ONE of the reasons why terrorism is likely to prosper and not wane in India is that out of the black money that runs the parallel economy at least $1.4 trillion was officially stated to be parked in Swiss banks in 2006, which is but a fraction of the whole.

The problem is a bit like this: suppose the beat constable assigned to check cars for bombs discovers a dead body in the boot of one that belongs to someone with clout. What could happen next in a country like India was the subject of the 1993 Vohra Committee report, so called after the current governor of Jammu and Kashmir, its author.

The nexus of businessmen, bureaucrats, politicians and the crime mafia that Mr Vohra put the spotlight on remains in my view the single biggest threat to the country, because only a fool would want to unearth black money and thereby commit hara-kiri in the hunt for terrorists. Or so it seems. To use the body-in-the-boot analogy, you cannot stop the flow of funds to terrorists as long as there is a runaway black economy mocking you.

If we were to go after the finances of the Lashkar-i-Taiba, the Students Islamic Movement of India or extremists of other religions or persuasions for that matter, there is every chance that we would run into a Dawood Ibrahim, a fugitive don who allegedly launders money for everyone named as suspect by Mr Vohra. In other words all the talk about squeezing the financial foundations of terror is destined to come a cropper in India.

Is that one reason why India is wary of sharing any information of the Mumbai attacks with the Interpol? It is not beyond possibility that there is a genuine fear of unearthing the body in the boot.

According to the Swiss Banking Association’s rarely discussed annual report of 2006, the top five depositors by nationalities were India: $1,456bn, Russia: $470bn, UK: $390bn, Ukraine: $100bn and China: $96bn. These are staggering amounts and only the tip of the proverbial iceberg.

The argument here is not that people who run the virtually unfathomable parallel economy are deliberately financing terrorism of the kind that took place in Mumbai last month. But who can deny that a detailed scrutiny of the financial system, which is what is needed and nothing less to weed out the sources of sustenance of terrorism, would be incomplete without having a clear profile of the unaccounted billionaires, Indians included.

In its spirit this is exactly the kind of antidote that Mr Vohra would applaud. Are there any takers?

According to one estimate of the parallel economy, some $2.5tr in Swiss Banks represents seven per cent of the world’s total economy. The amount held by Indians is calculated to be approximately 48 per cent of India’s economy. The money present in the Swiss banks is said to belong to unnamed politicians, industrialists, stockbrokers, cricketers, film producers, movie actors, bureaucrats and crime dons.

One of the tasks before the Vohra Committee was to establish the clout of criminals who were responsible for the 1993 Mumbai bomb attacks.

“In the first meeting of the Committee (held on July l5, 1993), I had explained to the members that the government had established the committee after seeing the reports of our intelligence and investigation agencies on the activities/linkages of the Dawood Ibrahim gang, consequent to the bomb blasts in Bombay in March 1993,” Mr Vohra has said in the published account of the report.

“In the bigger cities, the main source of income relates to real estate — forcibly occupying lands/buildings, procuring such properties at cheap rates by forcing out the existing occupants/tenants, etc. Over time, the money power thus acquired is used for building up contacts with bureaucrats and politicians and expansion of activities with impunity. The money power is used to develop a network of muscle-power which is also used by the politicians during elections.” So many elections have come and gone since the report was submitted and another crucial one is round the corner.

“The nexus between the criminal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country. The existing criminal justice system, which was essentially designed to deal with the individual offences/crimes, is unable to deal with the activities of the mafia; the provisions of law in regard to economic offences are weak.”

The report also cautioned the government about “a rapid spread and growth of criminal gangs, armed senas, drug mafias, smuggling gangs, drug peddlers and economic lobbies in the country which have, over the years, developed an extensive network of contacts with bureaucrats/government functionaries at the local levels, politicians, media persons and strategically located individuals in the non-state sector. Some of these syndicates also have international linkages, including the foreign intelligence agencies.”

It is the ordinary man’s hunch that some of these noble people were on television the other day advocating a declaration of emergency in India. Some of them wanted parliament to be suspended. One person popular with TV anchors suggested that the country be handed over to the corporate world. He wanted business clubs like Confederation of Indian Industries (CII) to link up with other clubs and take charge of the nation that had been so brutally attacked.

Unfortunately for these people their footprints (if not fingerprints) straddle the globe and are not just confined to the country’s unsecured shores. And so while the Indian government continues to press Pakistan to take strong and verifiable action against religious extremists on its soil, regardless, in my view, of their role or its absence in the Mumbai carnage, New Delhi has a greater task to carry out.

It cannot be just a coincidence that President Bill Clinton listed CII and a few dozen other top names last week among Indian industrialists as his hitherto unnamed donors. The fact would have remained a secret were it not for the American system that required him to spill the beans before his wife can be sworn in as the next US secretary of state. Is the taxman watching?

Ironically, this was also the period when the World Bank barred a leading Indian software firm, an icon that was to lead the country into the 21st century of prosperity, from doing business because it was caught red-handed bribing World Bank officials. All this has been happening when the country is locked in a grim war on terrorism. You cannot win the war when the one weapon that works against terrorists is so seriously flawed. It’s the parallel economy, stupid.