A few months ago, I received a link to an article about the sizable Indian deposits in Swiss Banks. The salient point in the article is that Indians have (allegedly) deposited ~ $1500 B in illegal personal accounts in Swiss Banks, and if this money was recovered, India could repay its entire foreign debt, and still have enough left over that just the interest will be more than the Central Govt’s annual budget. Okay. The article seems a little shady (the whole Swiss USP is their secretiveness, so I can’t see them publishing the breakup (excerpted below) for public consumption at large).
Black money in Swiss banks — Swiss Banking Association report, 2006 details bank deposits in the territory of Switzerland by nationals of following countries: Top five
India—- $1456 billion
Russia—$ 470 billion
UK——-$390 billion
Ukraine- $100 billion
China—–$ 96 billion
And yes, the SBA annual report does not give any breakup of the sort above. However, as per Wealth Management in Switzerland 2008, “SBA research estimates that Swiss banks’ global AUM reached about USD 10 trillion at year-end 2007“. And India’s contribution to the above? I don’t know. However, given that India’s total GDP is USD ~1.1 T; a shadow economy estimated at 40-60% of GDP; a national savings rate ~30%, a sizable amount is likely to have accumulated in offshore bank accounts (whether or not, the number hues closely to the above is irrelevant). Two recent developments (completely ignored by Indian media) makes this significant.
UBS divulges US client names: “UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities.“
Switzerland Eases Its Stance on Bank Secrecy Rules “The Swiss government bowed to pressure on Friday and agreed to exchange information on suspected cases of tax evasion [...] Austria and Luxembourg also announced steps intended to fend off a global crackdown on tax evasion by offering concessions [...] In a statement on Friday, the Swiss government said it would agreed to exchange information with other countries on a case-by-case basis where there were “specific and justified” requests. “
Government of India, get cracking!
UPDATE: Related NYT Editorial (Mar 13, 2009): “Senate investigators estimate that Americans who hide assets in offshore bank accounts are failing to pay about $100 billion a year in taxes [...] The United States Treasury isn’t the only one being shorted. The Tax Justice Network, a research and advocacy organization, estimates $11.5 trillion in assets from around the world are hidden in offshore havens [...] Bankers and their host countries are feeling the heat. In recent days, a rash of governments, including Andorra, Liechtenstein, Singapore and Hong Kong have said they would increase the transparency of their offshore banking business and share more information with tax authorities in depositors’ home countries [...] There are a variety of ideas worth serious consideration. Governments could revoke tax treaties with countries that refuse to cooperate with tax queries — making it much more cumbersome for their companies to do international business. They could restrict their own banks from doing business with banks in uncooperative countries or subject any business with these countries to higher standards of disclosure.“
You are being facetious right?Tell me that you don’t expect the GOI stake holders to expose themselves and their kin through this investigation? I guess you have the right to hope!