Given that the original list the French authorities gave the Indian government in 2011 had 628 names, The Indian Express-Le Monde-ICIJ collaboration nearly doubling this list is of great help—the 1,195 names, The Indian Express (IE) reported on Monday, have balances of R25,420 crore. As finance minister Arun Jaitley said at a briefing on the IE story, investigations have been concluded on 350 of the HSBC accounts; this is progress, though it may seem slower than hoped for—a total of R3,150 crore of undisclosed income in these accounts has already been booked. It is important, however, to make a distinction between having foreign bank accounts and the money all being illegal and therefore subject to Indian taxation. Swraj Paul tops the list with $386 million in his bank account, but since Paul is not an Indian citizen, that can hardly be relevant for the Indian taxman. Ditto for the code-named H.G.P. who, the list says, is a Kolkata-born UK citizen and has $133 million in his account, or the late Manu Chhabbria who was based out of Dubai and whose bank account had $141 million. While some in the list have said they are willing to pay up, others such as the Ambani brothers have denied any wrongdoing—Mukesh Ambani’s official comment is that he has no illegitimate accounts, Anil Ambani has said he has no HSBC account.
While tracking those with illegitimate bank accounts is important, it is equally important not to lose perspective. Even if you assume all the money in the accounts is illegitimate wealth, the sums in the IE list add up to $4 billion. The largest figure of illegal Indian wealth overseas, if you leave aside yoga guru Ramdev, is that given by the Washington, D.C-headquartered Global Financial Integrity which puts the figure at $440 billion, of which $95 billion was stashed away in 2012. Though there are several doubts about the GFI methodology and data, it is important to keep in mind, the number adds up to just 5% of India’s GDP in that year. In sharp contrast, central India’s tax-to-GDP ratio has actually fallen from 11.89% in FY08 to 10.35% in FY13—just maintaining the ratio at the higher level would more than make up for the losses from money stashed away illegally; indeed, since most experts argue implementing GST would add 1-2 percentage points to India’s tax-to-GDP ratio, it makes sense to concentrate on achieving this.
It is equally important for the finance ministry to shine the torch on HSBC and its officials who abetted such tax theft. The biggest blow to Swiss banking secrecy, it has to be recalled, came from the US successfully prosecuting Swiss bankers who regularly flew into the US to help citizens launder their funds. Till around a year ago, top global banks had, in fact, paid over $110 billion of fines for mis-selling products which caused the global financial crash and for rigging indices like Libor, etc—India would do well to add to the list of the world’s ‘finest’ banks.