India ranks fourth in the world in black money outflows with a whopping $51 billion siphoned out of the country per annum between 2004 and 2013, a US-based think-tank report said on Wednesday, underscoring the need for tough legislation brought by the NDA government.
The illegal capital outflows stem from tax evasion, crime, corruption and other illicit activity, the report said, according to which a record $ 1.1 trillion flowed illicitly out of developing and emerging economies in 2013.
Bringing back black money stashed abroad was one of Prime Minister Narendra Modi’s key poll promises and the government has since worked with authorities abroad to crack down on illegal account holders, enacting tough laws to arrest such practices.
China topped the list with $ 139 billion average outflow of illicit finances per annum, followed by Russia ($ 104 billion per annum) and Mexico ($52.8 billion per annum), according to the annual report released by Global Financial Integrity (GFI), a Washington-based research and advisory organisation.
In October, the Centre said undisclosed assets abroad worth Rs 4147 crores ($ 620 million) had been declared by Indians during the 90-day black money “compliance window” while the government’s total tax receipt stood at R 2,488 crores ($374 million).
Under the compliance window that expired on September 30, disclosures of assets will get another three months till December 31 to pay tax and a penalty.
Tax will be levied at the rate of 30% while penalty will be 100%. On the other hand, tough norms await those who did not avail of the ‘compliance window’. The penalties include a hefty 120% of the tax amount due besides a jail term of up to 10 years for holding undisclosed foreign assets.
In all, during this decade-long period of 2004-2014, GFI estimates that more than half a trillion ($510 billion) went out of India and in the case of China the figure was $1.39 trillion and Russia $1 trillion.
“This study clearly demonstrates that illicit financial flows are the most damaging economic problem faced by the world’s developing and emerging economies,” said GFI President Raymond Baker.
“This year at the UN the mantra of ‘trillions not billions’ was continuously used to indicate the amount of funds needed to reach the Sustainable Development Goals. Significantly curtailing illicit flows is central to that effort,” he said.
Noting that Sustainable Development Goals (SDGs) calls on countries to significantly reduce illicit financial flows by 2030, the report said the international community has not yet agreed on goal indicators, the technical measurements to provide baselines and track progress made on underlying targets and subsequently the overall SDGs.
In its report, GFI recommends that world leaders should focus on curbing opacity in the global financial system, which facilitates these outflows.