HIDDEN ECONOMY IN INDIA
The Indian economy at present is one of the fastest growing economies in Asia. However, it suffers from a large number of surfeit businesses that probably outnumber the legitimate businesses and income. ‘Swiss bank accounts’ as they are popularly known have become a somewhat integral part of the Indian economy considering the fact that India has a massive Black economy that exists in the shadow of its real economy. Black economy in a lay man’s terminology refers to funds earned in the black market wherein taxes have not been paid. As per a recent report commissioned by the government, India’s hidden economy, mainly driven by higher education sector, real estate deals and mining income is so huge that it is approximately three quarters the size of its reported Gross Domestic Product. This increase in the underground economy is clearly reflected in the increasing number of scams such as the 2G scam, Fodder scam, Bofors scam etc.
The existence of a shadow economy adversely affects the development of any economy, leading to a large number of scams where in billions of dollars are spirited out of the economy and are not accounted for which ultimately leads to inflation as well as a rise in the fiscal deficit. Furthermore, it also leads to the weakening of democracy as the bureaucracy too indulges in committing acts of illegality thereby eroding respect for justice and disrupting social functioning as funds that are meant to be used for public welfare are often mismanaged and used for personal purposes. Keeping this in mind, several governments have taken steps to curb the spread of this shadow economy in India including the present NDA government which was constituted in 2014.
While a large number of committees have been constituted to look into this matter and several other measures such as demonetization and anti-defection law have been introduced, the problem of Black money in India is still rapidly expanding. One of the most important ways in which this problem can be curbed is by adequate usage of the Right to Information that seeks to create a system of transparency to make bureaucrats more accountable to the people. Also, it is equally important that political parties should function more democratically, direct taxes must be simplified to remove deductions and concessions and Independent directors of companies should be chosen from outside the Company who’d serve as a public watchdogs and look into cases of mismanagement of funds.
It is therefore, the need of the hour to take stringent political action so as to curb the spread of Black money and truly embark on the journey of economic development by completely eradicating corruption.
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