Corruption in India contributes to a capital outflow of $462 bn from economy

Corruption in India contributed to a capital outflow of $462 bn from the Indian economy. The statistics were revealed in a report submitted by Global Financial Integrity an American firm which tracks and curbs illicit capital outflow between economies. The study covered the illicit capital outflow from India post -independence to the current age and was compiled by Dev Kar who was previously with the IMF. The study excludes illicit capital outflow by smuggling and other monetary transfers which are off the scope of the study.

According to the company embezzlement and evasion of taxes since the economic reform of 1991 have collectively contributed in a loss of over $462bn or Rupees 9.6 lakh crores. More than a fair share of the loss can be traced back to the financial transactions of high profile citizens and private concerns in India.

The startling revelation of the report was that over 16% of the Gross Domestic Produce of India was lost in the massive capital drain occurring in India. The illicit capital drain is twice more than the external debt India holds on a global scale. Liberalization and trade reforms have only compounded the effect with the post-reform outflow alone adding up to Rupees 72,000 crores. The outflow of illicit money is from accounts of India based banks to establishments abroad which has become 54% in 2009.

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