Amid the furore over the leaked ‘Panama Papers’ showing Indians with alleged offshore tax haven holdings, RBI Governor Raghuram Rajan warned against a “dangerous” trend of questions being raised about the legitimacy of even the ‘entrepreneurial wealth of self-made people’.

‘Worrying trend’

Speaking at the CII-Singapore Symposium 2016, Rajan said, “Let us not minimise the forces travelling around the world…Earlier in the crisis, people picked up the idea that crony capitalism was illegitimate, as it should be.

“But that has escalated to 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.

“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.” The Panama Papers is a series of media reports based on data leaks from a Panama-based law firm, which helped world leaders, celebrities and the super rich hide their wealth via banks and shell companies.

Rajan observed that 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.

“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,” he explained.

Rajan added that social structures should be made stronger and people should be given opportunities to safeguard the legitimacy of wealth.

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