It is believed that the second most populated country in the world with around 1,150,000,000 (1.15 billion) people, India is growing in stature amidst the economies of the world. The following figures will also give a normal Indian some causes to smile.
GDP (purchasing power parity): $3.57 trillion (2009 est.)
GDP (official exchange rate): $1.236 trillion (2009 est.)
But the truth is that the Indian economy is today witnessing a serious crisis. Unemployment, financial scams, political chaos and sick companies are the result of this unchecked phenomenon that has mushroomed under successive Congress Governments and has already done more harm than centuries of Muslim or Christian domination.
Today India is also seen as a potential world leader based on its thriving economy. But there is another economy thriving in India which everyone should be aware of. This economy is known as “The Parallel Economy”
THE PARALLEL ECONOMY:
A parallel economy is so called as it disregards the rules and regulations that ‘white’ businesses follow. The components of the parallel economy are numerous. Tax-evasion, Smuggling, Bribe-Taking, Foreign-currency racketeering are some of the more prominently visible and talked about forms.
While there are no authentic figures about the black economy in India, according to the Professor of Economics, Jawaharlal University, Arun Kumar, who has written one of the most authentic books on the subject, ‘The black economy in India’, puts the figure at around 40 percent of the GDP.
Some Stats: According to the latest estimate of Central Statistical Organization (CSO), the size of the Indian economy is around Rs. 61, 64,000 crore. So the size of the black economy comes out to be around Rs. 25, 00,000 crore or around $500 billion.
Estimates by eminent economists reveal that India’s parallel economy has risen from a mere 3 percent of the GDP in the mid-50s to around 50 percent today. The dimensions of this growth of corruption and generation of black income in India are indeed mind-boggling. The black economy is now about 50 per cent of the GDP or roughly Rs 30 lakh crores annually. This data is enough to shock anyone.
The black economy is made up of two constituent activities:
• Legal activities that are not reported to the tax authorities and the income from which goes untaxed and unreported
• Illegal activities not reported to the state (and, therefore, not taxed).
All this ill-gotten wealth of ours has been stashed away abroad into secret bank accounts located in some of the world’s best known tax havens such as the Swiss banks.
Let us look at the details of bank deposits in the territory of Switzerland by the nationals of the following countries in 2006:
India—- $1456 billion
Russia—$ 470 billion
Ukraine- $100 billion
China—–$ 96 billion
India with $1456 billion or $1.4 trillion has more money in Swiss banks than rest of the world combined, an amount 13 times larger than the country’s foreign debt. If this huge amount of black money property comes back to India; the entire foreign debt can be repaid. After paying the entire foreign debt, we will have surplus amount almost 12 times larger than the foreign debt. If this surplus amount is invested in earning interest, the amount of interest will be more than the annual budget of the Central government.
THE GOVERNMENT’S APPROACH:
• Recently, due to international pressure, Swiss government agreed to disclose the names of the account holders only if the respective Governments formally asked for it. Indian Government has not asked for the details.
• The German Government once bought a disc containing the names of people holding illegal bank accounts in Liechtenstein in 2007. They offered to share the disc for free with all the governments whose nationals’ names were in the disc. The governments of the US, UK, France immediately took the data and started prosecution but the Indian Government refused to accept it for two years—perhaps to enable the corrupt to escape
• Many committees have been formed but with little or no result more than forty Controls like FERA, MRTP, small scale reservations and licensing have been diluted or eliminated. Direct Tax rates have been reduced drastically. Voluntary disclosure schemes have been tried repeatedly but there is little dent on the black economy.
THE NEED OF THE HOUR:
The above facts should be enough to awake every Indian. Now looking at all these, the question is: what is there that can be done as a solution? In such a scenario it is only public pressure on the Government from every corner of the county that can push the government to do something seriously. We need to start a movement to pressurize the govt. to do so!! This is perhaps the only way we can get back the money which can be better utilized for the welfare of our country.