Rise in Swiss banks' stash is a rude shock

The news that money stashed by Indians in Swiss banks jumped over 50 per cent to Rs 7,000 crores in 2017 (up from Rs 4,660 crores in 2016), the year after demonetisation, must have come as a rude shock to Prime Minister Narendra Modi. He had promised to bring back all black money from overseas and put Rs 15 lakhs in every citizen’s bank account. The stashed funds were 47 per cent more than all money stashed by other foreign clients of Swiss banks. The money stashed by all foreign clients of Swiss banks rose just three per cent, to around Rs 1,00,000 crores. Mr Modi justified the devastating demonetisation saying it was a huge blow to black money. In reality, the opposite happened. Before demonetisation, there was a falling trend as there was a clampdown on black money.

It was amusing to see finance minister Piyush Goyal say 40 per cent of the funds was due to the liberalised remittance scheme introduced by then finance minister P. Chidambaram, whereby an individual could remit upto $250,000 a year. He further said they were awaiting the data, and asked how the media could assume it was black money or transactions were illegal. Here we have a situation of Schrodinger’s cat. Simply put, Schrödinger stated that if you place a cat in a sealed box with something that could kill it, over time you wouldn’t know if the cat was dead or alive until you opened the box, which means the cat could be both dead and alive. As far as Mr Goyal is concerned, the money could be legal or illegal and this will be known only after his inquiry is over.

Prime Minister Narendra Modi’s silence on this issue is perplexing, given that he belongs to the twitterati. He can’t ignore the havoc demonetisation created in the lives of people, specially in rural India that mainly transacts in cash. Some died as they didn’t have cash for medical treatment, some children were withdrawn from schools as parents had no money for fees. Is Mr Modi going to compensate them? And now we know Rs 7,000 crores fled to Swiss banks last year. Did people sacrifice their lives in vain?

Mr Modi was reportedly advised by one Anil Bokil, a key member of the Arthakranti Sansthan, an RSS-leaning economic advisory body set up by a group of chartered accountants and engineers. To be fair to the Sansthan, demonetisation was just one of five steps it had proposed to curb black money. This proposal was a one-stop solution to curb black money generation, price rise, inflation, corruption, fiscal deficit, unemployment etc. But Mr Modi chose to implement only demonetisation.

Prof. R. Vaidyanathan, professor of finance and control at IIM Bengaluru, has provided statistics of ministers’ foreign trips to tax havens, which seems to be unknown to the PMO!