There has been a capital flight of U.S. $ 11.3 billion from India to USA, through abnormal trade pricing, ( i.e. $ 5.8 billion during 1994 and of $ 5.5 bilion during 1995) says a study published in the latest issue of Finance India, the quarterly Jouranl of finance published by Institute of Finance, by three economists Prof. John S. Zdanowicz, Prof. William W. Welch and Pror. Simon J. Pak, of Florida International University, Miami, USA.

The development of the global price matrix and the analysis of India's trade with US has resulted in estimation of significant capital outflow through overinvoiced imports and under invoiced exports.

The study compared the average price of products imported to India from United states with average prices for products with identical characteristics purchased from United states by the world during 1994 & 1995. With a similar study in export transactions between India and US during the same year show the degree of over invoiced imports and under invoiced export. Recognising that there could be different degree of heterogeneityu of products being imported into or exported from a particular country during these years, the study has analysed transaction prices assuming differnt degree of commodity heterogeneity. The study also considered the dollar value of price deviation from average US/world prices for every India-US import and export transaction prices for all the products. The study while comparing India's import prices form the United State, to average and adjusted world import prices from the United State , showed that the value of over invoiced India imports range from $ 660.8 million to $481.7 million during 1994 and $ 840.4 million to 587.1 million during 1995. Under similar comparison of India export prices to United State, the value of under invoiced India export prices range from $ 5232.8 million to $ 1593.6 million during 1994 and $ 4743.9 million to 1214.0 million during 1995.

The researchers also studied the impact of abnormal pricing in specific product categories. The dollar value of income shifted by India's over invoiced imports during 1994 and 1995 were determined by summing the dollar value of deviations from all transactions in all product classifications, that were greater than 150% of the US/World average import prices During 1994 and 1995, 32% and 23% of the income shifted through over invoiced imports was due to over pricing in twenty five product classification, during the same years.

The study also points out that there are a lot of benefits of detecting abnormal internationl trade prices. The minimization of capital flight will provide the additional capital necessary for investment in the country's private and public sector. The study also stated that the detectin and control of capital flight will result in the minimization of income tax evasion and import duty fraud. It will give additional revenues to the treasuries.

This study also suggests detection and control of captial flight form India to USA. Acroding to the study India should adopt a transaction based audit and inspection programe, so as to able to control and determine both the level of physical inspection and the means of inspection that will result inmost cost effective monitoring of the international trade and most importantly detection of capital flight.