Funds stashed abroad curbing country's growth, says profesor of IIM -Bangalore

The tendency of Indians to stash away their earnings abroad is one of the major obstacles to the country’s growth, Prof R Vaidyanathan of the Indian Institute of Management -Bangalore said on Tuesday at a talk hosted by Rotary Club of Bangalore on ‘Indian Black Money and Tax Havens.’

Though black money’s impact may be minimal at the micro-economic level, on a large scale it poses grave threats in the form of terror financing and global intelligence theft.
 “At the global level, Indian black money is the cause of the country’s bankruptcy.”

Domestic black money remained in circulation and was one of the propellers of the recent spurt in the country’s Gross Domestic Product and per capita savings, he said. Describing global black money as ‘the Gangotri of corruption’,Vaidyanathan said global finance is a complex animal and every nation’s economy is interconnected.

He pointed out that though the massive amount of savings hoarded in the Swiss banks raised eyebrows, not many knew that Indians accounted for a huge part of this money: approximately $2.8 trillion, of which a few billion dollars were illegal.

He cited the International Monetary Fund’s estimates that the reserves in the tax havens across the world were in the order of $18 trillion. Also, 60% of global trade happened through the tax havens and 50% of the world’s collective funds were stashed away in these havens.

The only way India could get back the black money  stashed away abroad is by legislating that all that money belonged to the sovereign republic of India unless proved otherwise. This legislation was based on the French theory of guilty unless proven innocent, he added.