ThatDamnGood
FULL MEMBER
- Joined
- Oct 19, 2010
- Messages
- 441
- Reaction score
- 0
Certainly not corruption.
Asia Times Online :: South Asia news, business and economy from India and Pakistan
India bled by robber class
By Ranjit Devraj
NEW DELHI - A new report suggesting that illegal transfers of funds into accounts abroad by corrupt Indian politicians, officials and businessmen average US$19.3 billion a year could turn out to be a "gross underestimate", watchdogs warn.
The latest estimate by the Global Financial Integrity (GFI) program of the Washington-based Center for International Policy says more than $125 billion was spirited out of the country in 2000-2008.
GFI, which tracks cross-border flows of illicit money that is "generally the product of corruption, bribery, kickbacks, criminal activities and efforts to shelter wealth from a country's tax
authorities", says India cannot afford to ignore such massive leakages of funds.
"Had India managed to avoid this staggering loss of capital, the country could have paid off its outstanding external debt of $230.6 billion (at end 2008) and have another half left over for poverty alleviation and economic development," GFI said in the report "Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008" released on November 16.
Since independence from British colonial rule in 1947, India has lost $462 billion, in a "conservative estimate". If gaps in statistics can be covered, the estimate could well reach half-a-trillion dollars, the report said.
Following a World Bank model, the report measured the difference between recorded sources of funds, such as borrowings and foreign direct investment, and actual use of funds, like financing the current account deficit.
Staggering as the GFI figures are, they only represented a small fraction of the "black money" (funds hidden from the tax man) generated in the country, said Professor. Kamal Nayan Kabra, a leading economist and consultant who specializes in India's huge "parallel economy".
Kabra, who has taught at the prestigious Indian Institute of Public Administration, which trains senior bureaucrats, told Inter Press Service (IPS) that there was a "correspondence between the leakage of funds into safe havens abroad and the rate of generation of black money through such activities as property transactions, underreporting of contracts and the payment of speed money.
"It is important to note that as the country liberalizes and there is more freedom to make external transactions, there will be greater leakages of Indian funds into foreign markets," said Kabra. "What we are seeing is a trailer of what would happen once India goes in for full convertibility of the rupee that the liberalize-globalizers are pushing."
Kabra said one factor in the transfer of money abroad was the removal of restrictions on foreign travel - imposed on Indians for several decades prior to the start of free-market reforms in 1991 - allowing them to physically carry amounts abroad and set up the links for stashing away unaccounted wealth.
Indians travelling abroad spent $392 million in 1991, and $9.2 billion in 2008.
According to Kabra, joint ventures abroad also provide opportunities to move funds generated though bribes, kickbacks and commissions into accounts held in tax havens. "You can see black money generated from the recent scams surrounding the Commonwealth Games and the grossly underpriced sale of telecom licenses."
The GFI report, in line with Kabra's views, admits that India's vast underground economy (estimated to be at least as big as the formal one) is a significant driver of illicit financial flows.
In a preface to the report, GFI director Raymond W Baker said that deregulation and trade liberalization had accelerated the outflow of illicit money from the Indian economy. "The opportunities for trade mispricing have grown, and expansion of the global shadow financial system accommodates hot money, particularly in island tax havens."
Vineet Narain, an investigative reporter and campaigner against hawala (a system of illegal fund transfers through non-banking channels), told IPS that despite pious promises made at election time by political parties, the system has become so entrenched that there is little hope of ever dismantling it.
Narain shot into prominence after he filed a public interest litigation in the Supreme Court that resulted in several cabinet ministers being charged in 1997 with involvement in hawala transactions, and landmark rulings by the court on a system hushed up by a "conspiracy of silence" orchestrated by powerful politicians, bureaucrats and businessmen.
A ruling in Narain's case laid down a three-month limit for the government to respond to complaints of corruption. The Supreme Court, earlier this month, reprimanded the government for failing to observe it in dealing with complaints of losses worth $40 billion in the sale of telecom licenses.
"The judgement in the Vineet Narain case has fixed a certain time limit for grant of sanction [to prosecute - in this case union telecom minister Andimuthu Raja over vast corruption in granting of licenses] by the competent authority," the court reminded government counsel November 16. Raja had resigned over the scam two days earlier, but it continues to rock parliament.
"It is not surprising that hawala transactions have grown in size following liberalization, or that it has become even more difficult to eradicate because of the volume of the flows," Narain told IPS.
Narain regards GFI figures for total transfers abroad since independence in 1947 as "grossly understated", and places them in the neighborhood of $1.5 trillion.
In a statement released prior to the mid-2009 general elections, Lal Krishna Advani, leader of the main opposition, the nationalist Bharatiya Janata Party (BJP), citing "credible estimates", said the size of money held by Indians in Swiss banks and other tax havens could be as high as $1.4 trillion.
Advani, who was among those charged in 1997 for involvement in hawala transactions, promised to have the illegal funds tracked down and repatriated. But the BJP lost the elections to the Congress-led United Progressive Alliance under Prime Minister Manmohan Singh.
"No matter the outcome the elections or who is in power there is little real intent among the political classes to stanch the hemorrhage," said Narain. "For a start, any disruption would cut into the way political parties are funded.
"However, the BJP's offer of getting the humungous funds residing abroad repatriated and rechanneled into development refocused public attention to a serious problem affecting this poor country with many rich people," Narain said. "India may be losing money faster now than under colonial rule."
(Inter Press Service)
Asia Times Online :: South Asia news, business and economy from India and Pakistan
India bled by robber class
By Ranjit Devraj
NEW DELHI - A new report suggesting that illegal transfers of funds into accounts abroad by corrupt Indian politicians, officials and businessmen average US$19.3 billion a year could turn out to be a "gross underestimate", watchdogs warn.
The latest estimate by the Global Financial Integrity (GFI) program of the Washington-based Center for International Policy says more than $125 billion was spirited out of the country in 2000-2008.
GFI, which tracks cross-border flows of illicit money that is "generally the product of corruption, bribery, kickbacks, criminal activities and efforts to shelter wealth from a country's tax
authorities", says India cannot afford to ignore such massive leakages of funds.
"Had India managed to avoid this staggering loss of capital, the country could have paid off its outstanding external debt of $230.6 billion (at end 2008) and have another half left over for poverty alleviation and economic development," GFI said in the report "Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008" released on November 16.
Since independence from British colonial rule in 1947, India has lost $462 billion, in a "conservative estimate". If gaps in statistics can be covered, the estimate could well reach half-a-trillion dollars, the report said.
Following a World Bank model, the report measured the difference between recorded sources of funds, such as borrowings and foreign direct investment, and actual use of funds, like financing the current account deficit.
Staggering as the GFI figures are, they only represented a small fraction of the "black money" (funds hidden from the tax man) generated in the country, said Professor. Kamal Nayan Kabra, a leading economist and consultant who specializes in India's huge "parallel economy".
Kabra, who has taught at the prestigious Indian Institute of Public Administration, which trains senior bureaucrats, told Inter Press Service (IPS) that there was a "correspondence between the leakage of funds into safe havens abroad and the rate of generation of black money through such activities as property transactions, underreporting of contracts and the payment of speed money.
"It is important to note that as the country liberalizes and there is more freedom to make external transactions, there will be greater leakages of Indian funds into foreign markets," said Kabra. "What we are seeing is a trailer of what would happen once India goes in for full convertibility of the rupee that the liberalize-globalizers are pushing."
Kabra said one factor in the transfer of money abroad was the removal of restrictions on foreign travel - imposed on Indians for several decades prior to the start of free-market reforms in 1991 - allowing them to physically carry amounts abroad and set up the links for stashing away unaccounted wealth.
Indians travelling abroad spent $392 million in 1991, and $9.2 billion in 2008.
According to Kabra, joint ventures abroad also provide opportunities to move funds generated though bribes, kickbacks and commissions into accounts held in tax havens. "You can see black money generated from the recent scams surrounding the Commonwealth Games and the grossly underpriced sale of telecom licenses."
The GFI report, in line with Kabra's views, admits that India's vast underground economy (estimated to be at least as big as the formal one) is a significant driver of illicit financial flows.
In a preface to the report, GFI director Raymond W Baker said that deregulation and trade liberalization had accelerated the outflow of illicit money from the Indian economy. "The opportunities for trade mispricing have grown, and expansion of the global shadow financial system accommodates hot money, particularly in island tax havens."
Vineet Narain, an investigative reporter and campaigner against hawala (a system of illegal fund transfers through non-banking channels), told IPS that despite pious promises made at election time by political parties, the system has become so entrenched that there is little hope of ever dismantling it.
Narain shot into prominence after he filed a public interest litigation in the Supreme Court that resulted in several cabinet ministers being charged in 1997 with involvement in hawala transactions, and landmark rulings by the court on a system hushed up by a "conspiracy of silence" orchestrated by powerful politicians, bureaucrats and businessmen.
A ruling in Narain's case laid down a three-month limit for the government to respond to complaints of corruption. The Supreme Court, earlier this month, reprimanded the government for failing to observe it in dealing with complaints of losses worth $40 billion in the sale of telecom licenses.
"The judgement in the Vineet Narain case has fixed a certain time limit for grant of sanction [to prosecute - in this case union telecom minister Andimuthu Raja over vast corruption in granting of licenses] by the competent authority," the court reminded government counsel November 16. Raja had resigned over the scam two days earlier, but it continues to rock parliament.
"It is not surprising that hawala transactions have grown in size following liberalization, or that it has become even more difficult to eradicate because of the volume of the flows," Narain told IPS.
Narain regards GFI figures for total transfers abroad since independence in 1947 as "grossly understated", and places them in the neighborhood of $1.5 trillion.
In a statement released prior to the mid-2009 general elections, Lal Krishna Advani, leader of the main opposition, the nationalist Bharatiya Janata Party (BJP), citing "credible estimates", said the size of money held by Indians in Swiss banks and other tax havens could be as high as $1.4 trillion.
Advani, who was among those charged in 1997 for involvement in hawala transactions, promised to have the illegal funds tracked down and repatriated. But the BJP lost the elections to the Congress-led United Progressive Alliance under Prime Minister Manmohan Singh.
"No matter the outcome the elections or who is in power there is little real intent among the political classes to stanch the hemorrhage," said Narain. "For a start, any disruption would cut into the way political parties are funded.
"However, the BJP's offer of getting the humungous funds residing abroad repatriated and rechanneled into development refocused public attention to a serious problem affecting this poor country with many rich people," Narain said. "India may be losing money faster now than under colonial rule."
(Inter Press Service)
