Focus more on curtailing outflow of black money: GFI to India

India's efforts to bring back black money stashed abroad may not succeed as major western economies, including the US and UK, are the main beneficiaries of illicit funds, a global think-tank has said, underlining that the government should instead focus more on curtailing its outflow which has jumped nine-fold since 2003.
"These are not easy issues to solve. I think it is important that a great deal of importance be focused on curtailing the mechanism by which money continues to go out of India. That has more chance of success than getting very much black money back into India," US-based Global Financial Integrity (GFI) president Raymond Baker told PTI.

In a report last month, GFI said that the outflow of black money from India to foreign countries has increased nine-fold from USD 10 billion in 2003 to USD 94.7 billion in 2012.
India has replaced Malaysia as the fourth largest exporter of black money after China, Russia and Mexico for the 10-year period from 2003-2012.
These figures are on the conservative side and the actual amount could be much larger, Baker said.
"Getting black money back for any country is a hard thing to do, because international mechanism does not basically support this," he said, noting that the major western countries like the US and UK, which are the main beneficiaries of black money from countries like India would not like to stop this illicit flow of money into their economies.

"There is a global view that the money that has been stolen by government officials or corruptly acquired should be returned to the country of origin, but there is no such global understanding with regard to the money generated in the commercial sector which was tax evading," Baker said.

The money generated through tax evasion is the bulk of the illicit money that has gone out of India, he said.
One of the things, Baker said, that Prime Minister Narendra Modi could do "very effectively" is to put this issue much more effectively and solidly on the agenda of the G-20.

He said that it is not just the return of the corruptly stolen money, but it is also the whole issue of cross border illicit flow of money that needs to be addressed.
"This issue is crying out for a major figure from the emerging market and developing world to insist that this must be addressed at the level of G-20," Baker said.