It is the developing countries which are impacted more due to the flight of capital to tax havens and hence India should take the lead. Since the financial flows from these secretive jurisdictions can destabilize our financial system, particularly if they are not well-regulated, it is important that India takes steps to deal with them.

Barack Obama is concerned about it, Merkel is furious about it, and Sarkozy wants to regulate it, but the leaders of one of the most affected countries, namely, India, are not saying or doing anything about it. They are the tax havens or offshore financial centers where the ill-gotten wealth of tax evaders of many countries is hoarded. These tax havens are now in the news, since developed economies like the US, Germany, France, etc. want them to return the ill-gotten wealth from their citizens.

The US government as well as its congress are most concerned about these tax havens due to the severe economic crisis faced by the country and also due to the pressure from sections of economists etc. to `clean up' the global financial system. There are also concerns regarding the financing of terror groups by some of the tainted money from tax havens.

These tax havens are estimatedly more than 70 in numbers, but as the Internal Revenue Service (US) discussion reveals, around 40 of them aggressively market themselves. The popular one is Switzerland, Luxemburg, Lichtenstein, Channel Islands and Bahamas, etc.

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