$1.4 trillion parked in safe havens abroad'

The 'core problem' of parking of Indian funds in tax havens abroad could be addressed only by a strong political will, said Prof R Vaidyanathan, a finance and capital markets expert, on Saturday.


He said a slew of measures, including making it mandatory for politicians to declare that they don't have funds parked abroad, could go a long way in addressing the issue.

He said funds in the range of $ 500 billion and 1.4 trillion belonging to Indians were parked in safe havens abroad, especially Swiss banks. Delivering the Nani Palkhivala memorial lecture on 'Tax havens and illegal wealth of India', Prof Vaidyanthan pointed out that $1.4 trillion was equivalent to Rs 70 lakh crore, more than India's national income of around Rs 50 lakh crore.

Citing a study by Global Financial Integrity Study, the professor at IIM-Bangalore said the average money taken away from India annually during 2002-06 was $27.3 billion. Thus, during the five-year period, the amount stashed away equalled $136.5 billion.

Prof Vaidyanathan also cited statistics available on the Union finance ministry website, on country-wise approvals for direct investments in JVs and wholly-owned subsidiaries during 1996-2007, which revealed that more than one-third of outflows out of the total of $31,000 million was to well-known tax havens such as Channel Islands ($5,400 million) and Mauritius ( $2,600 million).

Noting that at least 60,000 Indians visit Switzerland every year, not all as tourists, he said reports on all official and personal trips made by politicians should be submitted to the government.

Pointing out that the Swiss government had always maintained that it could not divulge details pertaining to its clients, except in specific cases, Vaidyanathan said the Centre should take up the issue on a multilateral forum to get back the black money.

Source : ET

UK - One in Six homes is workless

BBC: More than one in six UK homes which house at least one person of working age does not have anyone in employment, official statistics show.

Sprouts of Positive News

The mainstream media in US and India is full of stories of Economic Recovery, while in reality nothing has changed yet.

CBFE Economics writes

1. A lot of people are very thirsty for any kind of positive economic news. If you read any of these articles you'll see that conditions for most of these corporations are pretty dreary. Most are actually seeing declining sales and earnings. About the only positive thing to report is that they beat analyst expectations.

2. Many of these media organizations are clearly suffering in this downturn as well. A recovery would greatly benefit them. So its in their interest to promote as much positive economic news as possible, possibly in an effort to shift public opinion and promote more economic confidence (regardless of whether it is warranted or not).

3. Many of these media organizations want to paint a positive picture regarding the financial situation of these corporations because they have ties to them. For example, remember the story about Macy's I linked to up top? The retail sector is one of the biggest advertisers in just about every form of media.

4. Its the predominant thinking on Wall Street and these media groups don't want to rock the boat. Call it inertia, if you will.

Who moved my Cheese? - India

Bloomberg reports :

India will seek new customers for overseas sales as recessions in the U.S. and Europe damp demand for the nation’s products, Trade Minister Anand Sharma said.

“About 60 percent of our traditional export markets are in recession,” Sharma told reporters in New Delhi today. India will be looking to expand its markets to “make sure that our exports remain competitive,” he said.

The worst global recession since the Great Depression has cut demand for made-in-Asia goods. Flagging exports are forcing Indian companies in sectors such as jewelry, textiles and leather to cut production, weakening an economy expected by the central bank to expand at the slowest pace since 2003.

The Trade Ministry will announce more assistance for exporters in a policy statement on Aug. 27, Sharma said. India’s exports dropped 27.7 percent in June from a year earlier to $12.8 billion, the ninth consecutive monthly decline. Exports plunged 33.3 percent in March, the biggest fall on record, according to Bloomberg data going back to April 1995.

Indian Economy - behind the scenes

Nearly 1.3 lakh jobs have been lost during April-June 2009, in eight key sectors, including textiles,automobiles and IT/BPO in the country as a fallout of the economic slowdown according to the labour bureau. Tamilnadu labour secretary T Prabhahkar rao had not received any largescale representation about the retrenchment in the state. Reacting to the report, C.K.  Ranganathan, CII Tamil nadu president said temporary jobs in the automobile sector has been affected but not permanent.