India And The Black Market
-----------------------------------
Sep 20, 2005
BLACK MARKET AND THE INDIAN ECONOMY
-----------------------------------
Statistics:
It is said that black money in India accounts for 20 % of GDP. If this is true, then black money generated every year must be around Rs 400,000 crore or $ 80 billion. This is a huge amount, more than the entire budget of the government at the Centre. We have a government that spends about Rs 350,000 crore a year, most of it on itself, and asks for accounts of every paisa. On the other side, we have black money worth Rs 400,000 crore every year, which is just guesswork, and there are no accounts. This money goes into property, which is why real estate prices are so high, and of course five-star hotels. If the government could have all this money, or even a small fraction, there would be no need for revenue or fiscal deficits, and no need for huge borrowings to make two ends meet.
How big is $ 100 billion? It is bigger than you think. It is worth Rs 500,000 crore, which makes it bigger than the central budget. It is more than twice our annual exports. It is equivalent to 30 times what Enron is supposed to have invested on its Dabhol project. It is more than what the US government is expected to pay those who have suffered from the September 11th smash. And, if you must know, it is a fifth of our annual GDP, which is itself a big figure.
Introduction:
The CBDT is hopeful of collecting more than Rs 7,000 crore (Rs 70 billion) as income tax area, the target indicated by Finance Minister P Chidambaram for the current financial year. The board has already collected Rs 3,400 crore (Rs 34 billion) during the first six months of the current fiscal year, compared to Rs 2,700 crore (Rs 27 billion) in the same period a year earlier.
Finance Minister P Chidambaram's Budget speech for 2004-05 shows there were only 27 million taxpayers...
Please login to view the full essay...