How the black economy is (really) making poverty worse in India

Prof Arun Kumar of JNU is authority on Black money and has written a book “The Black Economy in India” where he writes… India’s white economy is inextricably linked with its black economy. Where in 1991 the black economy constituted about 35 per cent of the national economy, it had increased to 62 per cent by 2013. Both legal (industry, services, real estate, the share market) and illegal (hawala, smuggling, narcotic drugs) activities, as well as instances of corruption contributed to this situation. But the cash, or ‘black money’, circulating in the country is merely around 3 per cent of the total domestic black economy. In this scenario, how effective is the Central government’s move to demonetize 500 and 1000 rupee notes in November 2016? Arun Kumar critically examines the causes and consequences of black income generation and the possible methods for curbing it. Backed by empirical data, his incisive analysis lays bare the pernicious effects of black income on the macroeconomy and the resultant inefficiency in society. It also focuses on the nexus of businessmen, politicians and the executive in perpetuating the black economy .