Mumbai: The amount of illicit money that flew out of India in 2013 was the fourth highest in the world after China, Russia and Mexico with such financial outflow from developing economies surging to $1.1 trillion.
According to a report released by Washington-based research and advisory firm Global Financial Integrity on ‘Illicit Financial Flows from Developing Countries: 2004-2013”, the developing and emerging economies lost $7.8 trillion in illicit financial flows from 2004 through 2013, with illicit outflows increasing at 6.5 per cent per year — nearly twice as fast as global GDP.
India lost $83.01 billion in illicit financial flows in 2013 and a total of $510.28 billion in the last 10 years with an average outflow of $51.02 billion every year.
China tops the list with a cumulative outflow of $1.39 trillion over the last 10 years. During the same period, Russia has witnessed a total illicit financial outflow of $1.04 trillion while similar outflow from Mexico touched $528.28 billion, a notch higher than India.
The illegal capital outflows stem from tax evasion, crime, corruption, and other illicit activity. The fraudulent mis-invoicing of trade transactions was revealed to be the largest component of illicit financial flows from developing countries, accounting for 83.4 per cent of all illicit flows — highlighting that any effort to curtail illicit financial flows must address trade mis-invoicing.
The study has recommended that the government should significantly boost customs enforcement by providing appropriate training and equipment to better detect the intentional mis-invoicing of trade transactions.
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