This paper presents an empirical method to quantify tunneling, the practice of transferring resources from firms with limited cash flow rights to those with more. Using data on Indian business groups, the authors find significant tunneling between firms in these groups. The method involves analyzing how firms respond to performance shocks to map resource flows and measure tunneling. The results suggest that tunneling is prevalent in India, with lower firms in the pyramid responding less to shocks and higher firms being more sensitive to shocks from lower firms. The findings are robust to alternative explanations, including dividend flows and industry misclassification. The study highlights the importance of understanding tunneling in financial development and economic transparency. The results also indicate that market valuations partially incorporate the extent of tunneling. The paper concludes that tunneling is a significant issue in Indian business groups, with resources often funneled to higher firms in the pyramid. The methodology provides a general approach for quantifying tunneling in other contexts.This paper presents an empirical method to quantify tunneling, the practice of transferring resources from firms with limited cash flow rights to those with more. Using data on Indian business groups, the authors find significant tunneling between firms in these groups. The method involves analyzing how firms respond to performance shocks to map resource flows and measure tunneling. The results suggest that tunneling is prevalent in India, with lower firms in the pyramid responding less to shocks and higher firms being more sensitive to shocks from lower firms. The findings are robust to alternative explanations, including dividend flows and industry misclassification. The study highlights the importance of understanding tunneling in financial development and economic transparency. The results also indicate that market valuations partially incorporate the extent of tunneling. The paper concludes that tunneling is a significant issue in Indian business groups, with resources often funneled to higher firms in the pyramid. The methodology provides a general approach for quantifying tunneling in other contexts.