 Let's move from a global issue to a national issue, which is India. After our first global illicit flows report, our first country report was on India, and the numbers are sobering to say the least. I read something recently that said that half the people in India don't have indoor plumbing or indoor sanitation. The impact not only on health but on safety, especially for women and girls, is significant. You juxtapose that against 700 or close to $700 billion in illicit money flowing out of that country since independence, and you understand the opportunity cost involved in so much money flowing out of these economies. So let's take a closer look at India. I'd like to invite Global Financial Integrity's Chief Economist Dev Khar, Dr. Irfan Nordin, and Ambassador Ibrahim Rasool up front. Thank you. Okay, good morning. I've had the opportunity to sit next to the timekeeper, and I've seen how relentless he's been. He's not always been obeyed, but he's been relentless. It's not for a lack of trying. So I'll get started while Dr. Nordin gets mic'd up. I really want to say that having sat through yesterday and today and having been involved in this process from an African perspective, I was reminded of a little story of a man who on very dark night walks down the street and sees someone crouching and obviously searching for something under his street lamp. He goes up and offers his help and the man tells him, well, I've lost my keys. And they search for five minutes, 10 minutes, 15 minutes, and it's obvious they're not finding this guy's car keys. And he says to the guy, listen, we've been scouring this area. Are you sure you lost it here? The man says to him, I don't think I lost it here, but this is the only place where the light is shining. And I think that that story for me says what it is that we are busy with. I grew up in apartments of Africa and we welcomed our transition to democracy and it brought in changes on the African continent. At that point, after the fall of the Berlin Wall, the light was shining on the markets and Africa shifted to market economies. The light was shining on democracy, human rights, and freedom. And an almighty process of democratizing and bringing in human rights and freedom happened across the African continent. Presidents were actually giving up the presidencies. The light was shining on deregulation and decontrolling of economies. And that's what we did. The light was shining on investment, on tourism, on trade. And that's what Africa did. But the problems often persisted. I understood what all of this meant when Raymond Baker invited me to Yale University to come and do a country report as many others will be doing for the rest of the day. I then entered this fascinating world of illicit financial flows. Last year, ahead of President Obama's U.S. Africa Leader Summit, Raymond, President Umberke, who headed the Africa High-Level Panel on illicit financial flows, we walked the corridors of the White House. We walked the corridors of State Department, of the World Bank, of Congress, and all of those places beating the drums for those aspects where the lights do not shine. Going into those citadels of power in order to say the light is not shining here, can we shine it there on illicit financial flows? And so I think that that's really where we have been able to go to. As I introduced the panel on Africa, I think that we have an opportunity to see whether the broad coordinates of illicit financial flows are similar across the world and whether we are able to learn some of these lessons. And so, for example, Africa have lost at least 50 billion U.S. dollars' worth in illicit financial flows, which simply means that the outflows in terms of IFFs have been greater than the inflows for development aid and the implications for infrastructure and for the MDGs have been severe. In Africa we have found that 65 percent of outflows have accrued directly to multinational corporations, 32 percent to crime, as we've just heard, and 3 percent in public spending or public sector corruption, although that is where the light shines mostly. In Africa there are regional trends with national specificities and we'd like to begin to unpack these national specificities because these give us the weapons and the tools to be able to understand this phenomenon and to combat it. Nigeria and oil, the DRC and mining, SADIC and wildlife, for example, and so we can go on or parts of Africa where states are weak and parts of Africa where states are strong. So strong states are often opaque and work by dictate and weak states have no regulatory frameworks and so how do we manage those paradoxes? In Africa we've also seen that the capacity of the state is often the issue. Does the state have the ability to monitor, measure, regulate and intervene? Does it have partnerships? Is it suspicious of those who bring help? Will disclosure of financial records in an African state on wildlife open it up to the implementation of sanctions on Iran, for example, and those are the hazards that African states weigh up all the time, but most importantly the budget of multinational corporations for legal defense is far greater than the capacity of African governments for legal offenses to take them to court. And so I think that those are some of the broad coordinates and I basically mentioned that in order for my own familiarity with what Dr. Devkar will speak about on India. He's had an extensive introduction yesterday. This is his second time on the stage so I'm not going to do too much of that but he is the chief economist of global financial integrity. GFI has been very fortunate to get someone with 32 years experience. In the IMF where he was, for example, the senior economist and worked mostly on macroeconomic and statistical issues and a range of other matters. He will speak to you after Dr. Irfa Nuruddin will speak to you. Now Dr. Irfa Nuruddin, I've taken me four months to get introduced to you. We're at the same university, Georgetown. We're in the same department, the School for Foreign Service. We're probably just in different units but I'm very happy to meet you because he's the associate professor and the Althani chair in Indian politics in Georgetown. He studies problems of economic development, democratization and civil conflict in the developing world. He specializes in comparative economic development and policymaking and all those other things I've just said but he's also a fellow at the Woodrow Wilson International Center for Scholars. They are eminently qualified to speak to you about India and so I leave it over to them to speak to you and I invite Dr. Nuruddin followed then by Dr. Kaur. Well, good morning everybody. Thank you Ambassador Rasool, Dr. Kaur, GFI for this invitation. I'm going to start in a sense by setting the stage globally before narrowing it down to India. My own research has been both on global financial flows and economic development issues but also specific to India and I think starting globally will help set the stage for how in many ways India is very different and I think has to be analyzed very differently to understand where illicit financial flows fit into the larger economy. I want to just start, even though it's preaching to the choir and convincing all of us that we need to know more about illicit financial flows seems kind of silly but I want to suggest two other consequences of illicit financial flows that actually have gotten relatively little attention over the last day and a half and that comes from my perspective as a political scientist, a political economist rather than just an economist. The first is from a new book that I've just finished with Tom Flores at George Mason University which will be published early in the spring by Cambridge University Press. Tom and I have studied every election in the developing world, both the good ones and the not so good ones. I'm not sure which one of the next US election falls in the camp of, crazy one, right, all those elections, over 1500 elections in the developing world since 1946 and try to understand the consequences of those elections for democracy, right, a very big sort of global picture for how do some elections seem to advance because of democracy and why do other elections seem to just perpetuate a cycle of what we now call electoral autocracies, competitive authoritarianism, et cetera. One of the major factors we find is that states that have limited fiscal space, the inability as Ambassador Russell said to invest in public spending, to invest in building roads and hospitals and schools, have elections that yield negative consequences for future democracy. This is based on a cross-national sample, like I said, every election in the developing world over the last 60 years, lots of robust statistical controls and the cutting edge econometric techniques and the result just cannot be shaken, right, states that have limited fiscal space and of course illicit financial flows are a significant part of explaining why these states have limited fiscal space actually have elections that hurt future democracy. And the causal mechanism here is quite simple, right, when states cannot spend on public goods, they must win elections and buy other means. They win those elections by indulging in patronage, by building client-listing networks, by exploiting ethnic cleavages and when necessary by stealing the elections outright. So in fact, the virtuous circle of democracy and fiscal space of financial flows goes both ways. Not only does good governance reduce illicit financial flows, but reducing those illicit financial flows actually pays forward to democracy. In India, we see the same thing. About seven years ago, I published a paper looking at anti-incumbency and electoral volatility. You might not know this about India, but in India is one of the few countries in the world where being an incumbent is actually a disadvantage in elections, right? Anti-incumbency rates are extremely high. In fact, for most of the last 30 years, to be an incumbent in an election was a statistical disadvantage relative to being a challenger. In an analysis where we compare across the Indian states, Pradeep Chiba of the University of California, Berkeley and I, show again that fiscal space, right, measured once again as the ability of governments to raise revenues, to spend on all sorts of public goods, is directly correlated with electoral volatility and anti-incumbency, right? So even in India, a pretty well-functioning democracy, even if it has all sorts of dysfunctions as well, where states have money, where they can spend on public goods, democracy seems to take root. Party systems get stronger, and incumbents can build records on which they can run future elections, but where they can't, it hurts them. So these two consequences, really political consequences, one for just the nature of elections, one for the nature of democracy, I think it's worth incorporating in our larger conversation about illicit financial flows, because once again, there's a virtuous or vicious cycle that this feeds into. So let's talk a little bit about causes. I'm going to leave the macroeconomic causes of illicit financial flows to Dr. Carr, his expertise on this topic, so far outstrips mine that would be silly for me to say much, but I want to sort of, in some sense, anticipate one of the things that his report finds. And that is that macroeconomic factors for the most part, with some important exceptions, don't explain the bulk of illicit financial flows from India. And so I'm going to suggest, somewhat self-servingly again, that part of that is because much of the explanation here is politics. One of the things that was said in the last panel is that the state is often complicit in this process. I think in India that's slightly more nuanced. It is not so much that the state is complicit in the kinds of corrupt activities that maybe are more common in other parts of the world, especially where wildlife, drugs, weapons, trafficking is common, but rather the state as an actor has such an outsized influence on the Indian economy that the entire economy is shaped by the decisions of the state. And I want to highlight four particular avenues in particular. Before I do that, though, I want to introduce one important distinction, I think that's also important for this conversation on India, which is that in India we refer to this as black money, right, in a broad sort of sense. And I realize in the normative and policy reasons that the language of dirty money, black money was issued in favor of, I think, a much more encompassing frame of illicit financial flows. But the one advantage that black money as a terminology has is that it takes away the focus on flows, right? And in India, one of the things to realize is that most of the black money never leaves the borders, the amount of black money in the economy that stays in that economy, that is part of the functioning, day-to-day functioning of this economy is far outstrips the extremely large amount of money that in fact the GFI's report finds actually leaves, right? So what I want to point, just sort of highlight is that in addition to all the money that's flowing abroad, in addition to all the money that's going to tax havens in Switzerland, the United States, Cayman Islands, wherever it is, a great amount of money is actually being hidden from the government and from the public sector within the country itself. As a young boy in Bombay, I remember driving around with my parents when they were looking for an apartment to buy, and the conversation with the realtor was this funny-coded conversation at least to the years of an 11-year-old, right? Which was what percentage of the price would be paid in black and what percentage would be paid in white, right? And it was an explicit conversation, right? The realtor was saying, I think this buyer is going to want 60 black, right? Versus 40 black, et cetera, right? This was an explicit, my parents, my mother is a school teacher, my father is an accountant, right? In service, as they would say it in India, there wasn't a source of black money per se. And so raising the black money to pay for an apartment required a set of transactions that I of course as an 11-year-old was happily oblivious about, right? And have never really asked my parents about, right? But nonetheless, this was just regular middle-class people needing to buy an apartment and needing to raise a very large amount of money because buying flats in Bombay, like buying apartments in New York City or D.C., is not cheap, right? But had to raise it in black money, all domestically. Okay, so where does all this black money come from and why is it such a big problem? How might we deal with it? I want to highlight four factors in particular. The first is the outsized role of political campaigns in this. Campaign financing laws in India are antiquated and I think contribute a large part of the black money problem in India. There is no clean way in which private actors can contribute to political parties. Political party financing is extremely limited but campaigns are extremely expensive. The last campaign in 2014 that elected Prime Minister Modi is estimated to have been the first billion dollar campaign in Indian history. But there's no way that that money could have been raised legally, I'm not saying about his party, I'm saying about any of these parties, right? And so we now have robust research, some of it being conducted by Milan Vaishan of here in D.C. at the Carnegie Institute, at the Carnegie Endowment, showing that much of this money comes out of the real estate sector, right? It is black money being funneled from a private actors into the coffers of political parties for the functioning of political campaigns, right? Political campaigns use this money, all of it again illicit, right? As a way of spending on raising of buying votes of influencing voters, right? Literally going out and handing out cash to voters all across the country. Reforming, in a sense, India's political campaign laws, right? Making it harder for parties and large industrialists, large real estate developers to form this illicit nexus, right, would put tremendous pressure on the source of black money within the system. Second, capital flight more generally, right? And illicit financial flows are largely driven by macroeconomic uncertainty. Not necessarily the policies themselves, but the research is pretty systematic on this, so saying that where actors are uncertain about the future of the policy, they hedge and keep the money out of the public system in favor of keeping it within their own hands. Reducing uncertainty about tax expropriation laws or taxation laws more generally, I think it's a primary focus for India. India's taxation laws are Byzantine. They're in the process of being trying to be reformed, but much of this now is retroactive taxation that is causing a lot of fear within the business community. A lot of this is now being used, and I want to point to very important, unintended consequence of a lot of the effort to reduce black money, right? The government is focused heavily on money that flows abroad. The laws that are being set up right now, in fact, September 30th is a major deadline for declaring black money within the Indian system with the new government. All of the laws for domestic money are different from the laws for foreign money. The foreign money laws are draconian. The domestic money laws are basically, we'll give you a pass, right? A lot of those foreign currency laws are now being used to target civil society organizations that get their currencies from abroad, the Ford Foundation, among others, was a target of the Indian government using the regulation of foreign currency, which is supposedly to get after black money, but actually using it to target civil society, while leaving the large amounts of money domestically that fund their very campaigns untouched, right? And so, in closing, and I hope to be able to talk a little bit more during Q&A, I just want to suggest that in addition to all the very important conversation that we've been having about trade and this info is saying about technocratic solutions to black money, at least in the Indian context, and I suspect in much of the rest of the developing world, really shining a bright light on the politics, right? That if nothing else makes this possible, then that, in fact, in many cases, coexist, right? With the larger system of black money generation is crucial if you're gonna make any headway in India and abroad. Thank you, and I look forward to the next set of comments. Thank you, Ambassador Rasool, for those generous comments and Professor Nuruddin. I just wanted to make a couple of important points regarding illicit flows from India. It is true, I agree with Professor Nuruddin that the volume of illicit funds that are in India are probably larger than the volume of funds that are leaving India, but our focus in GFI is illicit flows, and that is why we focus on that subject matter. But if you see the estimates of the underground economy in the report, you will see that the underground economy has increased tremendously from just like 8% or so after independence to now about 50% of GDP, and that in spite of a growing GDP. So obviously the underground economy is expanding in leaps and bounds and that means that the black money is fueling it. And not only that, we find a strong interaction between illicit flows and the underground economy itself. So there is this simultaneous, simultaneity of the impact between underground economy and illicit flows. And so basically it falls into this overall observation that illicit flows are driven by three main types of drivers. Governance drivers under which the underground economy comes, then the structural drivers like inequality and so forth, unemployment, and then macroeconomic drivers. What we find in the study is that the macroeconomic drivers are not so predominant. The main type of driver that is predominant in driving out illicit flows is the underground economy. And there is some evidence of the structural factors also that are driving out illicit flows. The reasoning is like this. When we have a non-inclusive growth, that means the focus is completely on the rate of growth and not on the quality of growth, not on the fact that the growth is inclusive. Then by definition, what you're creating is a very high number of high-network individuals because growth accrues to the top 1%. It does not poke it down to the other 99%. Now, if you combine this, the high-network individuals with a narrow tax base, which is what India has, India has only 3% of the labor force pay taxes. So there is something called tax fatigue. And tax fatigue means that 1% is fed up of paying taxes to finance the budget. So then that creates an incentive to send money out to escape the tax man basically. So this, we are able to show this. I believe we are one of the first to show this. This link between illicit flows and income inequality and non-inclusive growth in the case of India. And we replicated this in the case of a couple of other countries. In the case of India, we found that while in the entire sample period, the inequality, the interaction between inequality and illicit flows is not that significant, when we chopped up this time series into before reform and after reform, then the significance came into light. Because when you have from 1948 to 1990 or so, you have a controlled economy. Basically, India had five-year plans and socialist economy following Prime Minister Nehru's philosophy of a socialist controlled economy. Then you have inequality, which is kind of subdued through government intervention and heavy taxation and so on and so forth. So, but after reform, when the role of the state was withdrawn from the economy, you have the conditions for non-inclusive growth. So, what we found is that when we chop up the time series into before reform and after reform, there is a greater link, there's a most significant link between inequality and illicit flows. So, I think we can do a lot more research on this. We have been the first one out the door on it. And we can look into other issues, like for example, whether inequality also has a feedback effect on illicit flows. In other words, illicit flows are driven by high net worth individuals who send the money out, which creates conditions for further inequality because of unreported income. And then the further inequality creates more incentive to send money out. So, there is some kind of a vicious circle interaction that we could study. We can have case studies using other countries, like Russia, for example, or China. And we would be happy to do that. So, I'll be happy to take any questions that you have on India. And thank you very much. Thank you very much. This is probably the most disciplined panel you will find. Could I invite you to ask any questions of Dr. Kaur or Dr. Nurideen? Sorry? I'm Terry Sprack. Just say who you are, and then... I am, excuse me, I am Terry Sprackland, I'm one of the international reporters at Tax Analysts. And I was particularly interested in what you were saying that basically after 1990, as I understand it, after the reform of the economy happened, that illicit financial flows went way, way up. So reform therefore created an environment where that was much more likely to happen. Speaking as sort of a law of unintended consequences, I suppose, has there been any specific effort to counteract that from a government standpoint, or is, as you said, the financing of election, electioning kind of the narrow aspect of that helped keep things going in this sort of cash-driven direction? Yes, can I take that? Yeah, please, please. You might have come across this Sen Bhagwati debate. Amrata Sen on one side talking about inclusive growth and social empowerment-led growth. And on the other side, Bhagwati, which is who is focusing on and advising the government on spurring up the rate of growth. His theory being that you can have a better distribution only from a larger pie. So when the pie becomes bigger, then the question of addressing the inequality comes. So it's basically a debate as to which one should precede the other. But I must say in this debate, I tend to go with Professor Sen because growth by itself is not enough. I mean, China has been growing at 10%, if you believe the numbers, for many years, but they have huge amount of illicit flows coming out of, it's the number one country in our list, by the way. So you have this nexus between high growth that is not inclusive, and then the boiling of illicit capital coming out. So the same thing going on in China. So it is much more difficult to ensure balanced inclusive growth than it is to ensure a level of growth, a rate of growth. You can shoot for 9%, 10%, that's easier to do than to ensure that 10% is more equitably distributed in the economy. And when that happens, you actually basically empower the disenfranchised, the people who have been left out of the production process. And when you do that, then obviously it is a sustainable. Two, the quality is higher, and so that generates itself more stability in the economy, more social stability, and so on and so forth. So it has a number of different positive impact rather than just a focus on just a higher rate of growth. Dr. Noor, again? So the other, I agree with everything that Dr. Kara said, but two other points. One is that the reforms that occurred in 1991 were a balance of payments crisis. The IMF, I imagine Dr. Kara has a lot of insight, knowledge of what happened in those conversations, but among the things that happened was the lifting of capital controls in India. So India, in the 1980s, to turn rupees into dollars or into any other currency was extremely hard and required all sorts of, it's India, so all sorts of paperwork, right? But post-1990, capital controls were released so that you actually had foreign exchange convertibility. So one of the things that occurs is that it just becomes a lot easier for people to move their money abroad, right? So this again, where this distinction between floors, which I, again, fully endorse, and black money is a bit of a, at least where India's concerned, is a bit of a red herring. It's not that the money was in the formal economy prior to 1990, right? It was hidden under mattresses, right? It was sunk into all sorts of other things. A joke in my family was that we lived on the fifth floor, the sixth floor was owned, all four flats were owned by the same family, and it felt like every summer, they put in new marble floors, right? Throughout the 1980s, every year there was new marble floors, and the joke was they had to do something with the black money, right? I mean, it was time to sort of get new marble floors, kind of thing. Post-1990, they didn't have to get new marble floors. They could send the money to Switzerland, right? I mean, so I think that's one thing. The other thing is that the currency is severely devalued post reform, right? Because the currency had been propped up by government intervention in the 1980s, and one of the things that the 1990s brings is you have to sort of move to a more freely floating exchange rate. But that meant that everyone who had their money in Indian rupees was about to get a bath, right? I mean, they were going to lose a lot of net value unless you could turn that into foreign currency denominated funds pretty quickly. So I think there's a couple of these things, all of which I think is exactly what Dr. Kar finds, is what reform does is suddenly turn, create really significant incentives and capabilities of moving your money abroad and getting it abroad. And of course, I think the growing inequality, I would have a slightly different spin on it while again agreeing with everything that was said, which is the amount of wealth that has been created in India since 1990 cannot be underestimated, right? Last night I had dinner with a fairly senior government official, a lot of India's having a strategic and commercial dialogue with the United States. This week it's the first minister level dialogue in the United States between India and the US. So yesterday, the foreign minister, the Congress minister and the energy ministers were all in Washington, DC having meetings with their counterparts. It was a very big reception last night with Senator, the secretary Kerry and his counterparts on the Indian front. One of the things that comes out of those conversations is that in the trade liberalization and in all of that, we've had a lot more actors, right? Much smaller actors that were beginning to make a lot more money. In other words, the Indian middle class has grown exponentially since 1990. But this means that there's a lot more people who have money that they want to keep away from the government. Not necessarily because they're bad people but because the government laws around the stuff have been slow to be rationalized, have been unpredictable. And so I think it's both at rising inequality but it's also a larger size of people with assets that they want to hide. I mean, the scale of India is one of the things that's just very hard to wrap your mind around. Right, if 10% of all Indians fall in some sense of high net worth, right, the top 10%, we're talking about 100 million people. That's a lot of money. And it has to go somewhere. And right now it's not going into the domestic banks. Right, so it's going abroad. Any other questions? We've got one in front of the pillar and then that gentleman over there. Thank you for these comments, you get LaBelle. In a large country like India, and we'll have Brazil later this afternoon, Russia, where some degree of devolution has started to the state level, with authority sometimes being devolved and the power to do some taxation, how does the national government then, how is it able to bring all these actors to work together other than if you have money to give services, of course, that is a way of influencing the state level. But what is happening in India in this regard and any advice to that government or others of the size of that country with increasing devolution? Do you want to take that? Yeah, one of the big debates happening in India right now is that the government is trying to pass a goods and services tax, a generalized system of tariffs. India does not have a common market, right? So a producer, an industrialist with a factory in Maharashtra where Bombay is located, who wants to sell his goods across the state border, pays different taxes state to state, right? And so just simply rationalizing that, which is a major priority of both the last and the current government, though now that one is in the opposition, they no longer remember that they were supported within the last government. But that has been a major priority, I think it's a very big step towards this because it takes away some of the arbitrage that is possible when literary crossing state borders gives you very different tax regimes. India has always been developed. So you use the word that it's going through devolution. In some sense, the constitution lays out very different fiscal responsibilities of the state. And the state is a major fiscal actor in the Indian system. But it's not the major revenue actor, right? So the center accrues the revenues, the state does the spending. And so there's this very elaborate set of formulae that allow for the center to send money back to the states. I suspect that in the next five years, a lot of that's going to change to make it a much more common market and a lot simpler. And I think that will help a great deal. I just want to add to Professor Nuruddin's remarks that in India, what we have also is that there's a lot of variation from state to state in economic performance and the cost of doing business varies a lot from state to state also. According to the World Bank, while Gujarat is number one in the cost of doing business, but Bihar is 21, ranked 21, out of some 40 some states. And West Bengal is also lagging behind. So the leaders of the chief ministers of the states don't seem to quite get it. I mean, to put it very bluntly, they are not, they don't have this, an idea of this economic vision of spurring private enterprise and improving growth, dismal growth rates. It's not that they are focused on the quality of growth either. I mean, they are just playing, I think in many instances, they're just playing very narrow divisive politics. And so one of the problems that Prime Minister Modi is facing is on the GST, for example, he doesn't have the support of some, like Mamata Banerjee's government and they're playing footsie with this, political football with this thing. So it's a bit like Modi's position in India is a bit like President Obama's position in the US. He's sort of kind of hamstrung by this political realities. And his strategy is basically to sort of win states one by one. The next elections coming up is in Bihar and he's trying to win that. It seems that he has a good chance, the BJP in Bihar, but that is, we have to see that. So once the BJP gets Bihar, that would of course boost his position in Rajya Sabha, which is the lower house. Okay, in order that you get your tea on time, I'm going to, I've not seen that hand through this lectern, so I'm going to ask that gentleman and then directly you. And finally, that gentleman to ask the questions cumulatively and then divide it up between our respondents. Yeah, thanks. I want to thank the panel for a terrific presentation. My question is this, are there any penalties in India for sending black money outside of the country, at least even in theory? I mean, I seem to recall that years ago, maybe this is still in effect. In South Korea, sending money outside of the country is actually a capital crime. Now, I suspect that's not true in India, but are there any penalties even just on paper? Okay, please remember that. Is another question on that side? Thank you, good morning, Frank Vogel. Maybe you could just elaborate a little bit on illicit inflows. Looking at your chapter in this new book, they seem enormous. Where are they coming from? And then what are these huge amounts of money actually doing in the economy? Thank you. Thank you very much. And then the last question. Jack Smith, George Washington University Law School. We've all been seeing on the press and there's these wonderful photographs of these marches and people power against corruption. Haven't been seeing so much of it after the election of Prime Minister Modi. But the question is, is it having an impact in India or is it fizzling out like Occupy Wall Street did in the United States? Ooh. Okay. There's one about your book that's definitely for you. And the penalty, you want to take the penalty? Yeah. There haven't been very stringent penalties against sending money abroad. It was against the law, but I mean the penalty, it was not enforced. It was not enforced in large part because I suspect that when we do get the list of account holders, a large number of very powerful political families will be on that list, right, if not dominated by that list. And so much of what's happened over the last year, Prime Minister Modi in his campaign made black money a central campaign issue. He promised to bring back all the black money and to put in every Indian's account an amount of 15 lakhs, right, over 1.5 million rupees, right? So the major thing. And part of what a lot of what was done in the first six months of his administration was suggesting that they had seen lists and it had a lot of the opposition figures on that list sort of thing. So nothing's actually come about of that. I think there's a lot of negotiations happening in Geneva and other places to get access to some of these lists. But I suspect that that's why this was largely unenforced. The new law that I just mentioned, which has September 30th as a potential, as a major deadline, has a penalty of 90% of any money recovered. On top of a 30% of back taxes and the possibility of criminal prosecution. Though all of that is yet to be seen how if at all it gets enforced. Let me take your question about the corruption thing and then I'll leave you to answer the last one. I don't know that it has fizzled out. It had a couple of really big successes and the most notable one was in Delhi. Delhi's estate as well as being the national capital. And Delhi had an assembly election earlier this year where the anti-corruption party, there's a party called the Aam Admi party, the common man's party, won 67 of the 70 seats for grab. There's never been an Indian state election with that kind of a mandate. And it was seen very much as a vindication of middle class morality and sort of anti-corruption. Those are things, Delhi's per capita income is $9,000, US dollars. I mean it is several orders of magnitude richer and better off than the rest of the country. So it seemed like really this was a middle class speaking. Whether that catches on more broadly, we'll have to see. But one of the things India has had as a result of its anti-corruption movements is a pretty strong right to information act. Sort of modeled on the foyer but with a little more teeth in terms of having this participatory feature to it. And you have I think a very large civil society movement that is using RTI pretty aggressively to try and shine the light where the sun hasn't shone very well. It comes at a great amount of risk. I mean about 25 RTI activists have been murdered in the last year alone. Five in Maharashtra state itself. I mean again completely unreported, doesn't make the front page of the times of the post. But so this is, the politicians and the criminals fighting this the only way they know how but the law does exist and we'll have to see whether it can be used effectively. Well, I'll just add a few comments to Professor Nuruddin's remarks. I think that the AAP has not been as effective as people had hoped. I mean it started out well but then the leader, Arvind Kajirwal didn't come across as a very organized person as somebody who can tackle the issues head on. More of a theoretics you know is like a showmanship. And not much of substance. And so I'm not sure where that AAP party is going to be standing in national elections. There's a really, they don't have a national footprint. Let's put it this way. And I see major challenges before the AAP on making a national footprint in India. India is too complex a country. And AAP doesn't even have any presence in the south for example. It doesn't have anything. So it's, they have a long way to go. And this, the other person who was it that was running the anti-corruption? Anna Hazare. Anna Hazare also has fizzled out. I mean he's initially, you know, he made some marks on the national collective psychic but now he's kind of, he's taken a back seat. I don't, we don't hear much from him. So that's kind of sad, you know. But this whole business about Modi, Modi has used this black money, illicit flows, this issue very effectively I must say, to win an election. And this 15 lakhs in every Indian's account is an atrocious claim that he made and it's stuck. Totally, I mean this is a pipe dream. It's not going to happen. You know, but the Indian electorate was not savvy enough to really get that. And many, he got good support from the masses based on all these tall claims I guess. So I don't think this is going to happen. There are huge humongous obstacles to get even a sliver of that illicit assets held abroad. Now I'll just turn to this illicit inflows. These inflows, basically if you look at the detailed data, it is mostly comprised of under invoicing of imports. So in other words basically, you know, you're bringing in more imports than you're declaring. And therefore you're bringing in more value than you're declaring. And which then generates internally profits and you know, runaway profits and so on and so forth. So that is in that sense, they call it an inflow. But actually the way that import under invoicing is financed is that there is finance through external accounts, basically. I mean, you know, you have to, the foreign exporter still have to be paid. I mean, just because the under invoiced import doesn't mean that he's satisfied. He has to be satisfied. And the way that they satisfy it is through drawing down a foreign asset abroad. So what we find is that there is this interaction between inflows and illicit inflows and illicit outflows, which we find in some countries. That is in other words, for example, when you have export under invoicing, you send money out. And when you have import under invoicing, you use that account. So in other words, you need to replenish that account that is being drawn down to finance your import under invoicing. So then you send it through export under invoicing. So there is some kind of a causal link between import under invoicing and export under invoicing, what we call a Granger test, which is a more limited test of causality. Yeah, no, thank you very much. Just to conclude this, I think that for me, what was fascinating out of this and trying to draw from it, not the technical economic issues, but it appears to me that what you've highlighted by India, what I remember from Africa, is that the most vulnerable societies to illicit financial flows are those in transition. They are either in political transition where governments are informed or trying to reform and in very paradoxical case, India going to free elections that have become very competitive, those elections have resulted in a strengthening of black money and the use of it. And the knock on effect of that is, can you oppose black money if you have been the beneficiary of it? And I think that, so all those societies are in economic transition. The irony is that India at the point of its highest growth and the greatest creation of a middle class has had the greatest number of so-called perpetrators of IFS. It is not that the transition has resulted in a patriotism and good governance and moral fortitude. It has created something else. Then the third transition is a regulatory transition. Is it that deregulation and liberalization is inherently open to IFS or is it the transition where the old has not yet died and the new has not yet been born but that in that overlap period that the gap for money to flow out has been the most vulnerable point of it. So I think that the nature of transitional societies is something that I think we need to watch if we are going to get to the heart of it. And then I think we've also got to, to, to, to, to, in a sense understand some paradoxes at work if we are going to deal with illicit financial flows. I think the first one is the nature of governance. Strong governance, too strong governance becomes opaque and operates by dictate. And so IFS can happen. We governance don't have the capacities and so IFS happen and therefore unpacking this paradox may mean finding what is the point between those two where the ideal government can deal with some of these matters. The second paradox, and again I take it from what you say about tax fatigue, is it enough to have a compliance framework or do you need an incentive framework? And so how do we balance the paradox between strong emphasis on compliance and a set of incentives that can work some magic in this field? And then of course I think just carrying it forward from the previous discussion on wildlife and applying it out of this discussion is the paradox that for some, what they are doing is a business and for others what is being done is a crime. And so and whether it is multinationals who see what they do as a business and their CEO gets businessman of the year award and we all clap hands for him and put him on television, his success may be another man's crime as well as the idea that a villager who poachers sees this as business for survival and for others we are morally outraged that the elephants are diminishing. And so how do we find a collapse of that paradox as we move forward and therefore I think that the wonderful work that we are doing in tax laws and limiting and money laundry and all of those kind of things, I think needs to come with a far more political understanding of some of these things. But I think I want to thank both Dr. Nuruddin and Dr. Kerr for allowing us to think through all of these things at the hand of a country example. I'm very happy that we're drilling down and we're finding those country specific mechanisms so that we can deal with this. Thank you very much for being a good audience and for your questions. Thank you Dr. Nuruddin, Dev Kerr for that very interesting presentation, presentations and to Ambassador Rasul for that excellent summation. Given that summation I don't think I'll try to match it. So thank you very much for that. We're going to take a brief coffee break and we'll reconvene in about 20 past the hour.