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Dubai deals under investigation

Akhilesh Bhargava




Dubai has been a favourite destination for parking of illegal funds of Indians, who may have evaded various laws, including FEMA and the Income Tax Act. With a zero tax regime and a very liberal banking system, with few questions asked regarding funds inflow and outflow, it has been a tax haven of sorts, which has been patronised not just by South East nations like India, but by the nearby African, Central Asian and European nations too. As far as India is concerned, Dubai has had a notorious past of permitting a free run to criminals and tax evaders from India, even though due to international pressures in recent years, curbs have been imposed. It is for these reasons and the attraction of Dubai as an entrepot, that Indians have invested heavily in real estate in Dubai. Between 2013 to 2017, Indians have invested about Rs.100,000 crores, in real estate in Dubai. In the first three months of 2018 itself, the amount invested by Indians in real estate in Dubai, has been Rs.5000 crores.

It has been a common global practice for individuals and corporates to park money abroad, either to save on taxes or to avail of the benefits of residence in an attractive nation. American corporates itself are said to hold overseas assets worth USD 1500bn, seeking better tax and investment options. Such hoarding of funds is generally done in nations where taxes are nil/low and remittance laws are liberal, such that funds can flow in and out with ease. While such stashing of funds abroad by American corporates is reported to be generally legal, that has not been the case of India. Till about a decade ago, as a general rule, Indians could not buy assets abroad, because our restricting forex laws did not permit such remittances. Only those who had earnings in foreign exchange, by way of exports, could retain part of it abroad and invest it in assets. Even the regulations permitting Indian corporates to invest abroad were not liberal, with severe restrictions and conditions thereon.

It is these restrictive/rigid forex laws and oppressive tax laws, that gave rise to a culture of tax evasion and illegal parking of funds, in undisclosed assets abroad, in violation of India’s tax and FEMA laws. This practice of ‘evade tax and remit’, was encouraged by tax havens like Switzerland, whose very economies depended on the management of such illegal remittances into their nations. But in recent times, these nations too have been forced to share information with countries and overseas investments have come under the radar of tax and enforcement authorities, as in India.

The news is that the Indian Income Tax Department is probing the purchase of properties in Dubai by 7500 Indians, to check whether these have been out of legitimate disclosed sources and are not otherwise. In case these are funded by illegal hawala channels, then tax penalty and prosecution of these Indians will be harsh, apart from action against them by the ED and the money laundering authorities. With such action, the illegal investments into Dubai, emanating from India will certainly be reduced to a trickle.

Indian Economy

Indian economy poised to pick up in 2019, says IMF




Washington | India is projected to grow at 7.5 per cent in 2019 and 7.7 per cent in 2020, an impressive over one percentage point ahead of China’s estimated growth of 6.2 per cent in these two years, the IMF said on Monday attributing the pick up to the lower oil prices and a slower pace of monetary tightening.

The International Monetary Fund in its January World Economy Outlook update on Monday said India would remain the fastest growing major economies of the world.

“India’s economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease,” the IMF said.

Despite fiscal stimulus that offsets some of the impacts of higher US tariffs, China’s economy will slow down due to the combined influence of needed financial regulatory tightening and trade tensions with the US, the IMF said in its latest report.

Growth in emerging and developing Asia will dip from 6.5 per cent in 2018 to 6.3 per cent in 2019 and 6.4 per cent in 2020, it said.

China which grew at 6.9 per cent in 2017, as compared to 6.7 per cent by India, had a growth rate of 6.6 per cent in 2018. In the next two years 2019 and 2020 it is projected to grow at 6.2 per cent each, the IMF said.

The latest IMF projections remains unchanged from its previous World Economic Outlook projections.

While, the Chinese growth rate has been on a downward slope, according to IMF, India has experienced an upward trajectory in these years.

The IMF said India’s growth rate in 2018 was 7.3 per cent.

It has been projected to grow at 7.5 per cent in 2019, which is a marginal 0.1 per cent above its previous projection. In 2020, India is projected to grow at 7.7 per cent.

The IMF report comes days after the PwC’s Global Economy Watch said that India is likely to surpass the United Kingdom in the world’s largest economy rankings in 2019.

“India and France are likely to surpass the UK in the world’s largest economy rankings in 2019, knocking it from fifth to seventh place in the global table,” the report said.

“India should return to a healthy growth rate of 7.6 per cent in 2019-20, if there are no major headwinds in the global economy such as enhanced trade tensions or supply side shocks in oil.

“The growth will be supported through the further realisation of efficiency gains from the newly adopted Goods and Services Tax and policy impetus expected in the first year of a new government,” said Ranen Banerjee, Partner and Leader Public Finance and Economics, PwC India.

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International Economy

IMF revises down global growth rate projections for 2019 to 3.5 per cent




IMF growth

Washington | The IMF on Monday lowered its global growth projections for 2019 and 2020 to 3.5 per cent and 3.6 per cent respectively, citing slowdown in several advanced economies around the world more rapidly than previously anticipated.

The revised global growth rates are 0.2 and 0.1 percentage point below the International Monetary Fund’s (IMF) previous projections made three months ago.

“Global growth in 2018 is estimated to be 3.7 per cent, as it was last fall, but signs of a slowdown in the second half of 2018 have led to downward revisions for several economies. Weakness in the second half of 2018 will carry over to coming quarters, with global growth projected to decline to 3.5 per cent in 2019 before picking up slightly to 3.6 per cent in 2020, the IMF said in its World Economic Outlook (WEO) update.

This growth pattern, it said, reflects a persistent decline in the growth rate of advanced economies from above-trend levels occurring more rapidly than previously anticipated together with a temporary decline in the growth rate for emerging market and developing economies in 2019, reflecting contractions in Argentina and Turkey, as well as the impact of trade actions on China and other Asian economies.

In advanced economies, growth, is projected to slow from an estimated 2.3 per cent in 2018 to 2.0 per cent in 2019 and 1.7 per cent in 2020. This estimated growth rate for 2018 and the projection for 2019 are 0.1 percentage point lower than in the October 2018 WEO, mostly due to downward revisions for the euro area, it said.

According to the IMF, the global growth forecast for 2019 and 2020 had been revised downward in the last WEO, partly because of the negative effects of tariff increases enacted in the US and China earlier that year.

The further downward revision since October in part reflects carry over from softer momentum in the second half of 2018 including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand but also weakening financial market sentiment as well as a contraction in Turkey now projected to be deeper than anticipated, it said.

Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook, it said.

“Financial conditions have already tightened since the fall. A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt, the report said.

These potential triggers include a “no-deal” withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China, the IMF said.

According to the report, the main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilising an already slowing global economy.

“Across all economies, measures to boost potential output growth, enhance inclusiveness, and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives, it said.

Growth forecast for the US remains unchanged, the IMF said, adding that it is expected to decline to 2.5 per cent in 2019 and soften further to 1.8 per cent in 2020 with the unwinding of fiscal stimulus and as the federal funds rate temporarily overshoots the neutral rate of interest.

“Nevertheless, the projected pace of expansion is above the US economy’s estimated potential growth rate in both years. Strong domestic demand growth will support rising imports and contribute to a widening of the US current account deficit,” the IMF said.

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Business & Finance

Mehul Choksi no longer Indian citizen?

News Desk



Mehul Choksi



  • Fugitive businessman Mehul Choksi accused of participating in the Punjab National Bank fraud worth over 13,500 crore Rs has given up his Indian citizenship and surrendered his passport to the authorities of his new chosen place of residence – the island nation of Antigua; which also, not entirely coincidentally, is a tax haven. In his attempt to avoid extradition to India and face the law for his financial crimes, Mehul Choksi deposited the mandatory 177 $ to the Indian High Commission in Antigua for leaving Indian citizenship and has stated his new address as Jolly Harbour Marks in Antigua. Under the Citizenship by Investment program of Antigua, a person can take their passport on a minimum investment of 1,00,000 $. Let us recall that Mehul Choksi and his nephew Nirav Modi had fled the country in the first week of January in 2018, weeks before the banking scam was reported to the CBI perpetrated by them involving fraudulent guarantees and letters of credit which were not repaid.


  • Oxfam, the England headquartered non-profit, which has 20 independent charitable organisations under its umbrella and focuses on alleviation of global poverty just released a study which shines the spotlight on the ever-increasing inequality and disparity between the rich and poor. The report states that Indian billionaires combined saw their fortunes swell by 2200 crore Rs a day last year, with the top 1% getting richer by 39% as against just 3% increase in wealth for the bottom 50% of the population. Noting that wealth is becoming even more concentrated, Oxfam said India’s top 10% of the population holds 77.4% of total national wealth, while the top 1% hold 51.53% of the wealth. The group’s director said that is was “morally outrageous” that few wealthy individuals are amassing a growing share of India’s wealth, while the poor are struggling to eat their next meal or pay for their child’s medicine.


  • China – The world’s second-largest economy grew at a rate of 6.6% in 2018, down from last year’s 6.8% and its slowest rate in almost 3 decades – since 1990 to be precise. The data was in line with forecasts but it underlines the recent concerns about a weakening growth in China and what spillover effects this could have on the world economy. China is grappling with the effects of the current trade war with the US and declining exports. The US and China have been locked in an escalating trade spat since early 2018, raising import tariffs on each other’s goods. Last year, US President Donald Trump imposed tariff hikes of up to 25% on 250 billion $ of Chinese goods. In a tit for tat move, China increased tariffs on 110 billion $ of US goods. Trump has been pressing China to bring down the 375 billion $ trade deficit with the US which he attributes to unfair trade practices by Beijing and has even threatened to levy more tariffs.


  • Aeroplane to missile manufacturer and seller Boeing and Nasa have partnered to develop supersonic and hypersonic planes which can fly from New Delhi to New York in just 2 hours. However, this technology is expected to benefit the average flyer in about 2 decades by which time it is expected to become more affordable; though the company said that the prototype could be ready in about 5 to 10 years. At present, all aeroplanes except few fighter planes are subsonic, which means they fly below the speed of sound. According to the company’s plans, their hypersonic plane can travel at a speed of 6,125 km/hour which would help it cross the Atlantic Ocean in 2 hours and the Pacific Ocean in 3 hours. Robotics, Artificial Intelligence and Machine Learning are said to play a big part in the manufacture of these planes.




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