Swiss bank issue: Ramesh hits back at Advani

The data used by Bharatiya Janata Party's prime ministerial candidate L K Advani on the Swiss bank money issue is largely bogus and his sources are some obscure internet blogs which have no authenticity whatsoever, alleged former Union minister and the Congress party's cheif election campaign manager Jairam Ramesh.

Ramesh also said that the only seemingly credible data source used by the saffron party is the Global Financial Integrity Project of the Centre for International Policy, Washington.

He claimed that he had a correspondence with the principle author of GFI, Dev Kar, and alleged that many of the points were not highlighted by Advani, when he blamed the Congress-led United Progressive Alliance government on being soft on the illegal stashing of money to Swiss banks.

"The GFI study is a theoretical analysis of capital flight. As Kar acknowledges, all the capital fight from India during 2002-06 is on account of trade mispricing (export underinvoicing and import overinvoicing). I would have thought that trade policy reforms would actually have reduced the magnitude of such mispricing. This methodology depends on differences in unit value realisations as deduced from Indian export data and US import data and vice versa. The same would be the case with our trading partners. India is in low value segments and unit values are not sufficiently disaggregated. This clouds all such exercises," Ramesh said in an e-mail to the media.

"Kar reports a capital flight figure of anywhere between $4.7 billion to $22.7 billion annually between 2002-06. Advani and his team use only the upper end figure and deny the range completely. Further, the exercise does not take into account exchange rate changes which may well influence the figures for 2005 and 2006," Ramesh added.

"The GFI exercise reports gross outflows that could have taken place-where to nobody knows. This point is suppressed by Advani. When the GFI data is matched with the capital account as it should to get a comprehensive picture, there is actually negative net outflow -- something that knocks the bottom out of the entire Advani campaign. Errors and omissions in BOP data actually suggest a reversal of capital flight," Ramesh wrote.

"The GFI exercise is purely an academic study. Covering 160 countries it has its pluses. It has been completely misused by Advani," the former minister claimed.