Sense, Sensex and Sentiments: new book on Indian corruption
A book on corruption in India is timely: the national media is rife with stories of fraud, embezzlement, tax evasion and all sorts of whatnot. Released this month, Sense, Sensex and Sentiments: The Story of the Failure of India's Financial Sentinels is penned by well-known and respected Chennai-based chartered accountant M.R. Venkatesh. At root it is a lament for lost dreams, but it is also a hard headed examination of global and national systemic failures and the political barriers to progress. As this reviewer notes:
"Venkatesh has clinically analysed India's problems in the context of globalisation, focusing particularly on the problems of tax evasion, the flight of capital from India via hawala routes, and return of tainted money as foreign investment. Also discussed cogently are the issues of Government laxity, and complicity, most notably in the UPA decision to permit participatory notes to operate in the Indian stock market. The book investigates the collusion of national elites and international commercial and criminal interests in this vicious cycle, and their capacity to twist national laws, regulations and processes to their ends."
This is a familiar theme for readers of this blog, as is the involvement of the UK and USA in the massive hypocrisy of claiming to promote free market economics while quietly foisting corruption services on the rest of the world.
"The key problem, as the author is quick to explain, is the unpleasant truth of lack of political will at the level of the G-20 nations in tackling the growing menace of tax havens. This is particularly true of the United Kingdom (almost all tax havens are former British colonies!) and the United States (whose elite love offshore havens and whose Government loves the power of blackmail these havens afford it over tin-pot dictators in the third world). Thus the crisis of what are politely called secrecy jurisdictions continues because they serve the economic interests of powerful and unaccountable people."
India has been a victim of tax havenry for decades. As TJN's director John Christensen points out in his foreword to Sense, Sensex and Sensibility, the scale of this corruption highlights why the macroeconomic instabilities that have plagued the global economy since Mrs Thatcher triggered the current wave of financial market liberalisation can all be traced, by route or another, to secrecy jurisdictions:
"The best estimate I have seen suggests that between US$22-27 billion dollars of domestic capital flows illicitly out of India every year. India ranks fifth highest overall in the world in terms of scale of its illicit outflows, ranking below Russia ($32bn- $38bn), Mexico ($41bn-$46bn), Saudi Arabia ($54bn-$55bn) and China ($233bn-$289bn). The vast majority of this capital disappears offshore, typically being routed through exotic secrecy jurisdiction islands like Mauritius or my home island of Jersey, to the major financial markets in Europe and North America. Some of this capital returns to India, disguised as foreign investment to benefit from tax holidays and all manner of special treatments.India, like most countries, has fallen victim to a catastrophic failure of financial market deregulation."