India suffered a loss of $ 1.6 billion ( around Rs. 8,780 crore) in illicit financial outflows in 2010, capping a decade during which Asia’s third- largest economy experienced black money loses of $123 billion, according to a report by a Washington- based research and advocacy organisation.
The study, released today by the Global Financial Integrity ( GFI), ranks India the decade’s eighth largest victim of illicit capital flight, behind China, Mexico, Malaysia, Saudi Arabia, Russia, Philippines and Nigeria. Co- authored by GFI’s lead economist Dev Kar and economist Sarah Freitas, the report, ‘ Illicit Financial Flows from Developing Countries: 2001- 2010,’ is the organisation’s annual update on the amount of money flowing out of developing economies through crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for 2010. Kar said $ 123 billion was a massive amount for the Indian economy to lose.
“ This is more than $ 100 billion which could have been used to invest in education, healthcare, and upgrade the nation’s infrastructure. Perhaps, last summer’s electrical blackout would have been avoided if some of this money had remained in India and been used to invest in the nation’s power grid,” Kar said.
The report found all developing and emerging economies suffered a loss of $859 billion in illicit outflows in 2010, just below the all- time high of $ 871 billion in 2008— the year preceding the global financial crisis. GFI director Raymond Baker said while progress had been made in recent years, India continued to lose a large amount of wealth in illicit outflows.
“ Much focus has been paid in the media on recovering Indian black money that has already been lost. This focus is for naught as long as the Indian economy continues to hemorrhage illicit money. Policymakers and commentators should make curtailing the ongoing outflow of money priority number one.
” The $ 859 billion outflows lost to all developing countries in 2010 is a significant uptick from 2009, which saw the developing nations lose $ 776 billion. The study estimates the developing world lost a total of $ 5.86 trillion over the decade ( 2001- 2010).
“This has enormous ramifications for the developing world,” explained Freitas. “Poor countries lost nearly a trillion dollars that could have been used to develop economically, atrillion dollars that could have been used to pull people out of poverty and save lives.”
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