BLACK MONEY SPURT MAY BE BEHIND MILLIONAIRE EXODUS FROM INDIA
By Nantoo Banerjee
It is good to know that the government is seriously examining if a new law is required or prevailing statutes could be amended to confiscate the properties of those who commit financial crimes in India and hide abroad. Recently, Union Finance Minister Arun Jaitley said this in Lok Sabha in response to Trinamool Congress MP Saugata Roy’s query as to what steps the government has taken to bring back “IPL man” (Lalit Modi) and “Kingfisher man” (Vijay Mallya). The finance minister, without taking names, said assets worth Rs 840 crore have already been attached by various enforcement agencies. Hi-profile Modi and Mallya, both alleged to be big economic offenders, may have been much in the news these days, but there are thousands of others, including Islamic preacher and foreign fund handler through his Mumbai-based NGO, Zakir Naik, meat exporter Moin Qureshi, and a number of Indian businessmen, who are regularly migrating from the country to live elsewhere after making huge wealth in India. It may be worth investigating into the reasons behind the recent exodus of Indian US$ millionaires to become NRIs overnight receiving legal protection from their host countries for their money and investments held there.
Many of those recently turned NRIs continue to happily engage themselves in questionable economic and financial activities in India with their Indian counterparts taking cover under their foreign citizenship or resident status and also providing cover to troubled rich Indian partners arranging for them shelters abroad. Like Mallya, many Indian business tycoons have taken shelters abroad after robbing the country’s public sector banks, employees, creditors and investors and transferring funds after selling their sick industrial assets in India. Probably, the richest of them was the promoter of nearly Rs. 10,000 crore Ispat group who left the country during the Congress-led UPA regime, after selling his stricken steel plant in Maharashtra to another steel tycoon in India. Once outside the country and staying in their own houses abroad and pursuing their legal businesses there, it is very difficult to secure their extradition unless they are also involved in economic offences and violating laws in their host countries. The government of India is unlikely to find it easy to reach such people and get them extradited, even if they are found as big economic offenders here.
India, the world’s fastest growing large economy, has lately been witnessing an exodus of its upstart millionaires to foreign countries while they continue to do business in India or with India. They are moving out of India with family to all directions — from the UAE to UK and USA, Indonesia to Italy, Malaysia to Mexico, Australia to Austria, Belgium to the Bahamas, Switzerland to Sweden, Spain, Scotland and Singapore. In 2016 alone, some 6,000 Indian millionaires (in US$) left the country to set themselves up elsewhere. The Indian millionaire exodus figure was the highest in 2016, recording a 50 per cent jump over the number in 2015. According to New World Wealth’s latest report on global wealth and wealth migration trends in 2016, about 69,000 of India’s high net-worth individuals(HNI) have changed their domicile status since the country started the economic reforms process in 2000-01. The report said India is home of 264,000 millionaires and 95 billionaires with total wealth held in the country worth an estimated $6.2 trillion (as of December 2016). The last 10 years saw the biggest Indian millionaire exodus.
Paradoxically, India, also one of the world’s poorest countries in terms of per capita income, today ranks fourth among the world’s top five source countries for migrating millionaires. The countries ahead of India that lost large numbers of HNIs in 2016 were France, Turkey and Brazil. Australia has lately acquired the distinction of being the largest recipient of migrating millionaires from across the world, including France and India. Australia’s growing popularity is attributed to the country’s immigration laws, healthcare system, locational advantages for doing business in emerging Asian countries, insulation from the refugee crisis in Europe, public safety, lower inheritance tax, among others. Lately, growing number of Indians are engaged in doing business in and with English-speaking Australia, which has become very popular with Indian $ millionaires. The biggest of them is being Gautam Adani’s $22 billion Carmichael coal mine and port cum railhead project in Queensland.
The increasing trend of millionaire exodus from India is a matter of concern for many reasons considering the fact that these Indian millionaires are largely business persons doing business in local currency and amassing foreign currency wealth abroad. While in India, they employed local people in their business outfits, invested in local stock and property markets, borrowed funds mostly from PSU banks, dealt with local suppliers and other creditors and paid or avoided taxes to local governments and municipalities as well as the union government. Their well-planned disappearance from the country — lock, stock and barrel — may not have been always very clean. Employees in their outfits might have lost jobs, also many may have been left without salaries and allowances and provident fund deposits, including their own contributions that may have been deducted but not deposited, for months as it happened in the case of Mallya’s Kingfisher Airlines.
Many Indian businessmen maintain off-shore shell companies and large foreign currency deposits in 26 popular tax havens — from St. Kitts, Singapore, the USA to Panama — almost none with the knowledge of the Indian government. Some of them may be linked with their local shell companies. Lately, the Serious Fraud Investigation Office (SFIO) has filed cases against 49 Indian shell companies. Rs 3,900 crore is believed to have been laundered by 559 persons with the help of 54 professionals. Also, Rs 1,238 crore cash has been deposited in shell or dormant companies, post-demonetisation. While the growing exodus of India’s Dollar millionaires may look legal, their accumulation of large overseas wealth is less transparent. India’s existing laws have been able to do little to prevent illegal fund accumulation and transfer abroad by Indian businessmen and professionals. (IPA Service)