DR. JAIRAM RAMESH ON THE BLACK MONEY DEBATE

PTI 20th April 2009
Black Money Debate :  Congress terms BJP claim bogus

NEW DELHI: The Congress on Monday invited the BJP to a serious debate on black-money stashed abroad, while refusing to be drawn into discussions on matters based on "bogus" sources.

"Capital flight from India is a serious issue and should be debated seriously. But Mr L K Advani's data is very shaky and is based on mostly bogus sources," Congress election coordinator and former Union minister Jairam Ramesh told PTI here.

Advani, the BJP's prime ministerial candidate, had released a report of the party's task force on April 17 that pegged Indian wealth in Swiss banks and other offshore tax havens between USD 500 billion and USD 1.4 trillion (more than the size of the Indian economy).

Ramesh said the Global Financial Integrity (GFI) report of the Washington-based Center for International Policy was the only credible source of information for the BJP task force. All other sources, that Advani used to arrive at the capital flight data, are "bogus", Ramesh said.

While the GFI report arrives at a figure of USD 100 billion for "illicit financial flows" from India between 2002-2006, several Indian economists Ramesh has interacted with on the issue suggest that the report talked only about the gross outflows.

"If net outflows are matched with the capital account, there is a negative net outflows," Ramesh said. The Congress election strategist said even in the GFI study there are "very serious questions" on the methodology.

Ramesh further said he asked GFI study author Dev Kar on the route through which capital flight is taking place.

"He (Kar) said categorically that all this (illegal outflows) are because of under-invoicing of exports and over-invoicing of imports", Ramesh said.

The study covered the period 2002-2006 when "we had both the NDA and UPA governments. What did BJP do then?" he added.

Besides, the Communist Party - Marxist which has committed in its election manifesto a "drive to unearth black money, especially those stashed in Swiss banks.." has also raised questions about the role of the NDA government till 2004 in tackling capital flight.

CPM politburo Member Sitaram Yechury said on Saturday, the BJP task force report quotes from a study by Washington based Global Financial Integrity Project: "The GFI study shows that during the period from 2002 to 2006, annually USD 27.3 billions were stashed away from India.

If this is true, then nearly USD 55 billion worth of illicit transfers occurred in the two year period, 2002 to 2004, under the BJP-led NDA government itself, in which Mr Advani was the deputy prime minister and the home minister. What did he do to prevent such illegal transfers when he was in power?"

TNN 20th April 2009
Congress accuses Advani of fudging facts for poll gains

NEW DELHI: As BJP's PM-in-waiting L K Advani hammers away on black money and tax havens in the hope of striking it rich with voters, Congress on Sunday waved the key source of his information to accuse him of misquoting figures and politicking at the cost of facts.

Jairam Ramesh, the AICC economist heading its election affairs, told TOI that Advani was mischievously quoting the upper side of the approximate figures on capital flight from India -- which stretch from a relatively not-so-significant $4.7 billion to a staggering $22.7 billion between 2002-06 -- as put together by Global Financial Integrity Project, a US-based think tank.

"Advani is quoting the upper end of a very wide band. It is intellectual dishonesty, showing it was less to do with facts and more to sensationalise," Jairam said.

In fact, he said GFI has acknowledged that all capital flight between 2002-06 was because of trade mispricing, export underinvoicing and import overinvoicing.

The fresh criticism of Advani's rhetoric on black money adds to the riposte from top leaders like PM Manmohan Singh, Pranab Mukherjee and P Chidambaram who have all questioned Advani's sudden interest in curbing tax havens and secret bank accounts.

Jairam said there was no question about smoking out tax havens but Advani's claims on its scale and his "holier-than-thou attitude" was questionable. "His intellectual edifice is very thin," he said.

Continuing to put Advani's high-pitch campaign over black money under a scanner, the Congress leader said BJP did not acquit itself well if the GFI study was considered seriously. "BJP was in power for first two years of this capital flight period. It should answer what steps it took to curb this," he asked.

Though there have been political responses from top party leaders, Jairam has corresponded with GFI to pin BJP down for misquoting the scale of capital flight. Even on bringing out black money, he said BJP had not covered itself with glory, reminding that the last effort in this direction was VDIS, an amnesty scheme which was the brainchild of Chidambaram, in 1997.

"But BJP, with all its top leaders, had opposed it vehemently, saying that it was legitimising dirty money etc etc," he said.

Jairam slammed the data used by Advani as "bogus", based on obscure internet blogs lacking authenticity, while he added that the only credible source, the GFI study, was being cited selectively.

"When GFI data is matched with the capital account to get a comprehensive picture, there is actually negative net outflow. Errors and omissions in BoP data actually suggest a reversal of capital flight," he said, adding, "This knocks the bottom out of Advani's campaign."