OCTOBER 15, 2009 was a day that many rich and powerful Americans dreaded. Last Thursday was the deadline set by the Obama administration for American tax dodgers, who considered Switzerland an address of convenience, to come clean on the billions of dollars they had stashed away in Swiss banks and other tax havens around the world. More than 4,500 Americans have already admitted to holding money abroad and many more were expected to follow as the deadline approached.
Now consider this: according to reports earlier this year, Indians held more money in Swiss accounts than people from all other countries put together. The figure of US$ 1.2 trillion (Rs 60 lakh crores, the equivalent of India’s annual GDP)) may have been trotted then by opposition parties in the heat of an impending General Election but there is no doubting that well heeled Indians have stashed away money that is enough to build hundreds of hospitals, thousands of schools and lakhs of primary health centres. One of the pledges made by LK Advani during the last poll campaign was that, if elected to power, the NDA will bring back this humungous amount of money within its first 100 days in office. In the true spirit of elections, Manmohan Singh mocked at Advani’s charges, yet found the matter serious enough to later forward to finance minister Pranab Mukherjee a letter Advani had written on the matter.
Election campaigns are all about rhetoric and tall promises but nothing much happens afterwards. Which is proof that scandals are good poll issues that are best brushed under the carpet once the heat and dust of elections is over. At every election, the UPA too waves its own scandal chargesheet at the NDA but later both sides choose to live and let live. The Obama administration made a promise and then bullied the Swiss government to act and warned UBS, Switzerland’s banking giant, of punitive action. Even Nigeria got back almost a billion dollars stashed away in Swiss banks by despot Sani Abacha while Croatia got back millions embezzled from the country by a former president.
If tiny Croatria can do it, why can’t India, an emerging superpower and an aspirant for a high seat on the Security Council? My guess is no different from yours. It’s a cosy club they have there, the politicians, businessmen, powerful bureaucrats, real estate sharks and others who all believe in status quo. More than a year ago, the German government offered to hand over to India a list of account holders in Liechtenstein's LTG which was in its possession. The government sat on it for long and it was only after Ram Jethmalani filed a PIL that it assured the Supreme Court that the authorities were following it up. Yet it invokes the confidentiality clause to avoid making the information public. Faced with the wrath of MPs in both houses of Parliament, all that Pranabda would say was that he “ will look into it”. I have reasons to believe that with so much focus on offshore holdings, many Indians have already pulled out their money and invested them in acquiring businesses. With the Swiss Ambassador in New Delhi announcing last week that his government was ready to amend its laws, I suspect more and more Indians will be lining up to pull out their money.
In the past, governments had tried and mostly failed, because of a lack of will to go after evaders. On the home front, many schemes had failed altogether though the Voluntary Disclosure of Income Scheme ( VDIS) that the then Finance Minister P Chidambaram unveiled in 1997 helped the government mop up about Rs 10,500 crore. Even that was just a drop in the ocean considering that it accounted for less than three percent of India’s GDP. Finance Minister Pranab Mukherjee is on record that he is averse to another amnesty scheme.
But I know a lot many people in North Block who think otherwise.
Bring on another scheme, they say. Let the dodgers bring their money in, don’t ask them about the source of their wealth, make it conditional that their money be invested in key areas like health, education, water management, urban renewal etc where more than 80 percent of the money is looted by middlemen.
The tax dodgers will at least make sure someone else is not going to walk away with their money. The government can then utilise the crores it currently spends on the social services sector to build airports, expressways, convention centres, stadia etc. And still be left with spare change to make a bid for the 2020 Olympics.