DO INDIANS HAVE TRILLIONS IN SWISS BANKS?

DO INDIANS HAVE TRILLIONS IN SWISS BANKS?




The popular and ill-informed cry goes that Indians have stashed away a trillion 
dollars or more of ill-gotten wealth in Swiss accounts or in other secret tax 
free havens abroad has galvanized the media and attention-seekers into demanding 
that this money that rightfully belongs to the nation be brought back and the 
offenders put to death. 

When Julian Assange was interviewed on Times Now in the third week of April 2011 
he said clearly that there were Indian names attached to Swiss accounts and that 
these would come out in some future installment of Wikileaks. He said that the 
Indian government should be more aggressive in investigating these accounts 
because per capita India was losing more tax money than Germany. 

The largest stash in secret Swiss accounts is from Germany. 



What Assange did not say was that Indians had the largest number of secret 
accounts in Swiss banks but most newspapers the next morning reported that this 
is what he had said. The Navbharat Times made the story first lead on its front 
page and its more financially literate cousin, the Economic Times, reported the 
story less dramatically but had this headline, "More Indian Money in Swiss Banks 
than Others" - it was supposedly quoting Assange but he was not quoted as having 
said this.



Assange could not have said it because as the world's current super-sleuth he 
would know well that Indian money does not constitute the largest component of 
the Swiss banking system. Even cursory investigations will reveal that most of 
the money in Swiss banks comes from Europe, the Middle East, Latin America and 
the United States. India comes after these countries and possibly even after 
China and Southeast Asia. But, in recent months gullible Indians have been led 
to believe that if the money salted away in secret Swiss accounts comes back 
India then it would be the solution to all our economic problems. Prominent 
opposition politicians and activists have gone on record to say this on national 
television and leftist journalists have repeated the story endlessly in their 
columns and their TV shows.



What is interesting about this emphasis on Swiss accounts is that the naïve (and 
often those with vested interests) who go on and on about bringing India's money 
back seem not to notice that a whole new breed of Indian politicians has come to 
power and they have no interest in depositing their loot in foreign banks. They 
need it in India for political purposes and to make sure that their families 
roll in wealth for generations to come. With this in mind they use their 
ill-gotten riches to start up businesses in India that in the shortest possible 
time due to official patronage do remarkably well.


The Swiss accounts story is in all likelihood a red herring because even when it 
comes to big businessmen stashing their black money abroad there is less need 
than there used to be in socialist times. In those days when businessmen were 
made to sometimes pay taxes that were higher than their profits having secret 
stashes in Swiss banks were almost necessary especially since there was in those 
dark, impoverished times such strict restrictions on foreign exchange that the 
amount allowed by the RBI for Indians traveling to foreign lands was often less 
than you needed to pay for the taxi that took you into town.

The times have, mercifully, changed. Indian businessmen are allowed not only to 
take out more than enough money to be able to stay in fine hotels in London and 
New York they are even allowed to buy foreign companies and open legitimate 
accounts abroad. 

So instead of chasing after Swiss bank accounts those who want to reduce 
corruption in public life in India should be paying more attention to finding 
the holes into which black money disappears inside India. 

Real estate (or to a lesser extent starting an airline, running private 
educational institutes or setting up posh hotels) is a reliable parking spot 
because it is almost impossible to buy property in our towns and cities without 
black money. The corporate geniuses that have sprouted in the homes of our big 
political dynasties and who serve as money laundering fronts are full of black 
money secrets and then there are political leaders like Mayawati who flaunt 
their new wealth with pride. This is without even going into the thousands of 
crores of rupees of black money that fund elections in India.


What may have been made as profit in the recent spate of scams hitting our 
nation is small change compared with what the Chief Minister of a state can 
make. It is in his hands to change land use and hand out government contracts 
and there is big, big money in these activities. So one of the most effective 
ways to reduce corruption in India would be to reduce the discretionary powers 
that high officials enjoy. Another way of reducing corruption would be to lay 
down clear rules by which contracts are handed out instead of keeping the 
process so vague and nebulous that they can be tailored at will. 

Thanking you,

Arup Isaacs