A new report by Global Financial Integrity (GFI),a US-based think tank, states that illicit financial flows from India between 2000-2008 were approximately $104 billion (R4.8 lakh crore). This figure comes close on the heels of the Supreme Court instructing government authorities to disclose the names of Indians with money deposited in foreign banks, renewing the interest in bringing back Indian money stashed in foreign accounts.
To put it into perspective, the figure is ten times the government of India’s total allocation to education in 2010-11.
“Politicians, bureaucrats and businessmen who benefit most from the black economy are also the ones in power, hence there is no urgency to check this,” says Arun Kumar, professor at Jawaharlal Nehru University and author of “The Black Economy in India”.
The report ,titled “ Illicit Financial Flows from Developing Countries: 2000-09”, states that the proliferation of high net worth individuals in the post economic reform period drove these flows, given the absence of an improvement in public and corporate governance. Trade liberalisation, which resulted in more openness, also provided more opportunities for parties to misprice trade and shift billions of dollars in illicit capital from the country.
India, which was the fifth largest exporter of illicit capital in the 2008 version of the report, is now ranked 15th among developing countries. But there is little reason to cheer.
{{/usCountry}}India, which was the fifth largest exporter of illicit capital in the 2008 version of the report, is now ranked 15th among developing countries. But there is little reason to cheer.
{{/usCountry}}India’s improvement in the country rankings has nothing to do with policies and conditions required for the curtailment of such outflows. Illicit outflows from several oil producers such as the United Arab Emirates, Kuwait, Venezuela and Indonesia outpaced those from India. There were substantial inflows of illicit capital into India that were not accounted for in the figures.