Harish Gupta. NEW DELHI
It
may sound strange, but true. The day Swiss government announced lifting
veil of secrecy on all banking transactions required by the Indian
authorities after April 1, 2011, there was huge withdrawal of money by
investors from the tax-heaven nation. From April 1, 2011, the foreign
investments virtually dried up from Switzerland as much as $700 million
(Rs 2895 crores) has been withdrawn.
Latest
figures revealed that if $3 billion came from Switzerland during the
past two years, there was a net out-flow of $700 million in the first
two months of the current financial year (April & May 2011). For
the first time during the past ten years, there has been a negative
flow and a net withdrawal of Rs 2895 crores took place, said a worried
finance ministry official.
It
is also revealed that nine other tax heaven countries have witnessed
virtual non-activity in respect of investing money in India. For
example, investors from British Virginia invested nearly $1.5 billion
(Rs. 5812 crores) during the last two years. But the first two months of
the year data revealed the amount was less than Rs two crores. The
Caymen Islands, considered a huge tax-heaven for investors invested a
mere Rs 1.70 crores in the first two months of the current financial
year compared to Rs 6326.47 crores during the last two years.
The
story remains the same for other six popular countries which used to
invest heavily in India. In all, these ten nations invested Rs 754.15
crores during April 2011. But May was a shocker as the net out-flow was
Rs 2850 crores.
Obviously,
the mounting pressure on tax-heaven countries to disclose details of
flow of funds has sounded an alarm bells and reverse flow of funds has
begun in a big way. The Swiss Central bank is not wide off-the-mark when
it said that Indians have $2.5 billions deposits in various Swiss
banks. Obviously, the wiser Indian investors have started taking monies
out of these tax-heavens and taking it to other safe destinations.
If the investments from these countries has fallen, the flow of funds from Mauritius jumped to almost double.
Since
Mauritius has signaled that it will take some more time in
re-negotiating the controversial Double Taxation Avoidance Agreement
(DTAA), the round-tripping is now through the Iceland country.
Investments
from Mauritius broke all records in foreign investments as it sent more
than $2.1 billion (Rs 9300 crores) to India during the first two months
of the current financial year.
As
much as 42% ($55 billion) of the entire foreign investments whether in
the FDI or FII ($130 billion) has been routed through Mauritius between
2000-2011.
