We have written a lot on how corruption continues to be a huge malaise afflicting India. Having said that, it is not a problem plaguing India alone. According to a report by Global Financial Integrity (GFI) and published in the Economic Times, a record US$ 991 bn in unrecorded funds left 151 developing and emerging economies in 2012. If you look at a longer time frame it is even worse. Between 2003 and 2012, the estimated amount of dirty money shifted from developing countries amounted to a mind boggling US$ 6.6 trillion.
India, not surprisingly, featured in the list of countries that saw the largest outflow of dirty money. The others were China, Russia, Mexico and Malaysia. Middle East and sub-Saharan Africa have also seen large amount of illicit flows.
Essentially dirty money has been loosely classified as proceeds from shady deals, crime and corruption. Some of these illicit financial flows have also been a result of fraudulent underbilling or over invoicing for goods to avoid taxes and hide large transfers.
Corruption in India especially has been a huge menace and this amply came to the fore during the reign of the erstwhile UPA government. Its apathy and unwillingness to address it head on was infact one of the major reasons that proved to be its undoing in the May 2014 general elections.
Now that so much hope has been pinned on the Modi government it will be interesting to see whether it is able to change the fortunes of India dramatically. And along with the implementation of reforms, focusing on growth and development, how it tackles the combination of black money and corruption will be the key.
For India, tackling corruption becomes a major factor. Simply because one cannot help but notice that the amount of money wasted on account of crime and corruption could imply have been used towards productive expenditure such as infrastructure, education and healthcare. Certainly government finances would have been in a much better shape.
But while the ills of corruption and the burden on the economy is quite evident, only considerable political will can ensure that any meaningful headway is made in addressing this problem going forward.