Bring back India's wealth from UBS
Swiss Bankers Association has declined to give names of Indian holding accounts in Swiss banks. But they could not hold American's names, they buckled down, revealed names of US nationals and paid fines to US also. Why do we then fail?
SWISS BANKERS Association (SBA) has turned down India’s request of fishing the names of Indians who has had stashed black money in Swiss banks including Union Bank of Switzerland (UBS). This denial has come as a major bash to the efforts of Indian government with respect to unearth black money siphoned off abroad. The chairman of SBA James Nason has, however, said that the Swiss Banks would consider the unfolding names if concrete and definite information is made available to them.
He further said that India needs to re-negotiate Double Tax Avoidance Agreement (DTAA) with Switzerland so that SBA can exchange some information with respect to Indian accounts holders.
Startling figures
How many from us know of this starting fact that Indian nationals top the list of clandestine money deposits in Swiss Bank? It is a fact and not a wild guess because the revelation has been made by none other than the Swiss Bankers Association itself. The money deposited by Indian mostly politicians and bureaucrats and off course some business tycoons in the Swiss Bank has piled up to a huge 1456 billion USD. But when Nason was asked to verify this figure, he simply said these figures as ‘crazy one’. He or anyone from the SBA are legally bound not to reveal the names or amount under Swiss law, defying which he can attract six months imprisonment and pecuniary fines also. It is pertinent to mention that Swiss Banking Act of 1934, provides for utmost secrecy and confidentiality on part of Swiss Banks with respect to their account holders.
But same is not the story with Americans. In order to tight its screws on the tax evaders USA in a daring move, sought information from UBS regarding the American clients who have evaded tax from IRS and deposited their money in this clandestine off shore bank. Initially, the UBS vehemently opposed this move and declined to disclose the names of clients and their amounts in the bank account on the pretext of its age old policy of secrecy and confidentiality conferred on it under UBS Act, 1934.
The US administration toughened its stand and made UBS bow down. Bank’s then chairman Peter Kurer said, “We accept full responsibility for these improper activities, he added, suggesting that client confidentiality, to which UBS remains committed, was never designed to protect ‘fraudulent acts’.” The bank finally not only paid 780 million dollar as penalty to avoid possible launching of prosecution against it but also revealed and made available names of as many as 4450 account holders. Rightly said ‘might is right’.
This whole success story has set a good example for countries like India, citizens of which have reportedly deposited 1456 billion dollar in UBS. According to SBA, in 2006, Indian nationals reportedly held the largest quantity of illegally stashed money in Swiss Bank, if this is to be believed and there is no reason of disbelief, Russians have deposited 460 billion dollar followed by British 390 billion dollar, Ukrainians 100 billion dollar and Chinese 96 billion dollars. These figures speak much than what it appears to be. This is why it is said that India is rich country where poor citizens live.
In this period of global meltdown, we have been making impressive growth, second to China only. But in terms of gross domestic product, we are far behind than that of US, China, Japan etc. It is yet to cross 01 trillion dollar at the current rate of convertibility. If the deposited huge amount of Indian nationals is taken true, it is 1.8 times the GDP of our country. What a massive drain of wealth! Alas, we could have brought it back. In fact, this drain of wealth is much bigger than those of the British colonial period. Economic historians have estimated that till independence the Britishers had been able to drain our wealth from India equal to five per cent of GDP, whereas; in post independence India it is 108 per cent of the GDP. What a tragedy!
Startling figures
How many from us know of this starting fact that Indian nationals top the list of clandestine money deposits in Swiss Bank? It is a fact and not a wild guess because the revelation has been made by none other than the Swiss Bankers Association itself. The money deposited by Indian mostly politicians and bureaucrats and off course some business tycoons in the Swiss Bank has piled up to a huge 1456 billion USD. But when Nason was asked to verify this figure, he simply said these figures as ‘crazy one’. He or anyone from the SBA are legally bound not to reveal the names or amount under Swiss law, defying which he can attract six months imprisonment and pecuniary fines also. It is pertinent to mention that Swiss Banking Act of 1934, provides for utmost secrecy and confidentiality on part of Swiss Banks with respect to their account holders.
But same is not the story with Americans. In order to tight its screws on the tax evaders USA in a daring move, sought information from UBS regarding the American clients who have evaded tax from IRS and deposited their money in this clandestine off shore bank. Initially, the UBS vehemently opposed this move and declined to disclose the names of clients and their amounts in the bank account on the pretext of its age old policy of secrecy and confidentiality conferred on it under UBS Act, 1934.
The US administration toughened its stand and made UBS bow down. Bank’s then chairman Peter Kurer said, “We accept full responsibility for these improper activities, he added, suggesting that client confidentiality, to which UBS remains committed, was never designed to protect ‘fraudulent acts’.” The bank finally not only paid 780 million dollar as penalty to avoid possible launching of prosecution against it but also revealed and made available names of as many as 4450 account holders. Rightly said ‘might is right’.
This whole success story has set a good example for countries like India, citizens of which have reportedly deposited 1456 billion dollar in UBS. According to SBA, in 2006, Indian nationals reportedly held the largest quantity of illegally stashed money in Swiss Bank, if this is to be believed and there is no reason of disbelief, Russians have deposited 460 billion dollar followed by British 390 billion dollar, Ukrainians 100 billion dollar and Chinese 96 billion dollars. These figures speak much than what it appears to be. This is why it is said that India is rich country where poor citizens live.
In this period of global meltdown, we have been making impressive growth, second to China only. But in terms of gross domestic product, we are far behind than that of US, China, Japan etc. It is yet to cross 01 trillion dollar at the current rate of convertibility. If the deposited huge amount of Indian nationals is taken true, it is 1.8 times the GDP of our country. What a massive drain of wealth! Alas, we could have brought it back. In fact, this drain of wealth is much bigger than those of the British colonial period. Economic historians have estimated that till independence the Britishers had been able to drain our wealth from India equal to five per cent of GDP, whereas; in post independence India it is 108 per cent of the GDP. What a tragedy!
Like Americans, we too desperately require huge liquidity. We have injected massive stimulus package into the economy for a ‘jerk start’, for which we require more and more money. The IIIFCL, which provides fund to carry out infrastructural projects require money. The National Rural Employment Guarantee Scheme (NREGS) and Bharat Nirman Yojna etc, though marred by stray incidents of corruption, are bringing silent social and economic revolutions in rural areas. They are required to be further strengthened both in terms of financial allocation and social audits.
Thus, to see economy moving and rural developmental schemes get going, we require money. The million dollar question is, from where will the money come? We cannot increase the tax rate; because it is counterproductive ‘Laffer curve theory’ also suggests the same. We have evolved ‘direct tax code' which is aimed at harnessing more resources needed for our growth. We have set target of Rs 4, 00, 000 crore in direct tax head. Goods and services tax (GST) is to begin from April, 2010, which is expected to add 1.4 per cent additional increase to the GDP.
Thus, to see economy moving and rural developmental schemes get going, we require money. The million dollar question is, from where will the money come? We cannot increase the tax rate; because it is counterproductive ‘Laffer curve theory’ also suggests the same. We have evolved ‘direct tax code' which is aimed at harnessing more resources needed for our growth. We have set target of Rs 4, 00, 000 crore in direct tax head. Goods and services tax (GST) is to begin from April, 2010, which is expected to add 1.4 per cent additional increase to the GDP.
We have, therefore, to take recourse to similar measures as Americans have taken. If we can bring back hefty amounts from the UBS, it can be of immense help for our ailing economy; after all 1456 billion USD is an amount which can change the fate our nation. Liberalisation has increased the pace of flight of capital and the size of drain of wealth kept growing with growth of economy. Time and again this issue has been raised but every time the power brokers have succeeded in thwarting the move. Serious efforts are needed to bring back wealth. There must be a political audacity to raise this issue and make meaningful efforts in this regard. India must stand tall and extract information from UBS and other such offshore banks with regard to clandestine bank deposits by Indian nationals. We must talk to them in a peremptory tone and demand back the illegally drained wealth of the nation. It is high time; India must stand firm with a determined body language so that UBS behaves with us at par with US.
This issue can be raised on world forums including G-20, G-7, and UN summits. How can a nation or financial institutions like UBS be allowed to eat up the vitals of ours in the name of century old obsolete and colonial legislation? Time has come for the international community also to exert pressure on Switzerland and see that the policy of secrecy and confidentiality of UBS and other such offshore banks be scrapped. It does not go against the Laissez-Faire or free market economy, after all unethical financial practices and bottom less greed have already done tremendous damage to the world financial order beyond repair. Economies are made for the welfare of citizens in particular and human kind in general. How can unethical trade and financial practice be allowed to swallow the destiny and right to live a descent life of billions of poor people who still starve while the banks are spilling over with money?
This issue can be raised on world forums including G-20, G-7, and UN summits. How can a nation or financial institutions like UBS be allowed to eat up the vitals of ours in the name of century old obsolete and colonial legislation? Time has come for the international community also to exert pressure on Switzerland and see that the policy of secrecy and confidentiality of UBS and other such offshore banks be scrapped. It does not go against the Laissez-Faire or free market economy, after all unethical financial practices and bottom less greed have already done tremendous damage to the world financial order beyond repair. Economies are made for the welfare of citizens in particular and human kind in general. How can unethical trade and financial practice be allowed to swallow the destiny and right to live a descent life of billions of poor people who still starve while the banks are spilling over with money?
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