BY | December 18, 2012

By Arun Kumar

Washington, (IANS) The Indian economy suffered a staggering $1.6 billion in illicit financial outflows in 2010, capping-off a decade in which it experienced black money losses of $123 billion, said a report. An official said: “It has very real consequences for Indian citizens.”

India is ranked as the decade’s 8th largest victim of illicit capital flight behind China, Mexico, Malaysia, Saudi Arabia, Russia, the Philippines and Nigeria in the report by Global Financial Integrity, a Washington-based research and advocacy organization.

Titled “Illicit Financial Flows from Developing Countries: 2001-2010″, the report found that all developing and emerging economies suffered $858.8 billion in illicit outflows in 2010, just below the all-time high of $871.3 billion set in 2008 — the year preceding the global financial crisis.

“While progress has been made in recent years, India continues to lose a large amount of wealth in illicit financial outflows,” said GFI Director Raymond Baker.

“Much focus has been paid in the media on recovering the Indian black money that has already been lost,” he said, suggesting policymakers should instead make curtailing the ongoing outflow of money priority number one.

“For the Indian economy, $123 billion is a massive amount of money to lose,” said Dev Kar, GFI lead economist and co-author of the report with GFI economist Sarah Freitas.

“It has very real consequences for Indian citizens. This is more than $100 billion dollars which could have been used to invest in education, healthcare, and upgrade the nation’s infrastructure,” he said.

A November 2010 GFI report, “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008″, found that the Indian economy lost $462 billion to illicit financial outflows from 1948 through 2008.

Authored by Kar, the report measured India’s underground economy as 50 percent of GDP, with cumulative illicit outflows accounting for an increasing share of the total underground economy.

The new GFI study also estimates the developing world lost a total of $5.86 trillion to illicit outflows over the decade spanning 2001 through 2010.

The $858.8 billion of illicit outflows lost to all developing countries in 2010 is a significant uptick from 2009, which saw developing nations lose $776.0 billion.

GFI advocated that world leaders increase the transparency in the international financial system as a means to curtail the illicit flow of money highlighted by Kar and Freitas’ research.

RELATED

Mumbai: A benchmark index of Indian equities markets closed Tuesday's trade around 324 points down, as capital goods, banks and automobile stocks plunged. This is the second consecutive sell-out in the market triggered by weak industrial data and anxiety over the US Fed...

BSE

Hyderabad, Sep 16 (IANS) Round-the-clock electricity supply will be a reality in Andhra Pradesh from Oct 2 as the state government Tuesday signed an agreement with the union power ministry under the 'Power for All' scheme. The agreement was signed here in the presence of...

Oil prices will not fall below USD 100-mark for rest of 2014, expert predicts KUWAIT: There should be no anxiety over the global price of oil for the rest of 2014, predicted an expert, who viewed that prices would not fall below the USD 100 mark in spite of their recent drop...

GCC-Chinese ties based on steady oil supply -- report KUWAIT: The Gulf Cooperation Council (GCC) capabilities in steadily supplying China with oil has reflected positively on their relations, an economic report said Sunday. China is an unprecedented consumer of oil from...

US economy 2nd quarter strong performance, raises recovery hopes The US economy recovered more strongly than initially thought in the second quarter with a bigger portion of the growth driven by domestic demand in a bright sign for the future, the National Bank of Kuwait said...