India, a country that has its own issues with corruption, recently faced another scandal that sent its markets lower. Can its exchange traded funds (ETFs) emerge unscathed?

A U.S.-based research and advocacy group has reported that an estimated $462 billion in illicit money has been taken out of India over the last60 years . Anjana Pasricha for VAO news reports that the illicit transfers came through tax evasion and corruption and have resulted in major losses for the country.

The reports have put India’s problems with corruption sharply in focus and the chorus calling for greater accountability is growing.

India ETFs have not reacted well to the scandal; they’ve lost about 7% in the last 10 days. [India’s ETFs Waver After Obama’s Visit.]

News of the scandal comes at a time of heightened interest in the country, thanks to its explosive growth in recent years. In the third quarter, the economy grew 8.9%, says The Wall Street Journal.

RTT News reports that thanks to normal rainfall patterns, the agricultural sector has also rebounded. [Asia ETFs for Getting Your Asia Fix.]

If India can heed the calls for more accountability in all corners of its economy and make a serious effort at tackling the corruption problem, then its markets and ETFs may continue to perform as well as they have been in the last several years.

  • PowerShares India (NYSEArca: PIN)
  • WisdomTree India Earnings (NYSEArca: EPI)
  • iShares S&P India Nifty 50 Index (NYSEArca: INDY)
  • Market Vectors India Small-Cap (NYSEArca: SCIF)

If you’re a believer in the Indian economy, consider a leveraged play, such as Direxion Daily India Bull 2x Shares (NYSEArca: INDL).

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.