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Understanding the Black Economy and Black Money in India
The 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.
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.
144 pages, Hardcover
First published February 4, 2017
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259 people want to read
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Displaying 1 - 30 of 30 reviews
April 10, 2017
This felt like a long blog or magazine article - a long Caravan (Indian news magazine) cover story. Have read a few 200 page large-font books lately, but this one is even half of those at 100 pages. Or maybe it will feel like a poor cousin of Gurcharan Das's books (loved his India Grows At Night on a similar theme).
The author talks of the origins, growth, functioning and remedies of black money and black economy. He also takes a brief look at PM Modi's demonetisation. Inevitably, bcoz of its length such books leave one dissatisfied. Still, a good introduction to the topic. Thankfully, didnt spend money on it as it was avail in Kindle Unlimited.
The author talks of the origins, growth, functioning and remedies of black money and black economy. He also takes a brief look at PM Modi's demonetisation. Inevitably, bcoz of its length such books leave one dissatisfied. Still, a good introduction to the topic. Thankfully, didnt spend money on it as it was avail in Kindle Unlimited.
July 23, 2018
Short, crisp and to the point analyses of the Black Economy that has afflicted India. It is well researched and the conclusions about demonetisation are interesting. The prescription, however, is shallow.
June 12, 2017
A simple straight forward work on what needs be said on Black economy without bogging down statistics. Relevant to times when we are waging a war against our own shadows.
March 10, 2017
With so much talk about black money in recent times, a book like this helps a layman understand what it actually stands for ( within the Indian context ) . Devoid of economics jargon, this book by Prof Arun Kumar (who has researched the black economy in India since 40+ years ) is a must read
August 15, 2018
After demonetization of 2016, when there have been lots of talks on black money, this book is supposed to be timely, busting lots of myth and providing some groundbreaking objective analysis. Sadly the book fails to cover new grounds, that I have not already read in umpteen articles published or understood in newsroom debates.
The author admits in the acknowledgements, 'Since I already had a lot of published and unpublished material, I felt that I could quickly write a book….' There are only 4-5 pages on the subject of demonetization, which is a big disappointment. And the book reads exactly like that. Is it unfair to expect more from Prof. Arun Kumar who is country's leading authority on Black Economy?
It's not that the book is a complete drab. I lay below some key highlights:
- It is highly difficult to come up with accurate white economy numbers, let alone black economy. However, with whatever calculation methods and data available, Indian's black economy is estimated to be 62% of GDP.
- Only single digit percentage of black economy is stored in cash.
- Had there been little or no black economy since independence, every one of us would have been 7 times richer on average.
- Black Economy can be defined by the wealth not under the reports of the tax authority.
- This is a no brainer, that black economy is bad for any nation. The actual rate of growth is higher than that of white economy but lower than the potential rate of growth. The reason is that productivity of investment is lowered by the black economy due to wasteful investment and misuse of capital.
- Black money not only impacts the society economically but also in other aspects like health, education and environment.
- Tax itself is not a bad thing. High tax countries like Scandinavian countries don't generate huge black economy. Most people evade tax as the believe that their tax money is not properly utilized and they are not the recipient of any direct or indirect benefits from it.
- In order to tackle the black economy the triad of corrupt politicians, businessmen and the executives has to be dismantled.
- Some of the potential short term measures to tackle black economy are - bringing political parties, judiciary and the CM/PM offices under the ambit of RTI, take immediate action on available information, establish autonomy of institutions by having head of these organizations independent of their political bosses.
- Tax reform, judiciary reform, bureaucracy reform and global agreement to end secrecy of banks and tax havens should be the mid-term strategy.
- Finally, the only way in which black economy can be successfully tackled in long run is if successive governments show the political will to act. Political reforms and corporate reforms are of essence to bring in this long term plan. This can be brought by people's movement .
The author admits in the acknowledgements, 'Since I already had a lot of published and unpublished material, I felt that I could quickly write a book….' There are only 4-5 pages on the subject of demonetization, which is a big disappointment. And the book reads exactly like that. Is it unfair to expect more from Prof. Arun Kumar who is country's leading authority on Black Economy?
It's not that the book is a complete drab. I lay below some key highlights:
- It is highly difficult to come up with accurate white economy numbers, let alone black economy. However, with whatever calculation methods and data available, Indian's black economy is estimated to be 62% of GDP.
- Only single digit percentage of black economy is stored in cash.
- Had there been little or no black economy since independence, every one of us would have been 7 times richer on average.
- Black Economy can be defined by the wealth not under the reports of the tax authority.
- This is a no brainer, that black economy is bad for any nation. The actual rate of growth is higher than that of white economy but lower than the potential rate of growth. The reason is that productivity of investment is lowered by the black economy due to wasteful investment and misuse of capital.
- Black money not only impacts the society economically but also in other aspects like health, education and environment.
- Tax itself is not a bad thing. High tax countries like Scandinavian countries don't generate huge black economy. Most people evade tax as the believe that their tax money is not properly utilized and they are not the recipient of any direct or indirect benefits from it.
- In order to tackle the black economy the triad of corrupt politicians, businessmen and the executives has to be dismantled.
- Some of the potential short term measures to tackle black economy are - bringing political parties, judiciary and the CM/PM offices under the ambit of RTI, take immediate action on available information, establish autonomy of institutions by having head of these organizations independent of their political bosses.
- Tax reform, judiciary reform, bureaucracy reform and global agreement to end secrecy of banks and tax havens should be the mid-term strategy.
- Finally, the only way in which black economy can be successfully tackled in long run is if successive governments show the political will to act. Political reforms and corporate reforms are of essence to bring in this long term plan. This can be brought by people's movement .
September 7, 2021
This is short and book on Black Economy. Basically, written for a lay reader and is a good read for understanding the causes, consequences of black economy and the remedies to dismantle it in India.
At the outset the author makes it clear that black money is result of black economy and essentially, the black economy consists of activities through which black incomes are earned. So, the black economy is about earning incomes (which is a flow) and not the holding of cash (a stock). Black incomes are factor incomes, property incomes, not reported to direct tax authorities.
The effects of black economy on various aspects of national economy are discussed in detail. How under invoicing exports and over invoicing imports distorts the capital investment and its movement in and out of the economy is discussed in detail.
Further how corruption at various levels of economy and syphoning out of funds and hoodwinking the regulation leads to under investment and inefficiency in the system and how the economy can not achieve its real potential is discussed.
Finally, the author concludes that the black economy survives because of the nexus between the politicians, bureaucracy and Business which is triad. In order to tackle the black economy, the triad of corrupt politicians, businessmen and the executive has to be dismantled.
But how this can happen is a question? Dismantling the triad is not easy. No government has shown the necessary guts and will to tackle corrupt big businessmen, corrupt members of
the executive and corrupt political leaders, especially those belonging to their own parties, without which the problem of the black economy will never be solved.
The author feels that in India, there is no dearth of laws to deal with black income but we need to understand why they do not deliver. It is as a result of political interference and this needs to be remedied by giving institutions greater autonomy but making them accountable. Here lies the problem. How can we expect a government to take up these steps which itself is political?
At the end you come to a view that dismantling black economy is long haul. There is no magic wand to solve the problem. That is because the heart of the problem is political and the political class and governments are an integral part of the reasons the black economy exists. Further from the way the black economy operates it is clear that each Indians is in some way help creating the black economy. The urge for dismantling should come from within.
As rightly put by the author what is needed therefore is a combination of large-scale movements by the people which will force change upon the political class and change that is initiated within the system by members of the executive. Only then will it be possible to dismantle the black economy.
We can only hope!
At the outset the author makes it clear that black money is result of black economy and essentially, the black economy consists of activities through which black incomes are earned. So, the black economy is about earning incomes (which is a flow) and not the holding of cash (a stock). Black incomes are factor incomes, property incomes, not reported to direct tax authorities.
The effects of black economy on various aspects of national economy are discussed in detail. How under invoicing exports and over invoicing imports distorts the capital investment and its movement in and out of the economy is discussed in detail.
Further how corruption at various levels of economy and syphoning out of funds and hoodwinking the regulation leads to under investment and inefficiency in the system and how the economy can not achieve its real potential is discussed.
Finally, the author concludes that the black economy survives because of the nexus between the politicians, bureaucracy and Business which is triad. In order to tackle the black economy, the triad of corrupt politicians, businessmen and the executive has to be dismantled.
But how this can happen is a question? Dismantling the triad is not easy. No government has shown the necessary guts and will to tackle corrupt big businessmen, corrupt members of
the executive and corrupt political leaders, especially those belonging to their own parties, without which the problem of the black economy will never be solved.
The author feels that in India, there is no dearth of laws to deal with black income but we need to understand why they do not deliver. It is as a result of political interference and this needs to be remedied by giving institutions greater autonomy but making them accountable. Here lies the problem. How can we expect a government to take up these steps which itself is political?
At the end you come to a view that dismantling black economy is long haul. There is no magic wand to solve the problem. That is because the heart of the problem is political and the political class and governments are an integral part of the reasons the black economy exists. Further from the way the black economy operates it is clear that each Indians is in some way help creating the black economy. The urge for dismantling should come from within.
As rightly put by the author what is needed therefore is a combination of large-scale movements by the people which will force change upon the political class and change that is initiated within the system by members of the executive. Only then will it be possible to dismantle the black economy.
We can only hope!
June 20, 2020
This is not for the cool, out-of-context, free-market congregants who see the private sector as the panacea to all inefficiencies and black markets within the Indian system. Prof. Arun Kumar's recommendations are very old-fashioned and statist but quite sober. However, there is not much rigour that a 120 page work can offer, so it comes across more as a benevolent pamphlet than a work that can be taken quite seriously. Still, the difficulties in separating white and black money within the system and the deleterious effects of black money are reasonably well drawn within its narrow precincts.
Counterpoints are merely dismissed and not discussed in detail at all. The 2016 demonetization is bashed but treated as a "well-intentioned" exercise that, with the wisdom offered by a bit more hindsight and the author's own implied diabolism of the political class, seems more suspect. The book also suffers from mediocre editing, writing and conceptualization (at least demonstrated by the egregious brandy analogy with respect to emphasizing the necessity of estimations of black money's contribution to the GDP). And the Rs. 399 price is daylight robbery.
Counterpoints are merely dismissed and not discussed in detail at all. The 2016 demonetization is bashed but treated as a "well-intentioned" exercise that, with the wisdom offered by a bit more hindsight and the author's own implied diabolism of the political class, seems more suspect. The book also suffers from mediocre editing, writing and conceptualization (at least demonstrated by the egregious brandy analogy with respect to emphasizing the necessity of estimations of black money's contribution to the GDP). And the Rs. 399 price is daylight robbery.
December 21, 2022
Honestly, I have almost zero personal interest in India. No offense meant. It's got decades of issues and the problem has just been so deep rooted.
That said, I do find the subject matter of the book interesting. While the situation may be out of proportionally bad in India, I think many of the issues they face as a society can be seen elsewhere, too.
By very nature, the subject matter is rather dry, and it does read as such. However, the author made his points clear and moved on. He balanced "leaving no stone unturned" and "get to the point," so I had no difficulty reading it in entirety in one day.
If the subject matter is interesting to you, check it out. I don't regret reading it and being a touch more informed global citizen or whatever.
That said, I do find the subject matter of the book interesting. While the situation may be out of proportionally bad in India, I think many of the issues they face as a society can be seen elsewhere, too.
By very nature, the subject matter is rather dry, and it does read as such. However, the author made his points clear and moved on. He balanced "leaving no stone unturned" and "get to the point," so I had no difficulty reading it in entirety in one day.
If the subject matter is interesting to you, check it out. I don't regret reading it and being a touch more informed global citizen or whatever.
September 8, 2017
This book is not for a layman. The author has effectively started the book by counting on the story of the blind men and an elephant. Ironically, after reading book, we may also feel ourselves as one of blind men who got the tail of elephant and assumed it as a broom. For example, the author has correctly identified the problem of black economy as “a triad of corrupt businessmen, corrupt politicians and corrupt members of the executive…” he fails (as I understood) to give a specific way by which this triad can be eliminated. It is better if we see this book only as an opinion book rather than a reference book for an economics student.
May 13, 2017
Initial chapters were well researched outlining definition of Black Economy and it's variations and comparison with rest of the world. However, as the author delves into finding solutions to it, he miserably fails and makes broad propositions with no logical correlations to it. Further, the tone and tenor of the book is totally negative on every initiative taken so far. Be it, bringing PAN (which he vehemently ridicules but fails to suggest any robust alternative) and same with Demonetization.
May 31, 2019
An unparalleled book that helps understand the Black Economy. India is unique in creating a huge and growing (currently 65% of the total) parallel economy. Prof. Arun Kumar has acknowledged expertise this relatively unknown area and explains how different terms, used loosely to depict the same, have deep and nuanced implications. Great book for anyone remotely interested in economics. One should gift a copy to 56" before he starts another round of "Demon".
December 24, 2022
The author has described black economy nicely but also has made it abundantly clear that no one but him understands it. He has criticised everyone who has willingly or unwillingly tried to solve this issue and made regulations to curb it. First he says no amount of regulations can resolve it because of the inherent ingenuity of the human mind but in the end he gives some regulations that can solve it.
Seems like too much ego gone in someone's head🤷🏻♂️
Seems like too much ego gone in someone's head🤷🏻♂️
December 22, 2023
The book gives insights into understanding the factors that contributed to the huge black economy of India. The reasons includes our colonized past, corruption between politicians, bureaucrats and business men, illegal smuggling money etc. The author strongly shares the need to bring proper governance reforms between the politicians, bureaucrats and business men who contribute to the major chunk of the black economy
June 25, 2017
An excellent primer on the overall nature of the country's black economy. This is not in any way a thorough work though it is quite clear that the author is qualified to pen one. It's a tiny book that serves its purpose. Personally it allowed me to develop a framework to process the events that take place in the black economy. Recommended to all as it is written in a very simple style.
April 18, 2019
A good primer on what exactly is the Black Economy in India and how it affects every aspect of our life. Anyone can read this book because it is relatively jargon free and does a good job of explaining the basics. I wish it went on for a little bit longer and explored some topics more in depth.
July 9, 2023
It was nothing that I didn't already know. Except a few differences in the counting methods. I think the best part of the book was an Ameen Sayani impersonation saying "That was an Audible presentation" at the end.
July 21, 2017
Good insight!!!
Got a good insight about black money, generation, elites role nation's economy and possible ways of improve the current situation
Got a good insight about black money, generation, elites role nation's economy and possible ways of improve the current situation
January 30, 2018
Should have packed more insights.
September 2, 2018
Good read
Good read. Author has justified the topic and presented in a very easy and clear way. Thanks so much sir
Good read. Author has justified the topic and presented in a very easy and clear way. Thanks so much sir
April 15, 2020
There wasn’t enough energy in the book to keep reader engrossed. Just criticizing the triad for the surge in black money in India. Nothing special about this book. Don’t waste your time reading this. Had a feeling that this book was written only to demean the Indian federal system.
June 15, 2020
Excellent book from the point of view of a layperson to understand this issue in our country and the difference between the black economies of the developed world such as the US and India.
October 26, 2023
Needs work
March 24, 2017
Well covered
The book goes in depth of various aspects of Black economy, the root and possible sources of it. The book also explains challenges faced for various steps towards overcome the giant
The book goes in depth of various aspects of Black economy, the root and possible sources of it. The book also explains challenges faced for various steps towards overcome the giant
May 1, 2019
Good introduction to the topic of Black Money
December 18, 2018
Not that convincing. Though I'm myself beginner for this concept, I felt it's way to plain.
Read
March 6, 2017nice to have consolidated overview of the recent incidents and analysis.
February 14, 2017
Bit confusing but it will help you to differentiate black economy and corruption.
and explains why Modi's Demonetization of 500 & 1000 is failed.
and explains why Modi's Demonetization of 500 & 1000 is failed.
April 6, 2017
Explains what is black economy and what is black money and gives suggestions for controlling the black economy in India. It laments that the political parties in power does only cosmetic changes to the law to control it.
April 29, 2017
A timely book on understanding the concept of Black economy and Black money in India. Some of the remedies are practical and feasible provided there's a political will to implement.
April 28, 2017
November 8, 2016 is a date which will be written in bold letters in the Indian Economic history. Demonitization came as a bolt from the dark to common citizen in India. Even though the intention behind the same is novel, whether the attempt was a success our failure need to be seen. Aun Kumar, through his book Understanding the black economy and black money in India lays bare the real definition and sources of black money and analyses the outcome of demonitization.
The initial part of the book gives an awareness about the whole black money scene. We have been fed upon a wrong notion that major part of the black money lies in the real estate sector. Author states that unlike the General notion, black money cannot be studies in a single dimension. The book is educational, insightful and well rehearsed.
Nevertheless, author takes a prejusdistic and biased stand. In lieu of a systematic pros and cons analysis, author has shunned the idea as outrageous and stupid.
Overall the book is academically high graded yet going with antagonistic wave.
This review is in return of a free book from the publisher
Displaying 1 - 30 of 30 reviews