It is disconcerting how much the offshore wealth held by Indians in tax havens has grown in defiance of the Narendra Modi government’s avowed claims when it came to power that all the money would be brought back to India. Data released for the first time by Basel-based Bank of International Settlements on bilateral foreign holdings and analysed by a leading Indian newspaper group has revealed that there was a surge of 90 per cent from 2007 to 2015 to US$62.9 billion (about Rs 4 lakh crore) which represented about 3.1 per cent of India’s GDP.
What has actually happened is that the destination for hoarding unaccounted wealth has partially moved from numbered but highly-secret Swiss accounts to tax havens closer home to tax havens like Hong Kong, Macau, Singapore, Bahrain and Malaysia. While Swiss banks hold 31 per cent of India wealth, a whopping 53 per cent is held in these Asian tax havens. It is true that threats by the BJP-led government at the Centre to unearth these clandestine accounts drove the money out of Switzerland but there apparently was no action to keep up the pressure on these tax defaulters to not park the money in new tax havens which were waiting with open arms for such monies.
The Indian government’s resolve to unravel the hordes of black money in fact contributed to the Swiss banks agreeing to loosening the secrecy behind international transactions but clearly this was just not all that the government needed to do. Today, apart from Switzerland (31 per cent), and Asian tax havens (53 per cent), Europe (excluding Switzerland) accounts for 14 per cent and the Caribbean for four per cent of unaccounted Indian wealth stashed abroad.
The Basel bank data show that Saudi Arabia and Russia have huge stashes of unaccounted wealth while South Korea and Japan have the least stock of offshore assets. China has about $287 billion offshore wealth which was 2.4 per cent of its 2015 GDP. The report shows that if the Modi government is to at least substantially meet its poll commitment of tracking down and bringing back hordes of black money it has a long way to go and it has to widen its search operations.