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Global Financial Integrity report is not unique, but frenetic illicit movement of funds from India is revealing

Global Financial Integrity (GFI), a credible Washington-based think tank on international finances especially of the subterranean variety, has come up with startling findings.  The chief among them being developing and under-developed countries that figure high on the dubious list of deviants excelling in the art of illicit money transfers, both incoming and outgoing. And what is going to become a point of heated debate in India is India led the pack in the list of rogue states in 2014.  That year saw Narendra Modi being elected as India’s Prime Minister. Are there any pointers? Yes, if you read between the lines, the conclusion that the previous regime and its beneficiaries shaking in their boots at the prospect of a no-nonsense prime minister in office were busy tying up the loose ends is inescapable. The magnitude is startling.  2014 according to GFI witnessed a record volume of 1 trillion US dollars of illicit movement of funds across the globe with the largest share of 21 billion US dollars moving out of India in that year.

The GFI report also adds grist to the mills of the BJP when it says frenetic illicit financial movement was witnessed during 2005-2014, the years the BJP’s bete noire the Congress was in office.  These ex-facie cannot be just a coincident.  Bulk of the infamous Indian financial frauds took place during this period particularly 2G, coal and Commonwealth games just to mention a few.



Congress is bound to deny these inferences born of studied and careful reading between the lines of the GFI findings.  It may even bristle with indignation and question the very credibility of GFI and brand it as a BJP sponsored think tank out to malign it and its cohorts constituting the UPA.  But it has a lot to answer for particularly the timing of the scams and the frenetic activities witnessed in 2014 sensing Narendra Modi storming into power.

GFI has concluded that over-invoicing is the pet modus operandi of crooks both in the political firmament as well as in the industrial.  Kickbacks is the name of the game.  Bill my company or my nation for $1500 million whereas the quantum of purchase warrants a bill of only $1000 million and credit the whopping difference of $500 million is the instruction to the pliable supplier, may be a power plant supplier or more appropriately an arms supplier.  This act of mutual back-scratching harms the company and the nation immensely with a concomitant benefit to the foreign supplier and its Indian patrons.

To be sure the practice is as old as the hills and therefore the GFI findings are really not unique or new but they are revealing especially the timing of the gargantuan quantum of flows. The GFI has suggested concerted actions transcending nations given the fact that the menace has international ramifications.  It has lauded the G-20 and OECD initiatives in taking the problem of money laundering head on. But the task is difficult though not uphill with powerful Multi-national corporations (MNC) controlling two-thirds of global GDP likely to come up with new and more effective ripostes to counter the possible new world order on financial flows.

The Indian government led by Prime Minister Modi and his able Finance Minister Arun Jaitley  have taken a number of steps to fight black money and its concomitant money laundering.  And they are also tirelessly roping in international support to make for a perfect tango.  If all the nations of the world take the issue seriously, they are bound to savor success sooner or later.

Resistance would come not only from entrenched MNCs but also from powerful tin pot dictators whose substantial presence in sub-Saharan Africa, as the GFI report bemoans is a cause for concern.  Sundry Sultans ruling the oil-rich gulf nations too have basked in the sunshine of conducive and weak international financial order on funds movements with their citizens winking at their shenanigans in the selfish realisation that they too have been well served in the process.

The infamous Swiss banks too have at last been brought into line though kicking and screaming.  The credit for this goes to the USA which read the riot act to it.

Updated Date: May 04, 2017 16:00 PM

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