Panama Papers type cases fuel delegitimisation of wealth: Rajan

Mumbai, April 7 (IANS) Calling it important for societies to work towards legitimising wealth, RBI Governor Raghuram Rajan said on Thursday that the phenomenon of rich citizens spiriting money away in tax havens, as alleged through the “Panama Papers”, may encourage dissatisfaction among the less well-off.

“If you have a whole section of people who feel that they do not have the opportunity, then the focus will be on those who have it and the legitimacy of the wealth there. And that is something we need to worry about at the global level” Rajan said at the Confederation of Indian Industry-organised Singapore Symposium 2016 here.

“This is dangerous…the fact that there are occasions where people are found to be hiding their wealth as in the Panama allegations, essentially it contributes to the process of delegitimisation,” he added.

The Reserve Bank of India governor said such feelings had started to surface in India and parts of industrial economies as well, which was a worrisome phenomenon.

“Improving opportunities across the board is extremely important to sustain legitimacy of wealth.

“After all, poor people consume every rupee that they receive. But for rich people, once you have bought your yacht and private jet, there isn’t more you can spend on,” he added.

He also said providing ample opportunities to all sections of society would lead to better management of wealth.

“When we think of finance, it has to be with purpose. Finance cannot create entrepreneurs but it can help them. Finance can help the householder manage risks. And with that in mind we have to figure out the appropriate markets and the appropriate institutions,” he said.

“Panama Papers” refer to a new investigation published on Sunday by the International Consortium of Investigative Journalists (ICIJ) and more than 100 other news organisations, revealing the offshore links of some of the planet’s most prominent people, including many from India.

“In terms of size, the Panama Papers is likely the biggest leak of inside information in history — more than 11.5 million documents — and it is equally likely to be one of the most explosive in the nature of its revelations,” the consortium said.

The files contain new details about major scandals ranging from England’s infamous gold heist, an unfolding political money laundering affair in Brazil and bribery allegations convulsing FIFA, the body that governs world soccer.