More black money within country than stashed abroad

More black money is lying within the country than is stashed abroad by Indians, revealed three studies on unaccounted wealth commissioned by the government. The reports, which haven’t been made public by the government, show that 90-97.2% of the black money is inside the country while only 2.8-10% has gone out of the country. The black money outflow has been estimated at Rs 9.4-22 lakh crore ($216-498 billion) during 1980-2010.

The study reports prepared by three Delhi-based premier finance institutes were submitted until August 2014 to the NDA government but were not made public. The finance ministry had submitted the study based on the reports prepared by National Council of Applied Economic Research (NCAER), National Institute of Public Finance and Policy (NIPFP) and National Institute of Financial Management (NIFM) to the Parliamentary Standing Committee on Finance in July 2017.

A study by NCEAR shows that the unaccounted wealth outside the country is 2.8% at Rs 17-22 lakh crore.

“The wealth accumulated outside India is estimated to exist between $384 billion and $490 billion during 1980-2010. Taking the capital outflow worth $498 billion, its share of outflows in total unaccounted wealth can be estimated as 2.8%. Therefore, it appears that a greater proportion of the concealed wealth is lying within the country and only a small fraction is outside the country,” the report says.

The second study by NIPFP puts the illicit financial flows out of the country between 1997 and 2009 in the range of 0.2% to 7.4% of GDP. It, however, did not give any estimate of unaccounted wealth.

The total illicit outflow during 1990-2008 was Rs 9.4 lakh crore, as per the NIFM estimation, which “suggest that total illicit outflow at present value (including opportunity cost) from India in the reforms period (1990-2008) is Rs 9.4 lakh crore ($216 billion). Importantly, illicit outflows from the country are estimated on average to 10% of the estimated unaccounted income.”

1. The reports were commissioned in 2011 by then finance minister to assess unaccounted income and wealth both inside and outside the country. These studies were submitted to the government in December 2013, July 2014 and August 2014, while these were presented before the Standing Committee on finance headed by Congress leader Veerappa Moily in July 2017. The Chief Economic Advisor (CEA) to whom the study reports were forwarded had, however, observed that there are large variations in the numbers (percentage of unaccounted income with respect to GDP). He had opined that there is no scope for arriving at a common estimate of unaccounted income by combining estimates from the three reports.