Aashi Arya | PGP13003 | Section A

Society, Business and Indian Economy

Q1. How would you define a "black" economy? Elucidate the pattern of growth in India's black
economy over time and across sectors.

A country's gross national product (GNP) or gross domestic product (GDP), frequently referred
to as the "black economy" or "shadow economy," measures all economic activity in that nation
(GDP). Often unlawful or uncontrolled, this kind of commercial activity often includes the
creation, sale, and trading of illegitimate products and services.

● Operating outside of a nation's official legal and regulatory systems is one of the primary
features of a black economy. This implies that those engaging in these activities, both
individuals and companies, do not pay taxes on their income, which can result in a loss
of revenue for the government.
● The black economy is frequently linked to criminal activity including the trafficking of
illegal drugs, people, and money. However, it may also refer to legitimate operations that
are not disclosed to the authorities, such working without a licence or selling products
and services without one.
● A black economy's size and growth can fluctuate based on a number of variables, such
as the degree of governmental control, the level of corruption, and the condition of the
overall economy. In general, a smaller black economy is linked to a better economy and
lower levels of corruption.
● In India, the dark economy has generally been a critical piece of the nation's by and
large economy. The size of India's dark economy is challenging to quantify precisely, yet
some gauges recommend that it very well may be just about as extensive as half of the
nation's Gross domestic product.
● The development of India's dark economy has been driven by a scope of variables,
including debasement, tax avoidance, and the casual idea of numerous independent
companies. As of late,the Indian government has done whatever it may take to get
serious about tax avoidance and different types of unlawful monetary movement, yet the
dark economy stays a huge piece of the country's generally speaking monetary scene.
● The dark economy in India is available across a scope of areas, including farming,
assembling, and administrations. In the farming area, for instance, the dark economy is
frequently connected with the creation and exchange of unlawful medications and other
illegal harvests.
● In the assembling area, the dark economy is frequently connected to the creation and
offer of fake products, as well as the offer of merchandise without covering charges or
following other guidelines. In the administrations area, the dark economy is frequently
connected with exercises such as undeclared work and the arrangement of unlawful
administrations like betting and prostitution.
● The development of India's dark economy has had various adverse results for the
 country. For instance, it has prompted a deficiency of income for the public authority,
which could generally be utilized to subsidize public administrations and framework. It
has likewise added to imbalance and neediness, as the dark economy frequently
includes low-paid and unregulated work.
● Notwithstanding these difficulties, the Indian government has found a way various ways
to attempt to diminish the size of the nation's dark economy. For instance, it has
acquainted measures with get serious about tax avoidance and different types of
unlawful financial action, and it has tried to advance the formalization of the economy by
empowering organizations to enroll and pay charges.
● Nonetheless, the development of India's dark economy is a complicated and progressing
challenge, and it will require proceeded with endeavors by the public authority and
different partners to address.

Q2. Which factors have led to the growth of India's black economy? Do you think the
measurement of the black economy is vital for framing result-oriented government policies? - (5
bullet points each)

The following reasons have lead to growth of India’s black economy:

● Elevated degrees of debasement and pay off, which make it simple for organizations and
people to avoid assessments and guidelines.
● An absence of viable requirement of expense regulations and guidelines, permitting
people and organizations to work outside the proper economy.
● Elevated degrees of disparity, which has prompted an enormous number of individuals
working in the casual economy to earn enough to pay the bills.
● An enormous casual area, which isn't dependent upon similar guidelines and duties as
the formal economy.
● An absence of admittance to formal credit and monetary administrations, which has
constrained many individuals and organizations to work outside the proper economy.

Estimating the dark economy is significant because of multiple factors:

● It can assist the public authority with grasping the size and extent of the casual economy
and the factors that add to its development.
● It can give significant data to policymakers and controllers, who can utilize this
information to plan more compelling arrangements and guidelines.
● It can help the public authority track and screen the progression of cash in the economy,
which is significant for monetary strength and development.
● It can assist the public authority with distinguishing regions where the casual economy is
developing and take moves toward formalize these exercises.
● It can assist the public authority with gathering more precise information on the
economy, which is fundamental for arriving at informed conclusions about financial
strategy