This Presentation was created to delve deeper into the topic of Black Economy, particularly keeping in view the Indian Economy. This topic is of utter importance just because of its ability to generate humongous amount of Revenue for the authorities.

1. BLACK
ECONOMY
The Hidden Economy
S H A D E S O F E C O N O M I C S

2. A PRESENTATION BY:
Udit Prakash Parida Preeti Bajaj
Soumya Sarthak Jena Sristee Majee
Tushar Ranjan Panigrahi Ashrita Patra

3. TOPICS TO BE COVERED
Introduction
Determination of Black Market
India’s Black Economy
Source of Black Money
Effects of Black Money
Measures to curb Black Money
by the Indian government
Balancing the liquidity of
black money (legal
framework)
Conclusion

4. BLACK ECONOMY
The Black Economy refers to any
economic activity, which is legal in
nature but is unrecorded,
unregulated and untaxed.
It is that segment of a country’s
economic activity that is derived
from sources that fall outside of
the country’s rules and
regulations regarding commerce.

5. Any business can be classified as black market if it does any of the two
following thing:
(i) Non-remittance of sales tax: every business is charged sales tax by the
government of a country. If these taxes are not paid at all of not accurately
paid the business is regarded as a black market.
(ii) Selling of illegal products or goods: selling of illegal, prohibited, or banned
products such as weapons, human parts or human beings, hard drugs and
banned items makes a black market business.
HOW BLACK MARKET IS
DETERMINED

6. India ranks 87th in the Corruption Perception Index (CPI).
According to the latest statistical update by the Central Statistical Organization
the size of the Indian economy is estimated to be around 272.41 lakh crores.
Black economy’s share to this is estimated to be around 50% (by the IMF)
which is around 136.2 lakh crores and astonishingly higher than the income
generated by agriculture and industry combined together!! It is even higher
than the Indian government’s spending.
If all this black money is declared, it would result in an humongous generation
of tax revenue valued at almost 20 lakh crores which is almost the same
amount of tax collected by authorities in the year 2022-23.
INDIA’S BLACK ECONOMY

7. SOURCE OF BLACK ECONOMY
Control and Licensing System
Tax Structure
Donation to Political Parties
Ineffective enforcement of tax laws
Smuggling (or) Illegal Trade
Large hoarding of static assets & Cash
Money holdings in Shell Companies
Tax Evasion
Tax Avoidance
Money Laundering
Non-compliance of tax requirements
Undisclosed Foreign Assets

8. EFFECTS OF BLACK MONEY
It affects the financial system of the country. The central
bank is not able to control money supply in the economy
causing higher inflation. This will lead to a fall in the
value of the currency.
Black money affects the credibility of a country
negatively.
Black money is most often used for illegal activities such
as drugs and narcotics dealing, terrorism, etc. which is
detrimental to the health of the country.
The government suffers a big loss in the form of taxes
because of black money.
Black money creates a parallel economy in the country,
which is completely underground.
Black money can also cause real estate prices to go up,
which may lead to an asset bubble.

9. MEASURES TO CURB BLACK MONEY
BY THE INDIAN GOVERNMENT
Tax reforms have been initiated with a view to resisting
black money. The tax base has been increased and rates
have been slashed. Reforms are being made to
incorporate tax deduction at the source itself.
Through the Black Money Bill, the government has
allowed the reporting of black money generated through
tax evasion in a given time frame. The last such
declaration took place in 2016. It results in
minimazation and the waiver of the penalty imposed.
Demonetisation of Rs.500 and Rs.1000 was carried out in
2016 with the primary view of making black money
useless.
The government is encouraging cashless/digital
transactions with a view to making things more
transparent.
Electoral reforms are also intended to curb black money
as much of the black money generated in India is used in
elections.
Aadhar and Pan Linkage is made compulsory to help
keep track of tax evaders.

10. BALANCING THE LIQUIDITY OF BLACK MONEY
(LEGAL FRAMEWORK)
PREVENTION OF MONEY-LAUNDERING ACT,
2012
LOKPAL AND LOKAYUKTA ACT
BENAMI TRANSACTIONS PROHIBITION ACT,
2016
PREVENTION OF CORRUPTION ACT, 1988
THE UNDISCLOSED FOREIGN INCOME AND
ASSETS BILL
THE REAL ESTATE (R&D) ACT, 2016
DOUBLE TAXATION AVOIDANCE AGREEMENT
(DTAA)

11. CONCLUSION
AT LAST WE WANT TO CONCLUDE THAT BLACK
ECONOMY UNDERLINES THE MAJOR
MACROECONOMIC PROBLEMS FACED BY INDIA -
FISCAL CRISIS AND INFLATION.
BLACK MONEY WEAKENS DEMOCRACY, IF NOT
KEPT IN CHECK, INDIA’S GROWTH STORY CAN
BECOME A THING OF THE PAST.
IF MATTERS ARE TO BE KEPT IN CHECK, THE
PUBLIC HAS TO ACT ALONG WITH THE POLITICAL
AND EXECUTIVE CLASS.

12. THANK
YOU!