TT Epaper
The Telegraph
Graphiti
 
 
IN TODAY'S PAPER
WEEKLY FEATURES
CITIES AND REGIONS
ARCHIVES
Since 1st March, 1999
 
THE TELEGRAPH
 
CIMA Gallary
 
Email This Page
INDIA, BE PROUD
- Indian nationals and their Swiss bank accounts
Cutting corners
Ashok Mitra

Maybe the post-colonial discourse is not such an empty box. A rather startling set of data, attributed to the Swiss Banking Association, has been making the rounds in the media. If the data are to be believed, we emerge on top of the world at least in one particular matter. In 2006, Indian nationals reportedly held the largest quantity of illegally stashed money in Swiss banks. The amount was as high as $1,456 billion. The more prominent stragglers were crooks from Russia ($470 billion), the United Kingdom ($390 billion), Ukraine ($100 billion) and China (US $96 billion). Money stored away by Indians in numbered bank accounts in Switzerland actually exceeded the total deposits by nationals from all other countries of the world taken together.

Corruption, we all knew, had entered the portals of the nation. But the magnitude of corruption, as revealed by these estimates of outflow of tainted money, should fill the minds of at least some of the citizenry with awe. There are, of course, other safe havens for ill-gotten wealth, for example, Mauritius and Monaco. We must not, however, be extra-greedy; for the present, information made available through the courtesy of Swiss sources should be more than adequate to pump Indian ego: we have arrived.

For decades following Independence, the government imposed severe restrictions on foreign exchange transactions, and it was mighty difficult to obtain dollars or other foreign currencies without official sanction. A few standard stratagems were nonetheless at the beck and call of the unscrupulous ones to enable them to get around formal rules and regulations. One such was to over-invoice imports and under-invoice exports with the collusion of willing foreign partners. Another dodgery was to smuggle gold and other precious metals, and ensure payments abroad through devices like the hawala. The hawala burgeoned into a sizeable business proposition as its practitioners travelled along the learning curve.

Transactions of a clandestine nature would take place within the country, and hawala operators would see to it that money was transferred to certain parties or bank accounts overseas. Those who availed themselves of the facility included industrialists and business people of various specifications, bankers, auditors, stockbrokers, filmstars and constituents of other similar tribes. But the size of such transactions was, at least till about 20 years ago, somewhat modest, perhaps because of the element of risk involved.

The quantum of illegitimately transferred funds, as revealed by the information sourced to the Swiss Banking Association, cannot be explained by the relatively modest hawala kind of activities. Money of such proportions is customarily handled only by entities of the genre of transnational corporations, some of whom have at their disposal funds exceeding the annual budget of at least 100 member-states of the United Nations. A sizeable number of these corporations has increased its involvement in India in the recent period, more precisely ever since economic liberalization was formally introduced in July, 1991.

The international corporate giants took full advantage of the new developments in the country. It was suddenly a free-for-all, with no holds barred. Whatever was left of the nation’s ethical principles got butchered in the span of just 15 years or thereabouts. This was only to be expected. The neo-liberal economic philosophy hawks loudly what it considers the most precious of its wisdoms: one must make profit, one must make more and more profit, even the sky is not the limit for profit-making, one must be prepared to run over one’s own grandmum if that would fetch an extra thousand bucks.

The shift in economic policy suited exceedingly well the new generation, including the new generation of politicians. Another not-so-fortuitous factor offered a helping hand. India as a nation has always existed at two levels: lots and lots of moral preachings have accompanied a hypocritical defiance of such preachings. Ruling politicians would, for instance, flaunt khadi as their outer attire and at the same time wear silk or other expensive undergarments. They would foam in the mouth while advising teetotalism to visitors in their expansive living room; in another corner of their bungalow, their offspring would be having a roaring party with Scotch whisky flowing like water.

The same cynicism has been pervasive in the matter of offering and receiving illegal gratifications. The British had already introduced the custom of dasturi to speed up civil works in the country. After 1947, the custom got generalized. Ruling politicians were quick learners. They turned the other way — more often than not at a consideration —even as shady practices crept into the different layers of administration. One still remembers the hysterically funny, yet lurid, episode that took place in the late 1960s. Gulzari Lal Nanda was the country’s home minister. A well-meaning man, he was perturbed by the pace at which corruption was spreading within government. He invited the public not to stand on ceremony and post with him personally their complaints about alleged cases of corruption. A couple of mornings were set aside every week for the minister to have a face-to-face encounter with members of the public.

In no time, long queues formed of people anxious to unload their grievances to the minister. Not surprisingly, it took hours and hours — and sometimes days — to meet the home minister. The impatient crowd and the constabulary assigned to manage the crowd soon came to a deal. Policemen happily accepted a ten-rupee note from each of those who wanted to jump the queue and see the minister before their turn came. Corruption, so to say, received the official imprimatur.

Liberalization has made a shambles of residual scruples. More than one-third of the national income is channelled through the government budget. Contracts bestowed by ministries are greatly coveted; defence contracts have a special glamour. Politicians in power, who award the contracts, have a price; the price is paid in Swiss bank accounts. Politicians happen to be role models. Civil servants soon fall in and join the crowd of the corrupt; they too have their numbered bank accounts in Switzerland. Bribe-giving and bribe-taking become an established culture, and Swiss bank accounts begin to play their historical role. Transnational corporations know where to deposit money for ‘satisfaction’ before things would start to move in their favour in New Delhi, Mumbai, Chandigarh, Hyderabad or Bangalore. Industrialists and businessmen — and their pet auditors — have been joiners even earlier. Their gains from after-hours transactions are naturally hugely greater than those of politicians and civil servants.

This is where the neo-colonial discourse suddenly assumes a relevance. The reported holdings of Indian citizens in numbered accounts in Swiss banks in 2006 — close to $1500 billion — is roughly 1.8 times the size of the country’s gross domestic product that year. Economic historians have done their research and have tentatively estimated British exploitation of India over the two centuries from Plassey till Independence to be around 5 per cent of the country’s gross domestic product. Post-colonial internal exploitation — of Indians by Indians, as revealed by the data from Swiss banks — would appear to be of a no less impressive order. But have no fear, the transnational corporations will take care so that external exploitation does not come to a surcease either.

Top
Email This Page