iconimg Friday, September 04, 2015

Chetan Chauhan, Hindustan Times
New Delhi, December 17, 2012
India is among the top 10 developing countries in the world with a black money outflow of $1.6 billion ( Rs. 8,720 crore) in 2010, a report by Global Financial Integrity (GFI) said. The report, to be released on Tuesday, said the total outflow of black money from India since independence until 2010 was $232 billion, generally in the form of corruption, bribery and kickbacks. The cumulative value of illicit assets held by Indians during the same period is estimated to be $487 billion.

In the post-reform period of 1991-2008, deregulation and liberalisation accelerated the outflow of illicit money from the Indian economy, the report by Washington-based GFI, http://www.hindustantimes.com/Images/Popup/2012/12/18_12_biz2.jpgIllicit Financial Flows from Developing Countries, said.

“Almost three-quarters of the illicit assets comprising India’s underground economy — which has been estimated to account for 50% of India’s GDP (around $640 billion in 2008) — ends up outside of the country,” the report’s author and former economist with IMF Dev Kar, said.

The earlier edition of the report has been quoted by the government in its white paper on black money.

The report found illicit financial flow in 2010 from these countries was $858.8 billion, just below the all-time high of $871.3 billion in 2008.

Maximum outflow of illicit money was from China with India ranked eighth.

The report said that astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks, meaning that the poor in source countries are being deprived of their right to development.

There is a statistical correlation between larger volumes of illicit flows and deteriorating income distribution in the developing countries, the report said.

The finding that only 27.8% of India's illicit assets are held domestically supports the argument that the desire to amass wealth illegally without attracting government attention is one of the primary motivations behind the cross-border transfer of illicit capital. 

Opportunities for trade mispricing grew and expansion of the global shadow financial system - particularly island tax havens - accommodated the increased outflow of India's illicit capital flight, the report said.

The government has, however, claimed that it has taken several steps including signing treaties with foreign countries to know about Indian black money stashed in foreign banks.

It also claimed that the Income Tax department had initiated action against persons regarding whom information has been received from these countries.