Black money trail

NEW DELHI: In a season of swindles, kickbacks and scams, here is some more on the mother of them all. Black money —the popular moniker given to the billions seeded by dirty deals and whisked away abroad from the taxman’s prying eyes — has received much attention in recent years.

The opposition never tires of screaming foul at the government. The government, for its part, is at pains to say it is doing all it can to track down the illegal stash.

Despite the cacophony, an estimate of the scads of black money in secret bank vaults overseas has long been one big unknown, resulting in a great deal of speculation and glib talk around the subject.

Finally, some help is at hand. A new study by an international watchdog on the illicit flight of money from the country, perhaps the first ever attempt at shedding light on a subject steeped in secrecy, concludes that India has been drained of $462 billion (Rs 20,556,848,000,000 or over Rs 20 lakh crore) between 1948 and 2008.

The amount is nearly 40% of India’s gross domestic product, and nearly 12 times the size of the estimated loss to the government because of the 2G spectrum scam . The study has been authored by Dev Kar, a lead economist with the US-based Global Financial Integrity, a non-profit research body that has long crusaded against illegal capital flight.

Mr Kar, a former senior economist with the International Monetary Fund, says illicit financial flows out of India have grown at 11.5% a year, debunking a popular notion that economic reforms that began nearly two decades ago had tempered the creation and stashing away of black money overseas.

Outflows accelerated after reforms

If capital outflows were a child of the independence era, the problem came of age in the years after the reforms kicked in. Nearly 50% of the total illegal outflows occurred since 1991. Around a third of the money exited the country between 2000 and 2008