The latest report of Global Financial Integrity (GFI) throws up mind-boggling figures on illegal outflows from the developing and emerging countries.
The latest report of Global Financial Integrity (GFI) throws up mind-boggling figures on illegal outflows from the developing and emerging countries. According to the report, it crossed the $1-trillion mark in 2011 and, in 2013, it was over $1.1 trillion. India is the fourth-biggest exporter of illicit money, with an average annual outflow of $51.03 billion during the period 2004-2013, behind China ($139 billion), Russia ($105 billion) and Mexico ($53 billion).
What is more worrying is the fact that, 83% of this is due to trade mis-invoicing, meaning over $800 billion in illicit trade, resulting in loss of significant customs revenue which could be utilised for developmental work. In India, trade mis-invoicing at 10.3% of the total trade during 2004-2013 represents 100% of the illicit outflows from the country in most of the years, including the last two.
Clearly, India is lacking in data collection and sharing. The government would do well to utilise all windows to create a robust framework for co-operation with other countries in terms of getting data on prices and also their timely dissemination to curb trade mis-invoicing. Though a large part of the illicit outflows from India may have been coming back into the country through PN and other routes, this needs to be done on an urgent basis.