Social structures should be made stronger and people be given opportunities to safeguard the legitimacy of wealth, RBI Governor Raghuram Rajan said at a panel discussion here this morning.
“Let us not minimise the forces travelling around the world — important sources of concern, like with the Panama reports — notions about the illegitimacy of wealth. Earlier in the crisis, people picked up the idea that crony capitalism was illegitimate, as it should be. But that has moved on into seeing passive wealth as illegitimate. So if you’re a coupon clipper clipping what you’re parents gave you as inheritance, perhaps you shouldn’t have so much.
The Panama Papers is a series of media reports this week based on data leakages from a Panama-based law firm which helped world leaders, celebrities and the superrich hide their wealth via banks and shell companies.
“But this increasing talk about whether entrepreneurial wealth is illegitimate and whether self-made people should have what they have (is worrying). People hiding wealth contributes to the concept of de-legitimisation of wealth… Improving opportunities across the board will sustain the legitimacy of wealth. If most people don’t have opportunities, then their focus will be on people who have more.”
Rajan was speaking at the Singapore Symposium 2016 and discussing opportunities for more global connectivity in capital and trade with Tharman Shanmugaratnam, Deputy Prime Minister, Singapore.
With mounting evidence of such concerns about the legitimacy of wealth in India and particularly in other countries, governments’ focus should be on job creation, Rajan concluded. “Finance must have a purpose, it must be the handmaiden to enterprise. Finance, by itself, can’t be entrepreneurial. It should help the enterprise and help the householder manage his money.”