India lost a whopping $123 billion in black money during 2001-2010, making it the eighth largest victim of illicit financial outflow, a US-based research and advocacy organisation said in a report.

However, India’s black money loss of $123 billion in 10 years is far less than that of China, which, according to the report, suffered a loss of $2.74 trillion during the same period (2001 to 2010), followed by Mexico ($476 billion), Malaysia ($285 billion), Saudi Arabia ($201 billion), Russia ($152 billion), the Philippines ($138 billion) and Nigeria ($129 billion).

According to the ‘Illicit Financial Flows from Developing Countries: 2001-2010’, released by the Global Financial Integrity (GFI), India is the eighth largest victim of black money losses. It is also the only South Asian country to figure in the top 20 list of such nations.

In 2010 alone, the Indian economy suffered $1.6 billion in illicit financial outflows.

“$123 billion is a massive amount of money for the Indian economy to lose,” said Dev Kar, GFI lead economist and co-author of the report.

“It has very real consequences for Indian citizens. This is more than $100 billion which could have been used to invest in education, healthcare, and upgrade the nations’ infrastructure. Perhaps last summer’s electrical blackout would have been avoided if some of this money had remained in India and had been used to invest in the nation’s power grid,” he said.

While progress has been made in recent years, India continues to lose a large amount of wealth to illicit financial outflows, said GFI director Raymond Baker.

“Much focus has been paid in the media on recovering the Indian black money that has already been lost. This focus is for naught as long as the Indian economy continues to hemorrhage illicit money. Policymakers and commentators should make curtailing the ongoing outflow of money priority number one,” he said. 

India among top 10 in illicit fund outflows

The developing world lost nearly one trillion dollars in illicit capital outflows in 2010 due to corruption, tax evasion, and other financial crimes not involving cash transactions, according to a new report released by a global financial watchdog group.

The GFI says in its latest report that illicit financial outflows cost the developing world $859 billion in 2010, up 11 per cent from 2009. Over the decade spanning 2001 through 2010, the developing world lost a total of $5.86 trillion, the group claims.

“Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks,” said GFI’s director Raymond Baker.

With an illegal capital outflow of $420 billion, China accounted for almost half of the dirty money that flowed into tax havens and Western banks in 2010. Malaysia and Mexico followed China with outflows of $64 billion and $51 billion, respectively.

Illicit financial flows have increased in every region of developing countries, the GFI notes.

Read the report