New GFI Report Finds Illicit Capital Flight out of India US $462 Billion
November 17th, 2010
November 17th, 2010
Global Financial Integrity
WASHINGTON, DC —“The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008,” released today from Global Financial Integrity (GFI), estimates that tax evasion, crime, and corruption have removed gross illicit assets from India worth US $462 billion. The report also finds that the faster rates of economic growth since economic reform started in 1991 led to a deterioration of income distribution which led to more illicit flows from the country. Moreover, the report finds that the poor state of governance is reflected in a growing underground economy which in turn has fueled more transfers of illicit capital from India. This analysis is cast in terms of a pre- and a post-reform period spanning a total of 61 years since independence.
“This report puts into stark terms the financial cost of tax evasion, corruption, and other illicit financial practices in India,” said Global Financial Integrity director Raymond Baker. “It also shows that these illicit outflows contribute to stagnating levels of poverty and an ever widening gap between India’s rich and poor.”
Primary report findings include:
“In this report we clearly demonstrate how India’s underground economy is closely tied to illicit financial outflows,” said GFI lead economist and report author, Dr. Dev Kar. “The total present value of India’s illicit assets held abroad accounts for approximately 72 percent of India’s underground economy. This means that almost three-quarters of the illicit assets comprising India’s underground economy—which has been estimated to account for 50 percent of India’s GDP (approximately US $640 billion at the end of 2008)—ends up outside of the country. We also find that there is a statistical correlation between larger volumes of illicit flows and deteriorating income distribution.”
The report also makes recommendations for economic reforms and good governance measures and contains comprehensive tables, charts, and other data for detailed analysis of India’s illicit financial flows, economic indices, and history of financial reforms.
The report is available at http://india.gfip.org. A tip sheet which summarizes the reports’ findings is also available at http://india.gfip.org or by clicking here.
If you have questions regarding this report or Global Financial Integrity, or if you wish to request an interview, please contact Monique Perry Danziger at +1 202-293-0740 ext.222 (office) or +1 202-904-3113 (mobile).
The Task Force on Financial Integrity and Economic Development addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.
Global Financial Integrity is a coordinating committee and founding member of the Task Force on Financial Integrity & Economic Development.
For additional information please visit http://www.financialtransparency.org
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