India has lost $462 billion as black money

Post independence, India lost a staggering US $462 billion in illicit financial flows due to tax evasion, crime and corruption, a research and advocacy group said in a report on Wednesday.

The report, the Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, released by Washington-based Global Financial Integrity (GFI) found 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.

According to the primary findings of the report from 1948 through 2008, India lost a total of $213 billion in illicit financial flows (or illegal capital flight).

These illicit financial flows were generally the product of: tax evasion, corruption,black money, bribery and kickbacks, and criminal activities.

The present value of India's total illicit financial flows (IFFs) is at least $462 billion. This is based on the short-term US Treasury bill rate as a proxy for the rate of return on assets. India's aggregate illicit flows are more than twice the current external debt of $230 billion,' the report said.

'This report puts into stark terms the financial cost of tax evasion, corruption, and other illicit financial practices in India,' said Global Financial Integrity director Raymond Baker.

'It also shows that these illicit outflows contribute to stagnating levels of poverty and an ever widening gap between India's rich and poor,' he said.