Raghuram Rajan cautions on perceptions

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Mumbai | Published: April 8, 2016 6:33:01 AM

Commenting on revelations in the Panama Papers, Reserve Bank of India (RBI) governor Raghuram Rajan cautioned on Thursday that perceptions about entrepreneurial wealth being illegitimate could be dangerous.

raghuram rajanCommenting on revelations in the Panama Papers, Reserve Bank of India (RBI) governor Raghuram Rajan cautioned on Thursday that perceptions about entrepreneurial wealth being illegitimate could be dangerous. (Express Photo)

Commenting on revelations in the Panama Papers, Reserve Bank of India (RBI) governor Raghuram Rajan cautioned on Thursday that perceptions about entrepreneurial wealth being illegitimate could be dangerous.

“Increasingly, there is talk about whether entrepreneurial wealth is illegitimate, whether self-made people should have what they have and whether that is something of a fair game,” the governor observed, while speaking at CII’s Singapore Symposium, 2016.

Rajan added that 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.

He said it was extremely important to impart legitimacy to wealth by ensuring the underprivileged also have opportunities, a global concern at the moment.

“If a whole horde of people, whole sections of society don’t feel they have opportunities, then the focus is going to be on those who have it and who have made it and those who don’t have it will say it is illegitimate,” Rajan said.

“I think one of the most important sources of concern, which you have seen with some of these Panama reports and so on, is that the notion of illegitimacy of wealth is built into them,” the governor said, adding that the financial crisis had built up the idea that bankers were illegitimate, that crony capitalism was illegitimate.

The governor added the perception has now changed to the illegitimacy of passive wealth holding. “That if you’re a coupon clipper who is clipping what your parents gave you as inheritance, perhaps you shouldn’t have so much and it should be redistributed,” he said.

Since Monday, reports on wealth held by the rich across the globe in offshore entities have been in the limelight following investigations worldwide. Documents leaked from the law firm Mossack Fonseca, registered in tax haven Panama, have revealed several politicians, heads of state, companies and individuals held alleged secret dealings.

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