Understanding the Black Economy and Black Money in India: An Enquiry into Causes, Consequences & Remedies

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.