Smuggling and its Consequences to an economy | Arriba Trends

Smuggling and its Consequences to an economy


Smuggling is the act of illegal transportation of valued material such as currency, precious metals, human resource, drugs and various other substances across the borders. These illegal acts are carried out by an organised criminal groups taking advantage of the loopholes in the legislation as well as in the trade monitoring procedures across the borders. With the growing connectivity between the nations the issues of smuggling has also emerged in a rapid scale. Though the concerned authority is keen to have a firm grip on it but time to time several cases has emerged to the limelight indicating the smuggling going on throughout the world.

In a developing nation like India it has been a challenging task for the authority to have a large scale crackdown on smugglers. Few years back World Gold Council revealed a study stating that nearly 95 tonnes of gold has been smuggled to India in 2018, although the India’s Association of Gold Refineries and Mints and other industries stated that the actual figure could be more than the twice revealed.

Currently one more such illegal act is in limelight revealing socking data associated to it. The recently busted Kerala Gold smuggling case revealed that nearly 140 tonnes of Gold worth Rs.  65,000 cr has been smuggled through Kerala as the state has been the focal point for Gold smuggling over the past 10 years funnelling the Hawala Transactions of more than Rs. 40,000 cr. And also because of this a total of Rs. 1,05,000 cr black money has been circulating in the state in the past 10 years. The organisation has smuggled more than 160 kg of Gold since September 2019 out of which 26 kg of Gold was smuggled alone in the month of June.

Why this illegal transportation of precious metal?

If we have a look around us, these precious metals like gold have notable value in the international market. These metals are considered to be the standard currency all around the world. The main reason behind the increase in smuggling is that not all countries produce and refine the pure metal and have to depend on other countries. This gives the chance to criminals to carry the crime of smuggling across the borders as it becomes a highly rewarding process. As per reports in India smuggling of the precious yellow metal has increased after 2013 and it has gained more speed after 2017.

How does it affect the economy of a country?

The main question behind this remains, how is the country’s economy affected. The economy of any country depends on the import and export of goods. The government of the country controls its economy and the wealth of the nation, which is dependent on the selling of the goods.

The illegal transportation of precious metals poses a large number of challenges in front of the country. It presents a threat to not only the security of the country but also obstructs socio-economic development. Especially the smuggling of precious metals causes a huge economic loss to the country that is not quantifiable.

The recently busted Gold smuggling in Kerala has dented our country by several ways as it is said that this case may have a serious impact on not only the economy of the country but can also affect the ties with the UAE. Since this smuggling of Gold is being carried out in a very massive amount, it is suspected that it might involve in financing terrorism and other anti-India deeds, thus boosting the corruption, crime, and evolution of inequalities for the concerned businesses.

Though smuggling harms the economy by several ways, here is a collection of few of the worst affected areas:

  • It leads to a loss in revenue of the country, as the act is not administered and hence is excluded from the government’s net tax.
  • Smuggling promotes a number of crimes as it makes a large amount of money easily available and gives rise to more criminal activities.
  • It destroys the local economy. The legitimate industries on one side pay taxes but this illegitimate transportation bypass the routes without paying any tax.
  • And smuggling leads to instability in the market as it discourages business and investments from the overseas.
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