Saturday, August 29, 2009

$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 Saturda

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

No comments: