Understanding the Black Economy and Black Money in India: An Enquiry into Causes, Consequences & Remedies by Arun KumarThe Narendra Modi government’s sudden demonetization of `500 and `1,000 notes in November 2016 failed to put a dent in the black economy but caused untold hardship to hundreds of millions of Indians. It has crippled the country’s economy for a long time to come. In this book, Arun Kumar, the country’s leading authority on the black economy, tells us why Modi’s gambit failed. He shows us the way in which the problem can be rooted out, provided the government has the political will and determination to act.
Today, the black economy is estimated to be 62 per cent of GDP—or about `93 lakh crore ($1.4 trillion). Corrupt businessmen, corrupt politicians, and corrupt members of the executive (bureaucrats, police and the judiciary) are responsible for controlling the black economy and enabling its growth. If the black economy were to be dismantled and turned into a part of the ‘white’ economy, the country’s rate of growth would be 12 per cent. If it had not grown the way it has since the 1970s, India’s per capita income today would be approximately `7 lakh per annum ($11,000) and India would become the second largest economy in the world. If the black economy were taxed at current rates, it would generate `37 lakh crore in additional taxes and the union budget would show a surplus of `31 lakh crore instead of a deficit.
The failure of successive governments to tackle the problem effectively has been the single biggest obstacle to eradicating poverty. It is the cause of both widespread policy failure and the inability of the nation to improve its living conditions rapidly.
Govt has no official estimation of black money in the country: MoS Finance
Jump to navigation. A secret study commissioned by the finance ministry concluded in that between 90 to 97 per cent of unaccounted wealth, or black money, was lying within India and not outside. This report, according to sources, was among the inputs that likely prompted the Narenadra Modi government to go ahead with its November decision of invalidating, or 'demonetising', around 85 per cent the currency in circulation. On November 8, , night when PM Modi delivered the shock demonetisation announcement, he had said that the move would help weed out black money. India Today TV has accessed this "secret" government report, which is actually an assimilation of studies conducted by three premier economic institutes. This report on black money was ready by December but its existence has been kept under wraps. The three institutes that form part of this black money report differed in their assessments and top officials warned that the findings were inconclusive.
What is black money, and why is it to so difficult to quantify it?
In Understanding the Black Economy and Black Money in India, Arun Kumar takes us on a journey from the origins of the black economy in India to what should come after demonetisation. Credit: Reuters. Black money is currently one of the most discussed political and economic issues in India. During the tenure of the last government, the issue of corruption galvanised a popular civil movement. In November , when Prime Minister Narendra Modi announced the demonetisation of high currency notes, he said he had taken the step primarily to fight black money.
Black money is money earned through any illegal activity controlled by country regulations. Black money proceeds are usually received in cash from underground economic activity and, as such, are not taxed. In its simplest form, black money is money on which tax is not paid to the government. A store that accepts cash for its merchandise and does not issue receipts to its customers will be transacting in black money, as it would not pay tax on the unaccounted sales. The sellers in both examples have earned money from legal sources but evaded taxes. Black money is money on which tax is not paid to the government; it is normally made through illegal means.