Raymond Baker will meet with high-level government officials, civil society organizations, journalists
NEW DELHI, India; Global Financial Integrity (GFI) Director Raymond Baker will travel to India this week for meetings with government officials, journalists, and civil society organizations. Mr. Baker will also deliver remarks at a press conference Friday afternoon.
The budget 2011 is one among a series of budgets in the medium term that seeks to consolidate the Central government’s fiscal deficit and this is in line with what I had expected. Fiscal consolidation is mainly driven by revenue growth and steps in that direction are crucial in order to reconstitute fiscal space.
Fiscal space means the government can launch a well-targeted expansionary expenditure policy so as to boost investments in infrastructure. Massive increases in infrastructure are needed in order to raise India’s potential rates of economic growth in the long run and to achieve better balance in growth rates among India’s states. The Budget seems to recognise the need to boost growth rates in some lagging areas where there is widespread discontent that is driving certain insurgency groups like the Naxalites. Better balance in economic growth will help to achieve national cohesiveness.
Writing about India’s booming economic performance and growth potential has become its own cottage industry over the last several years. Indeed, a report out this week predicts that India will become the world’s fastest growing economy by 2012 and, by 2030, will likely be the globe’s third largest economy behind China and the United States. From its educated work force to its embrace of technology and the likelihood it will be among the leaders in developing “green” businesses, it appears that India – other than the Commonwealth Games – can do no wrong. But the rosy picture has a dark underside that must be addressed if India’s stagnant income inequality levels are to be overcome.
Examines Role of Tax Evasion, Corruption, Trade Mispricing
WASHINGTON, DC — “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008,” released today from Global Financial Integrity (GFI), estimates that tax evasion, crime, and corruption have removed gross illicit assets from India worth US $462 billion. The report also finds that the faster rates of economic growth since economic reform started in 1991 led to a deterioration of income distribution which led to more illicit flows from the country. Moreover, the report finds that the poor state of governance is reflected in a growing underground economy which in turn has fueled more transfers of illicit capital from India. This analysis is cast in terms of a pre- and a post-reform period spanning a total of 61 years since independence.
New GFI Blog Post Explores Link between Corruption, Poverty, and Violence against Whistleblowers in India
Post features advance look at numbers from upcoming GFI report on illicit financial flows from India; country lost over US$125 billion in illicit outflows between 2000-2008
WASHINGTON, DC – Following a Washington Post story published yesterday about recent violent crimes in India against whistleblowers, Global Financial Integrity published a post revealing new numbers from an upcoming GFI report on illicit financial flows (IFF) from India and explaining linkages between IFFs, poverty, corruption, and crime.
WASHINGTON, DC – Dev Kar, Lead Economist for Global Financial Integrity (GFI) and author of the highly-publicized GFI report “Illicit Financial Flows from Developing Countries: 2002-2006,” will visit Mumbai, Pune, Jamshedpur, Calcutta, and Delhi over the course of a three-week tour of India starting Monday, June 1st.
Economists use two basic models to estimate illicit financial flows (IFFs), also known as illegal capital flight. According to the first method, if the source of funds (borrowing abroad and foreign direct investment) is higher than recorded use, the excess must have leaked out as unrecorded transactions and are therefore illicit by definition. The second method tracks the over-invoicing of imports and under-invoicing of exports by domestic residents in order to capture their illicit holdings of foreign currency abroad. The Global Financial Integrity (GFI) study estimated that black money to the tune of $22.7-$27.3 billion left India annually during 2002-2006.
That issue, of black money leaving India, and the total stock of slush funds held abroad by Indians, has become a hot-button political issue. Unfortunately, in the political fray a number of commentators have misinterpreted the GFI report and have confused the issues.
It Is Difficult to Adequately Track Illicit Money Leaving the Country. But Flows Are Likely to Be Immense
Global Financial Integrity (GFI) recently published a report titled Illicit Financial Flows from Developing Countries: 2002-2006 as part of a project financed by the Ford Foundation. This report, which was well received by academia, governments and non-governmental organizations, came to be widely discussed in the Indian media. The report found that black money to the tune of $22.7-27.3 billion a year has been leaving India over the five-year period, 2002-2006. It should be noted that even the upper range of GFI’s estimates likely understates the outflow of black money from India. After all, economic models cannot capture all the channels through which money can be transferred illegally out of a country. A few examples will suffice. It is well known that illicit hawala transactions are an important way by which residents can swap the rupee for foreign exchange. A US state department report estimates that hawala transactions in India range between $13 billion and $17 billion annually, and present a security threat to the country. Neither can economic models capture the outflow of black money as in a courier’s cross-border transfer of foreign exchange in a suitcase.