Four years on, black economy still a grey area
Even four years after commissioning three think-tanks to estimate the size of the black economy, the government is yet to get an approximate measure about India’s bustling parallel economy that operate between regulatory boundaries.business Updated: Jul 04, 2015 00:36 IST
Even four years after commissioning three think-tanks to estimate the size of the black economy, the government is yet to get an approximate measure about India’s bustling parallel economy that operate between regulatory boundaries.
In 2011, the government had commissioned three think-tanks — National Council for Applied Economic Research, National Institute of Public Finance and Policy, and National Institute of Financial Management — to come out with an estimate of India’s black economy.
“The three institutes have given their reports independently, but the problem is that their figures vary as wildly as possible. Not only do the figures differ, but each report suggests different figures depending on the methodology used,” said a top government official familiar with the development.
A befuddled government has roped in the economic adviser’s office to zero in on an accurate estimate of black money. “The economic adviser’s office in conjunction with the income-tax department is studying the reports now,” the official said.
The final report, which may be completed within two months, will be submitted to the standing committee of Parliament. The estimation was first ordered by the committee.
In April, the finance minister Arun Jaitley had said there was no official estimation of black money within India or stashed away abroad. “Varying estimations of the amount of illicit money moving out of the country have been reported by different persons/institutions. Such estimations are based upon different sets of facts, data, methods and assumptions, leading to varying inferences,” he had told Rajya Sabha in a written reply.
“However, there is no official estimation of the amount of black money stashed abroad or black money taken out of country,” Jaitley added.
Estimates of black money in India fluctuate wildly.
The BJP, in a 2011 report, had estimated India’s black economy to be worth around $500 billion and $1.4 trillion. According to former CBI director AP Singh, $500 billion (about Rs 31.4 lakh crore) is stashed away in tax havens by Indians. A 2010 World Bank report puts India’s shadow economy at close to one-fifth of economic output.This difficulty in measurement is because black money is generated through complex, sophisticated activities for the purposes of tax evasion, crime and corruption.