BLACK ECONOMY

WHAT IS BLACK ECONOMY??

A hidden sector of the economy

where private cash transactions go unreported. It is a sector of economic activities involving illegal economic activities including buying and selling of drugs. That part of an economy that is

HOW IT IS FORMED??
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

 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

Effects of black Economy.

Affects public revenues. Degenerates the investable

surplus. Delimits the national productivity. Drains the balance of payments. Distorts equity and equality concepts of economic distribution.

EFFECTS ON INDIAN ECONOMY

While there are no authentic

figures, economists feel that it is in the region of 40% of India is 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 Organization (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 all the estimated black

money is declared, it could generate a tax

WHAT GOVERNMENT IS DOING??

Surely, the government

can make better use of this amount. Additional tax income to the government, would not only have helped the government to expand its welfare programmes, but also enabled it to take up

IMPACT ON VARIOUS INDUSTRIES.

The fast-moving consumer

goods (FMCG) industry loses 67% of its turnover due to counterfeit products and illegal imports. The size of the FMCG industry is around Rs 1,00,000 crore, which pegs the losses to the sector from counterfeiting at Rs 7,000 crore. With the excise rate applicable on personal care products being 8%, the duty evasion is well over Rs 500 crore annually. It not only affects the industry but, more importantly impacts, consumer interests

 Pharma is no different.Of

the drugs tested in a countrywide survey conducted by the Drug Controller-General of India, 0.4% were found to be spurious.
The size of Indias

pharmaceutical industry is Rs 90,000 crore and the estimated size of the counterfeit market is around Rs 360 crore.
Apply a multiplier effect of

 For the music industry, the

turnover is said to have declined from Rs 1,200 crore in early 2000s to around Rs 600 crore, mainly due to pirated music CDs and DVDs.
The Rs 6,000 crore Indian film

industry loses Rs 2,500 crore annually to piracy. Over 800 million pirated DVDs discs are consumed in India annually and 1 million DVDs are added every month in India.
If there was no piracy, the

estimated revenues earned by the

CONCLUSION
Despite computerization and

issuance of permanent account number (PAN) to all the taxpayers, benami transactions are still rampant. According to a finance ministry source,30% of the high-value transactions of total value of over Rs 55 lakh crore are without PAN.
A majority of real estate transaction

have been reported without PAN.

The implementation of goods and

services tax (GST) is expected to help contain the spread of black money in the