India's Informal Trade with Sri Lanka and Nepal: An Estimation

Taneja, Nisha; Sarvananthan, Muttukrishna; Karmacharya, Binod K.; Pohit, Sanjib

doi:10.1177/139156140400500102

Cited by 11 publications

(11 citation statements)

References 1 publication

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“…Nepal has sizeable informal transactions in remittances, trade, and investment. For instance, Taneja, Sarvananthan, Karmacharya, and Pohit (2004) estimated that informal trade from Nepal to India accounts for about 38% of total formal trade, while informal trade from India to Nepal accounts for more than formal trade. Likewise, illicit financial flows from Nepal to India accounts for about 32% of total trade (Global Financial Integrity, 2019).…”

Section: Discussionmentioning

confidence: 99%

Impossible Trinity in a Small Open Economy: A State–Space Model Simulation

Bhatta

Nepal

Jayanthakumaran

et al. 2022

5008

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Should monetary policy independence be maintained when the exchange rate is fixed under closed capital account conditions in a small open economy? In this study, we simulate the impossible trinity condition during 1989 to 2019 on the Nepalese economy that restricts capital flows and fixes the exchange rate with India. We modify the traditional Taylor rule based on the monetary policy reaction function to characterize Nepal's economic conditions more closely. The state–space model simulation shows that the policy trilemma does not hold in Nepal, such that the model can predict interest rate when the weight for domestic conditions is assigned at a substantially lower level. Therefore, the existing policy mix may need to be revisited to maintain monetary policy independence. Nepal might consider devaluing its currency to neutralize the adverse effects of the negative risk premium and ameliorate the real exchange rate appreciation in the short run and explore alternative arrangements in the long run.

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Section: Discussionmentioning

confidence: 99%

Impossible Trinity in a Small Open Economy: A State–Space Model Simulation

Bhatta

Nepal

Jayanthakumaran

et al. 2022

5008

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“…Informal trade between the two countries has declined rapidly since the early 1990s. But exports from India comprise domestically produced goods, while Sri Lanka exports goods both domestically produced as well as those originating in third countries (Taneja 2002). The major imports from India are sarees, garments, electrical and mechanical items/parts and utensils; exports to India include spices, electronic items and cosmetics.…”

Section: India's Border Trade With Its Other Neighboursmentioning

confidence: 99%

India's Border Trade with Its Neighbouring Countries with Special Reference to Myanmar

Singh

2007

Margin: The Journal of Applied Economic Research

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Border trade between India and its neighbouring countries is largely determined by ethnic ties, affinity, long porous borders and low transaction costs. The inefficiencies and high transaction costs associated with formal trade have helped to promote informal trade, which traders find easier and more convenient. The feature that distinguishes cross-border trade between India and Myanmar from trade with other neighbouring countries is the adoption of a barter system. There is also a missing link between the border trade and production structure (both agriculture and industry) of the northeastern region of India, particularly Manipur, so that the larger gains from trade accrue to traders operating beyond the northeastern region.

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“…Furthermore, the report noted that the severity of the problem is due to an increase in illegal activities such as ML, fraud and terrorism, not just narcotics (Patabendige, 2021, p. 78). Taneja (2002) did a study on informal trade between India and Sri Lanka. From May to October 2001, the study was conducted in Chennai, Tiruchirapalli, Thiruvananthapuram, Tuticorin, Mumbai and Rameshwaram.…”

Section: Introductionmentioning

confidence: 99%

“…According to the report, informal commerce in high-value items like gold, silver and other ways primarily take the form of informal money transfers like Undiyal. The study classified trades as airborne, which accounted for roughly $180.2m, and seaborne, which accounted for approximately $27.1m (Taneja, 2002). The survey also said that the majority of these import and export transactions is carried out through under or over-invoicing.…”

Section: Introductionmentioning

confidence: 99%

The phenomenon of trade-based money laundering (TBML) – a critical review in Sri Lankan context

Sivaguru¹,

Tilakasiri²

2023

JMLC

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Purpose Money laundering (ML) has become a significant challenge all over the world today. Trade-based money laundering (TBML) is a type of ML that poses a hazard to any country. In recent years, developed and developing countries have pursued liberal policies for international financial markets. The Financial Action Task Force (FATF) defines TBML as the process of concealing criminal earnings and shifting value through trade transactions in an attempt to justify their illicit origins. As international financial markets have improved ML controls, criminals have turned to the trade sector as a new venue, raising trade risks. The purpose of this study is to highlight the danger posed by TBML and the initiatives that should be taken to prevent such. Design/methodology/approach A review of publicly available reports, case studies, secondary data and literature on TBML from a variety of Sri Lankan and international contexts comprised the methodology. However, due to the dearth of literature on TBML details/information in the Sri Lankan context, international case studies have been analyzed. More critically, there are no precise estimates of TBML or defined protocols for collecting and maintaining TBML data. As a result, the FATF potential TMBL typologies were analyzed, and typical TBML procedures were examined to identify viable treats for Sri Lanka. Findings The study found that TBML has a significant effect on the economy and, as a result, social conflicts. Sri Lanka has the potential for TBML, and ML through financial institutions was identified as a major risk. Literature, on the other hand, shows that a large quantity of money has been laundered using TBML in Sri Lanka. The geographical location entices criminals to wash their illicit gains, and so the country has potential danger from South Asian countries. However, because of the sociopolitical climate in Sri Lanka, criminals are constantly looking for ways to profit illegally. Relaxing rules to promote foreign investment may encourage launderers to use their illicit proceeds. The government needs to take great care when dealing with this particularly delicate issue. Research limitations/implications Due to the complexity of financial crimes, this study had a number of limitations, as do many others. The data used for this study was sourced from publicly available information and the TBML has been clearly defined or understood due to the fact that the complexity of the methods used by criminals. As a result, the number of local instances reported on TMBL is quite small, hence this study relied on international case studies. Originality/value This research on TBML in Sri Lanka is original. It is anticipated that the findings and contribution of the study would help the stakeholders develop TBML prevention measures.

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India's Informal Trade with Sri Lanka and Nepal: An Estimation

Cited by 11 publications

References 1 publication

Impossible Trinity in a Small Open Economy: A State–Space Model Simulation

Impossible Trinity in a Small Open Economy: A State–Space Model Simulation

India's Border Trade with Its Neighbouring Countries with Special Reference to Myanmar

The phenomenon of trade-based money laundering (TBML) – a critical review in Sri Lankan context

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