ABSTRACT
During colonial rule, India was subject to drain of wealth and lost a considerable amount of its savings. Consequently, it faced a shortage of capital for essential development. Its social and physical infrastructure was woefully inadequate compared to what the colonial power managed to accumulate (Kumar 2013). With independence in 1947, it was expected that this loss of savings would come to an end. Instead, it changed its form. One of the important forms through which the country has been losing savings in the post-independence period is flight of capital: that is, capital going out of the country illegally. Its magnitude has been growing over time and is harming the nation in a wide variety of ways (Kumar 1999). In this chapter, the macroeconomic aspects of illegal flows and flight of capital, the activities associated with them and their impact on the Indian economy are analysed.
