$27bn flows out illegally every year from India

Just when a partisan debate rages over the issue of billions of black money hoarded abroad by India's corrupt, a US-based organisation 

— Global Financial Integrity (GFI) — has ranked the country fifth in the list of 160 developing countries suffering from the outflow of huge amounts of money through illicit channels. 

Quoting its report -- 'Illicit Financial Flows from Developing Countries: 2002-06' — which came out in December last year, GFI said total illicit financial outflows from India during the period averaged from a low of $22.7 billion to a high of $27.3 billion per year. 

The report comes bang in the middle of a confrontation between Congress and BJP over the latter's promise to bring the illegal billions back. 

Congress has accused the BJP of exaggerating the issue by distorting facts for partisan ends. It, along with the Left, has also accused BJP of not taking measures to tackle the problem during NDA's tenure at the Centre. The BJP has returned the fire with full force, accusing Congress of ignoring the issue. 

GFI director Raymond Baker said it was not just India's problem. "In 2006, total outflows from developing countries outpaced incoming official development assistance (ODA) by a ratio of 10 to 1. This means that for every $1 in ODA a developing country received, $10 was lost due to illicit financial outflows," he said. 

China topped the list of countries for illicit outflows with $233bn-$289bn, followed by Saudi Arabia ($54bn-$55bn), Mexico ($41bn-$46bn) and Russia ($32bn-$38bn). 

The issue of money taken illegally abroad and stashed in tax havens has recently acquired prominence because of the feeling, encouraged by the global slowdown, that days of secret banking are over. The consensus was reflected in the recent meeting of G-20, and has been strengthened by the promises of Swiss authorities to cooperate with demands, provided they are backed up by specific details, for investigation into accounts in banks within their jurisdiction. 

In India, Supreme Court has taken up the matter following a PIL by a group of well-known citizens. 

The Centre has promised to get back to the court this week with details of what it has done to deal with the issue, particularly with regard to details of 1,400 accounts with a bank in Liechtenstein which has been made available by German authorities. 

The GFI report estimated that total illicit capital flight from developing countries was as high as $1 trillion per year during 2002-06. The illegal outflows involve activities such as corruption (bribery and embezzlement of national wealth) and proceeds of licit business that becomes illicit when transported across borders in violation of laws and regulatory frameworks. 

Baker said, "This massive loss of assets is the greatest impediment to economic development and poverty alleviation and should be of concern to all nations." 

The GFI report is based on examination of trade and external debt data from 2002-06 maintained by the International Monetary Fund (IMF) and the World Bank.