Your rightful indulgences like shopping, eating out, going to movies, most certainly have a bolstering effect on the economy. But there exists a dark side which cleverly evades taxes to generate what is colloquially referred to as ‘black money’.
This ‘sin’ economy, comprising fake and counterfeit products, smuggled and pirated goods, unauthorized gambling, bribery and prostitution, among a host of other sinister activities that go unaccounted, has a draining effect on the economy. So Just how big is the black economy?
While there are no authentic figures, economists feel that it is in the region of 40% of India’s gross domestic product (GDP). Professor of economics, Jawaharlal University, Arun Kumar, who has written one of the most authentic books on the subject, ‘The black economy in India’, puts the figure at around 50% of the GDP.
According to the latest estimate of Central Statistical Organisation (CSO), the size of the Indian economy is around Rs 61,64,000 crore. Thus, the size of the black economy, taking it at 40% of GDP, is around Rs 25,00,000 crore or around $500 billion.
If black money is declared by individuals or corporate houses as income, it becomes legal and would be taxed at 30%. If all the estimated black money is declared, it could generate a tax revenue of Rs 7,50,000 crore for the government! This is more than total tax collection at Rs 6,41,000 crore for 2009-10. Kumar puts the potential tax revenue figure much higher at around Rs 10,00,000 crore.
Source: Various-(Not a research of NiftyDirect.com)
