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Panama Papers: Dangerous to question the legitimacy of wealth, says Raghuram Rajan

by April 8, 2016 General

Reserve Bank of India Governor Raghuram Rajan on Thursday called for improving opportunities across the board to sustain the legitimacy of wealth in the wake of The Panama Papers.

Rajan warned against the “dangerous” trend of questions being raised over the legitimacy of wealth — and said that the focus of people who felt they did not have the opportunity, would be on those who had wealth, and the legitimacy of wealth.

“Now increasingly, there is a talk about whether entrepreneurial wealth is illegitimate, whether self-made people should have what they have, and whether that’s something a fair game,” Rajan said.

“I think this is dangerous. And the fact that there are occasions when people are found to be hiding their wealth as in the Panama allegations, essentially contributes to this process of de-legitimisation,” the RBI Governor said.

The RBI is part of the multi-agency group announced by the government to probe cases of all Indians who have set up offshore entities in tax havens who feature in The Panama Papers.

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“Improving opportunities across the board will sustain the legitimacy of wealth,” Rajan said at a conference organised by the CII in partnership with the Institute of South Asian Studies (ISAS) and National University of Singapore (NUS). “If most people don’t have opportunities, then their focus will be on people who have more.”

On Tuesday, Rajan had said that it was important to note that there were legitimate reasons to have accounts outside the country. “The LRS (Liberalised Remittance Scheme) allows you to take money outside. Yet to see what is legitimate and what is not legitimate. That’s the process of investigation that will take place,” he said.

With PTI inputs