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Illicit money outflows average 10% of GDP: Parlimentary panel

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Illicit money outflows average 10% of GDP: Parlimentary panel
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New Delhi:  Estimates of unaccounted wealth in and outside the country are difficult to measure, although some studies have estimated that an average of 10 per cent of the unaccounted income leaves the country in the form of illicit financial outflows, according to a parliamentary committee.

The Parliamentary Standing Committee on Finance, in its report, said, "The unaccounted income and wealth inside and outside the country does not appear amenable to credible estimation in the context of India". 

The report on the "status of unaccounted income/wealth both inside and outside the country - a critical analysis (a preliminary report)", tabled in Parliament on Monday, said that studies conducted by the institutes have estimated unaccounted wealth outside the country. 

Citing the verbal deposition by Revenue Secretary Ajay Bhushan Pandey before the Committee, the report said: "As regards the macro estimation of unaccounted income and wealth, the three studies have observed that the reliable estimation of unaccounted income and wealth is extremely difficult. These studies themselves have observed that it is extremely difficult."

It added, "They have also reported a very huge variation in estimations of unaccounted income ranging from 7 per cent to 120 per cent of the reported GDP. There is a lack of consensus regarding the most suitable method in the Indian context."

As per the National Institute of Public Policy and Finance's (NIPFP) study, during the period 1997-2009 illicit financial flows out of the country have been in the range of 0.2 per cent to 7.4 per cent of the GDP, the Committee said. 

Besides, the study conducted by National Council of Applied Economic Research (NCAER) stated that wealth accumulated outside India is estimated to exist between $384 billion and $490 billion during the period 1980 to 2010, it said. 

"National Institute of Financial Management (NIFM) results of estimation suggest that total illicit outflow at the present value (including opportunity cost) from India in the reform period (1990-2008) is Rs 9,41,837 crore (around $216.48 billion)," the report tabled in the Parliament said. 

"Importantly, illicit outflows from the country are estimated on average to 10% of the estimated unaccounted income."

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