• Dr.NaziaJamal

The GFI explains illicit flows as funds which are illegally earned, transferred, and/or utilised across an international border. The main sources of illicit flows include commercial tax evasion, transnational crime and grand corruption. India has the third-highest trade-related illicit financial flow among over 135 countries with a whopping USD 83.5 billion escaping the government's tax net owing to trade-based money laundering tactics, according to the latest GFI report. In March 2018, it was reported that the amount of Indian black money currently present in offshore banks is estimated to be ₹300 lakh crores or US$ 4 trillion. An estimated $770 billion in black money entered India while $165 billion exited the country during 2005-2014, US-based think tank Global Financial Integrity (GFI) has said in its latest report. However India ranks eighth with illicit funds outflow at $1.6 billion according to a report by Global Financial Integrity in December 2012.This also says that the total outflow of black money from India since Independence until 2010 was $232 billion. In the post-reform period with the new economic reforms both capital flows and illicit flows have increased tremendously resulting in the new opportunities and threats to the Indian economy. The new liberalised era has opened the doors of the Indian economy; deregulation and liberalisation accelerated the outflow of illicit money from the Indian economy. As is well known, that macro economic objectives are contradictory in nature resulting in a dilemma to the policy makers such as Impossible trinity i.e independent monetary policy, free capital flows, and exchange rate stability gives the policy makers a tough challenge to devise an appropriate policy for a developing country like India, further with the presence and growing quantum of the illicit funds makes this task much more challenging. Indians have deposited in foreign banks in their illegal personal accounts a sum of about $1500 billion, which have been misappropriated by them. This amount is about 13 times larger than the country's foreign debt. With this amount 45 crore poor people can get Rs 1,00,000 each. This huge amount has been appropriated from the people of India by exploiting and betraying them. Once this huge amount of black money and property comes back to India, the entire foreign debt can be repaid in 24 hours. After paying the entire foreign debt, we will have surplus amount, almost 12 times larger than the foreign debt. If this surplus amount is invested in earning interest, the amount of interest will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to maintain the country very comfortably. These illegal fund flows are creating this impossible trinity far more impossible to tackle. Thus there is a need to assess and analyse the threats and problems posed by illicit flow of capital resulting in the presence of black economy in India which in turn leads to several macro economic imbalances and policy failures. The paper is planned to be divided in six sections, while the first section traces out the quantum of illicit capital flows. The section two is devoted to a brief review of literature. How illicit capital flows in India is further increasing a challenge to the policy makers will be assessed in section three. Section four tries to analyse the dimensions and presence of impossible trinity and its impact on dilemma faced by the policy makers in India. Section five presents the main conclusions. Finally section six is devoted to highlighting the policy approach towards these issues in India

Black Economy: Illicit Capital Flows and Impossible Trinity with Special Reference to India

"Black Economy: Illicit Capital Flows and Impossible Trinity with Special Reference to India", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.9, Issue 9, page no.b800-b811, September-2022, Available :http://www.jetir.org/papers/JETIR2209198.pdf

"Black Economy: Illicit Capital Flows and Impossible Trinity with Special Reference to India", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.9, Issue 9, page no. ppb800-b811, September-2022, Available at : http://www.jetir.org/papers/JETIR2209198.pdf