Intermittent talks about huge sums of money parked by Indian nationals in foreign tax havens were doing the rounds ever since a report attributed to Swiss Banking Association started doing the rounds in 2006. The Wikileaks disclosures of Julian Assange, however, provided the immediate context for Anna Hazare to step in and rally the civil society against graft.
The latest public figure to join the anti-graft bandwagon, of course, has been Baba Ramdev who landed in Delhi in a charter aircraft to launch a Satyagraha movement. Baba's fast has created quite a stir. He coerced the UPA government into giving written assurances about the latter's commitment to bring black money back into the country and to clamp down on corruption.
However, in spite of getting that assurance, Baba reneged on his pledge to withdraw the agitation. It saw the government coming down hard on him and his followers and break up the fast in a midnight clampdown. Rights activists have rightly pointed out the high-handed manner in which the government dealt with Baba and his fasting followers. They have also justifiably criticised imposition of Article 144 at the Ramlila Maidan as Baba's agitation was completely peaceful and never threatened the law and order situation.
Indians, cutting across caste, class, religion and social standing, are unitedly voicing a demand for the black money to be brought back. But how would the money be used in case the UPA government, reeling under multiple exposes of scams and financial irregularities, balks under popular pressure and manages to bring it back?
At ibnlive, we discussed this and the following is our suggestion. However, our maths is based on recovery of the money from Switzerland alone as no concrete figures are available for Indian money parked in other places like Liechenstein, Luxembourg, Cayman Islands, Seychelles, Mauritius, Macau, etc.
According to several economists and financial experts, bank deposits in the territory of Switzerland by nationals of India total upwards of $1.4 billion. That is close to the nominal GDP of India today. IT kind of gives credence to the widely held belief that $1.456 trillion of Indian money is parked in Swiss bank vaults.
India, as of December 2010, had external debt amounting to $ 237 billion, according to the CIA World Factbook numbers.
First step should be to pay this debt off. Assuming that with interest, the figure rises to even $275 billion, the country would be left with $ 1.181 trillion after paying off all its foreign debt.
A Goldman Sachs study in 2010 has reported that India would need to invest $1 trillion in economic and social infrastructure to sustain an 8 to 9 per cent growth momentum and to overcome its problems. However, in the report, the investment banker clearly mentions that this $1 trillion includes government funding, private enterprise as well as foreign investment.
The suggestions of the report have been corroborated by Rahul Saraogi, managing director at Atyant Capital in a 2011 interview with Value Investing Letter.
Infrastructure in India, unlike in the case of China, will be built only using a public-private partnership model. In certain sectors like telecom, airports and power, the model has been successfully working. In case of developments of ports, roads, railways and urban transportation, the models are evolving. Assuming up to 70 per cent of the funding comes from the government and the rest from other players, India would invest $ 700 billion in this sector. The bulk of the government's investment should be in water treatment, sanitation, waste management, renewable energy, health, education, urban infrastructure and allied fields.
The 8 to 9 per cent YoY (year on year) growth will ensure that the government has more than enough funds to pay for maintenance and salary of workforce needed to maintain and run the expanded services.
Now, we are left with $ 481 billion.
India is one of the hungriest nations in the world. It is ranked 67th out of 84 countries listed and ranked on the Global Hunger Index report, 2010. India accounts for 42 per cent of the world's underweight children.
Unless India ensures food security for all its people, its claim for greater role in the world will be taken with a pinch, if not a lump, of salt. In that regard, universalisation of PDS is the simplest and surest way to ensure food security.
In that regard, Dr Abhijit Sen of the Planning Commission had proposed a minimum support price-linked PDS scheme, excluding 25 per cent of the population who are not the target group. But this was shot down by C. Rangarajan, chairman of the Rangarajan Committee, who thought that streamlining the present PDS system would be enough.
Though the government has made up its mind on the proposed Food Security Bill, it is not too sure if universalisation of PDS would be a viable measure.
A study by Praveen Jha, Associate Professor at Jawaharlal Nehru University (JNU) and Nilachal Acharya of the Delhi-based Centre for Budget Governance and Accountability (CBGA), show that Universalisation of PDS is even possible without the help of this magic money we are talking about. Their study shows that an additional Rs 94,419 crore per annum will be required to supplement the present provisions of food subsidy which translates to roughly $21 billion.
Now taking into account inflation over the next ten years, a figure of $ 300 billion will be enough to take all Indians out of the hunger trap. With quality healthcare and social infrastructure, India can then start looking like a developed nation.
Out of the remaining $181 billion, $60 billion should go in strengthening our defence capabilities. Over and above the already-approved $100 billion procurement plan, that should give us one of the meanest fighting forces in the world.
The remaining $ 121 billion money should be used to fund higher education, cutting-edge scientific and social research institutes and exclusive scientific projects.
Undoubtedly, all this is only possible if the money is available. The Swiss Banking Association has already said that it might hand over to the Indian government a list of names of individuals who have accounts there if New Delhi so requested. However, unlike the German government, the Congress-led UPA seems to be dragging its feet.
Even Wikileaks founder Julian Assange has criticised New Delhi for giving all the wrong excuses for not acting. Political observers feel that the government is worried that names of account holders coming into the public domain might haunt the various parties that make up UPA. The grapevine has it that several prominent political leaders and their family members, apart from prominent businessmen and public figures, have money parked there.
So till the government actually swings into action, which is highly unlikely, all this is entirely in the realm of speculative fantasy. But just because our government fails to fulfil our wishes, we should not stop having them.
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