in 1967-68, the black money in India was around Rs 3,034 crores (9% of GDP); this went up to Rs 46,867 crores by 1979 (49% of GDP). You can only imagine how the figures would have grown since then! The oft-quoted and much respected Global Financial Integrity (GFI) in its recent report said that India was the third largest exporter of black money in 2011, with $84.93 billion being exported in 2011. From 2002-2011, $343 billion of black money has gone out from India, as per their report.
Similar is the situation with respect to corruption and scams. While in the 1980s, India saw only eight scams of a significant nature, the 1990s had 26 such scams. The figure now has reached a whopping 150 plus! From animal fodder, coffins for soldiers, or real estate meant for martyrs, to telecom and even sports events like the CWG, wherever there has been a scam, there has been a collusion of the devious political class with bureaucrats and businessmen. In 2010, the late and most respected management guru C. K. Prahalad had said that corruption was costing India Rs. 25,000 crores every year, as per the FICCI-E&Y report ‘Bribery and corruption: Ground reality in India’, corruption cost India Rs. 36,500 crores in the period October 2011 to September 2012. A 2011 study by the research agency Indiaforensic is more shocking, as it puts the cost of corruption to India at Rs.1,555,000 crores in the last decade. Another study I read revealed that 50 million poor households have to annually pay around Rs 9000 crores as bribe to various authorities for getting their work done.
Back to black money, and Transparency International says that a huge 60% of black money generated is directed into the electoral process. And taking advantage of this debauchery by politicians (who get their major source of black money from businessmen), the business class has invested in various surreptitious tax havens throughout the globe! Mauritius, Cayman Islands, Bermuda, British Virgin Islands, select Scandinavian and European countries, and even countries like Thailand, Singapore, Hong Kong and Macau – destinations are innumerable for Indians to park illicit funds.
The example of Mauritius is quite interesting, and one that I quoted in one of my previous editorials. I had written then – and this holds now too – that how does one justify that Mauritius ranks first among all countries in Foreign Direct Investment (FDI) inflows to India while its national income is just around $9 billion, and its investment in the banking sector is just over $1.5 billion? 9,000 plus offshore corporate entities in Mauritius have their roots in India. Under the Indo-Mauritius treaty, and under certain other treaties, a Mauritius company can sell shares of an Indian firm and yet escape taxes as there is no policy of capital gains tax (CGT) in Mauritius.
Quite ironical that when ultra-rich countries like Switzerland, which clearly hoards an astounding amount of black money, are ready to cooperate with India, not many Indian politicians are ready to take that offer up. I think it’s quite understandable why they would not want to follow up! This is unlike the governments of other nations. For example, Germany paid $6.3 million to the LGT group in Liechtenstein and bought bank data to identify tax evasion. In 2009, US forced the Swiss government to give access to 4,450 secret accounts in UBS. Even Nigeria, after 18 years of trying, got back $700 million. So did Philippines ($700 million) and Mexico ($74 million)!
It’s time now for India. Rather, it’s time for the BJP to take the lead in the area of getting back black money and ending corruption. As I’ve said before, the black money lying abroad belongs to Indians; and that it must be brought back. And if corruption is killing India, then the BJP must necessarily punch it down transparently and show the electorate that they mean their words when it comes to improving India. Yes, the economic development agenda is a great one when other things are proper. But when we have two most critical issues that are destroying India with every passing day, then BJP needs to first pull India out of the muck, and then target the sky. If they wished to convince the electorate that they should be the party of choice to lead India, then ending black money and corruption should be at the top of their agenda.
- 10 January 2014 |
- Arindam on Indian Economy