parallel economy in iNdia

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Economic Journal of Development Issues Vol. 11 & 12 No. 1-2 (2010) Combined Issue The

Parallel

Economy...

THE

PARALLEL

ECONOMY

IN

INDIA:

CAUSES,

IMPACTSANDGOVERNMENTINITIATIVES

SukantaSarkar*

AbstractThe study hasmade an attempt to assess the overallprofileofparallel economy in India,particularlyintermsofcauses,impactsandgovernmentinitiatives.TheresultsindicatethatparalleleconomyhasbeenexpandingveryrapidlyinIndiaaswellasindevelopingcountries.

It

is

evident

from

the

study

that

government

of

India

already

introduced

various

commissions

forestimatingblackeconomybutestimationreportsarenotsame.Indiangovernmentismoreconcernedabouttheprevalenceoftheparalleleconomyandvariouscommissionsareformedforcontrollingitbutresultsarenotsoimpressive.Thus,thepapersuggeststhatrecommendationsofthecommissionsorlawsshouldbeimplementedcorrectlyforreducingbadeffectsofblackeconomy.

Keywords:blackmoney,inflation,privatization,realestate,India

Inpopularparlance,theunofficialeconomygoesbythenameofblackmoneyandtheofficial,ofwhitemoney.Blackandwhitearealsovariouslysubstitutedbynumbertwoandnumberone,un accountedandaccounted,unreportedandreported,unrecordedandrecordedandsoon.

Prof.

J.C.

Sandesara

INTRODUCTIONEconomyconsistsofeconomicsystemofacountryorotherarea,thelabor,capitalandland resources,and theeconomicagents thatsociallyparticipate in theproduction,exchange,distribution,andconsumptionofgoodsandservicesofthatarea.Allkindofprofessions,occupations,economicagentsoreconomicactivities,contributetotheeconomy.Consumption,savingandinvestmentarecorecomponentsintheeconomyanddeterminemarketequilibrium.Aninformaleconomyiseconomicactivitythatisneithertaxednormonitoredbyagovernment,contrastedwithaformaleconomy.TheinformaleconomyisthusnotincludedinthatgovernmentsGrossNationalProduct(GNP).Informaleconomicactivityisadynamicprocesswhichincludesmanyaspects

ofeconomicandsocialtheoryincludingexchange,regulation,andenforcement.

Paralleleconomymeansfunctioningofanunsanctionedsectorintheeconomywhoseobjectivesrunparallelandincontradictionwiththeobjectivesofofficialorsanctioned

* Mr.SarkarisLecturerofeconomics,DepartmentofManagement,ICFAIUniversityTripura,Agartala,Email:[email protected]


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Economic Journal of Development Issues Vol. 11 & 12 No. 1-2 (2010) Combined Issue Sukanta

Sarkar

or legitimate sector in the same economy (Rajaram, 2006, 577). This is variouslyreferred to as unaccounted economy, illegal economy, subterranean economy,or unsanctioned economy. According to the D.K.Rangnekar (as citedby Datta&Sundharam,2004,376),If the Parallel economyposesa serious threat to stabilityandgrowthoftheofficialeconomy,surelyitstemsfromthefactthatthemagnitudeofblackmoneyislargeandriggeddealsaregrowinginvolumeandcomplexityatan alarming rate.Apart from the wide ramificationsof the parallel economy, onemightalsobealive to the fact that black incomesareaccentuating the inequalitiesin incomeandwealthandbreedinganewclassof blackrich inasocietywhich isalreadyharshlystratified.

Illegaleconomy is taxevadedeconomy. It ispossible toconvert illegaleconomyorblackmoneyintowhitemoneyandviceversa.Forexample,whenapersonmanagestoget thereceipt from theshopkeeperbypaying thesalestax foracommoditybutdoesnotpurchaseitactually,hegeneratesblackmoneyasreimbursementismadetohimagainstthereceipt.Themoneynotactuallypaidistheblackmoneyinsuchacase.In such case, the shopkeeper sells the same commodity to another person withoutgiving him any receipt for it. On the other hand, if a person purchases something(say,ascooter,oraVCR,etc.)andplaysRs.15,000foritoutofwhitemoneybutgetsareceiptofonlyRs.10,000,thebalanceofRs.5,000becomesblackmoneyfortheseller.Inthiscase,thewhitemoneybecomestheblackmoney(Ahuja,2007,489).

The parallel economy has political, commercial, legal, industrial, social and ethical

aspects.Therearewideconfrontationsbetween theobjectivesof the legitimateandillegitimatesectorsunderparalleleconomy.D.R.Pendse(ascitedbyLekhi,2003,191)argued that thereare twopossible sourcesofblackmoney.Firstly, itmayoriginatefromillegitimatesourceofincomearisingoutofillegalgratificationsuchaspaymentofSelamiorPagriorincomefromsmuggling,briberyetc.Secondly,itmayoriginatefromlegitimateandlegalsourcesofincomebutconcealedfromtaxauthoritiesoutoftaxevasion.

Thebasicobjectivesof thispaperare toanalyze thecausesofparalleleconomy, itsimpactontheeconomyandvariousinitiativesofIndiangovernmentforsolvingthisproblem.

INTERNATIONAL

EXPERIENCE

Parallel economy orblack economy is existing inboth developed and developingcountries. Thereisanabundanceofliteratureavailableuponmeasurementtechniquesandaboutestimatesofparalleleconomy.Avarietyofmethodshavebeenusedandthedifferentmethodsappeartogeneratewidelydivergentestimates.ThisissummarizedinTable1.


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Parallel

Economy...

Table

1

:

Parallel

Economy

Estimates

in

Developed

Countries

Country

Parallel

Economy

(as

%

ofGDP)

Greece,Italy,Spain,PortugalandBelgium 2430%

Sweden,Norway,Denmark,Ireland,France,TheNetherlands,GermanyandGreatBritain

1323%

Japan,USA,Austriaan Switzer an 810%

Source:http://www.crisil.com/youngthoughtleader/winners/topic4_Jyoti_Agarwal_IIm_CAL.PDF

Table1showthatparalleleconomyexistsinvariousdevelopedcountriesallthough

theirvariousinitiativeshavebeentakinggovernments.

TheestimatesofparalleleconomyinthecontextofsomeofthedevelopingcountriesarepresentedinTable2.

Table

2:

Estimates

of

Parallel

Economy

in

Developing

CountriesPeriod:199093

Country

Parallel Economy

(as%

of

GDP)

Africa

NigeriaandEgypt 6876%

TunisiaandMorocco 3949%

CentralandSouthAmerica

Guatemala,Mexico,PeruandPanama 4060%

Chile,CostaRica,Venezuela,Brazil,Paraguay&Colombia 2535%

Asia

Thailand 70%

Philippines,SriLanka,Malaysia&SouthKorea 3850%

HongKong&Singapore 13%

Source:http://www.crisil.com/youngthoughtleader/winners/topic4_Jyoti_Agarwal_IIm_CAL.PDF

Therearevariousdevelopingcountrieswhereblackmoneyisincreasingveryquickly.

Itoccursatall levelsofsociety, from localandnationalgove rnments,civilsociety,judiciaryfunctions,largeandsmallbusinesses,militaryandotherservicesandsoon.

INDIAN

EXPERIENCE

VariousattemptshavebeenmadetoassesstheblackmoneyinIndiafromtimetotime.Majorfewofthemareaspresentedhere:


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I.

Kaldors

Estimate:AlthoughtheTaxationEnquiryCommissionhadexaminedthe structure of Indian Taxation, a reviewby Prof. Nicholas Kaldor wasdesiredby the Government in late 1955 in view of the larger dimensionsassumedby the problems of resources for the plan since the commissionreported(ImportantEvents194661).Prof.N.KaldorinhisreportonIndianTax Reform estimated the nonnational income (i) wages and salaries (ii)incomeofselfemployedand (iii)profit, interestandrent.Aftermaking therough adjustmements, according to Wanchoo Committee, the estimatedincomeincomeonwhichtaxhasbeen(blackincome)wouldprobablybeRs.700croresandRs.1000croresfortheyears196162and196566respectively.Projectingthisestimatefurtherto196869onthebasisofpercentageincreasein

nationalincomefrom196162to196869,theincomeonwhichtaxwasevadedfor196869,theincomeonwhichtaxwasevadedfor196869canbeestimatedatafigureofRs.1800crores(Datt andSundharam,2004,378379).

II.

Wanchoo

Committees

Estimate: Shri K.N.Wanchoo, retired ChiefJusticeof theSupremeCourtof India, aschairmanexplainedwhat the termblackmoneymeantinitsfinalreportsubmittedinDecember,1971.Thiscommitteeestimated nonsalary income for 196162 of amounting Rs. 2686 crores andnonsalaryincomeactuallyassessedtotaxasRs.1875crores,thus,taxescapedforRs.811crores.Therefore,in196162,blackmoneywasofamountingRs.700croreswhichrosetoRs.1000croresin196566andfurtherRs.1400croresin196970.Verylatelyitwasaccountedtobe4.4percentofGNP(Dhar,2003,719).

III.

Rangnekars

Estimate: D.K. Rangnakar as a member of the WanchooCommittee submitted his report in 1982 (India Today, 2005). According toRangnekar,taxevadedincomefor196162wastheorderofRs.1,150crores,ascomparedtotheDTECestimateofRs.850crores.For196566,itwasRs.2,300crores,asagainstRs.1,216croresestimatedbyDTEC.Theprojectionsofblackmoneyfor196869and196970wereRs.2,833croresandRs.3,080croresrespectively(DattandSundharam,2004,378).

IV. ChoprasEstimate:ACommitteeunderO.P.Choprawasformedin1982formeasuringblack money in India (India Today, 2005). O.P.Chopra preparedaseriesofestimatesofblack incomewhere it increased fromRs.916crores(6.1 percentof GDP) in196162 to Rs.8098 crores (10.5 percentof GDP) in

197677(Dhar,2003).Thestudyshowedthatabuoyanteconomyoffersmoreopportunitiesforunaccountedincome.Duringperiodsofrecession,itmaybedifficultforproducerstoexactunaccountedmoney.Chopraalsocorroboratesthe hypothesis that tax evasion is more likely the higher the rate of tax.His findingsalso support thehypothesis that increase inprices leads to anincreaseinunaccountedincome.Further,hefoundthatfundsaredivertedtoagriculturetoconvertunaccounted(black) incomeinto legal(white) income(DattandSundharam,2004,379).


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V.

Guptas

Estimate:Governmentof IndiaformedacommitteeunderPoonamGuptaandSanjeevGuptain1981forcalculatingblackmoneyinIndia.TheyusedFeigesmethodoftransactionincomeratiotoestimateblackmoneyinacountry.Theyusedaverageofthreeyearsviz.194950,195051and195152asthebenchmarkforestimatingblackmoneyfortheyearof196768to197879.Theyestimated that itwas19.8%ofGDPatmarketprice.Theblackmoneyincreased for Rs. 3034 crores in 196768 to Rs. 46867 crores in197879. Themainfindingsofstudiesonblackmoneywere:(a)Abuoyanteconomyoffersmore opportunities for unaccounted income; (b) The ratio of unaccountedincometoassessablenonsalaryincomehasgoneupafter197374;(c)Increasein prices leads to an increase inblack money; (d) Funds are diverted to

agriculture toconvertblackmoney intowhitemoney;and (e)Onepercentincrease in overall taxes leads to more than 3 percent increase in theblackeconomyrelationtotheofficialeconomy(Lekhi,2003,192).

TheNationalInstituteofPublicFinanceandPolicyestimatedthatin1985amountofblackmoneyinIndiawasnearlyRs.1,00,000crore,whichisapproximately20percentofthenationalincome.In1996,theestimatedblackmoneywasbelievedtobemorethanRs.4,00,000crore(TheHindustanTimes,January20,1997).

Most of Indiasblack money estimated tobe about US$1 trillion (Dh3.67tn) isbelievedtobeparkedinbankaccountsinSwitzerland.AccordingtotheSwissBankersAssociation, Swiss law and tax agreements prohibit third countries from general

searches forpossible taxevaders,ornamefishing.The Indiangovernmenthopesthatsituationwillchangeafteritstaxtreatywiththecountryisrevised(Chopra,2010) .

CAUSESOFGENERATINGBLACKMONEY

TherearemanyreasonsforthecreationofbackmoneyinIndia.Someofthemareasfollows:

i. Controls and licensing system: Black money is increasing in India for thereasonsofcontrols,permits,quotasandlicenses.

ii.

Higher

Rates

of

Taxes:Higherratesoftaxeshasresultedagrowingtendencyof

taxevasionamongthetaxpayers.Taxevasioniscommoninincometax,corporatetax,corporationtax,unionexciseduties,customduties,salestax,etc.

iii.

Ineffective

enforcement

of

tax

laws: In India, the enforcement of tax laws

inrespectofincometax,salestax,exciseduty,stampdutyetc.isquiteweak.Thishasledtoenormousunrestrainedevasionoftaxesandpilingupofblackmoney.

iv. Fundingofpoliticalparties:There isanupwardtendencyofsupportingofpoliticalpartieswiththehelpofblackmoney.Bigtradehousesaredonating


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anenormous amountofblackmoney to thepoliticalparties,especially therulingpartywiththesoleobjectivetotamethepoliticalleadershipforderivingundueprofitbymanipulatingpolicydecisions(Lekhi,2003,193).

v. SecondWorldWarafterinfluence:DuringthetimeofSecondWorldWar,alotoftheIndianindustryfoundcircumstancesfavourableforblackmarketing.Supply industrialgoods from the traditionalsuppliesof theWestwerecutoff, which resulted severe shortages in many essential fields. This formedthesentimentofmakingofmarketingmoneyoutofshortagesandnotoutofextensionofthebusinessactivities.

vi. Inflation:Theadditioninpricesofcommoditieslikepetrol,etc.ininternational

market,boost in prices of commodities due to high increase in duties andtaxes imposedby the government, the conspicuous utilization createdbypeople with unaccountable money, diverting resources from manufactureto speculation all these is the root of inflationwhich in turn createsblackmoney.

vii. AgriculturalIncome:Thereluctancetobringagriculturalearningsintherealmofincometaxhasalsocontributedtocreationofblackmoney.Bigindustrialhouses,overthepastfewdecadeshaveenteredtheagriculturesectorinabigwaybyacquiringbigfarms.Theblackmoneyaccruedfromothersourcesissoughttobetransformedintowhitebyviewingitontheagriculturalreturnsaccount.

viii.

Privatization:

Privatizationhasopenedupanewareatotheprivatesectoraswellastoministersandbureaucratsformakingblackmoney.Itisexpectedthatmanyscamscometolightformakingblackmoneythroughprivatization.

ix.

Transactions

in

Urban

Real

Estates: Realestate transaction isasignificant

sourceofgeneratingblackmoneyinIndia.

x.

Other

Factors:GenerationofblackincomeinacountrylikeIndiaalsoresults

from other differentactivities like smuggling, property deals,bribery, kickbacks,commissions,concealmentofincomebyprofessionals,artistsetc.Inthiswayanenormousamountsofblackincomeincessantlyresultsinenhancementoftheareaandactivitiesofparalleleconomy(Lekhi,2003,194).

Impact

of

Black

Income

on

the

Indian

Economy

Generationofblackincomeandtherebyestablishmentofparalleleconomyhasbeencreating the following serious impacts on the social and economic system of thecountry.

BlackincomehasbeencausingunderestimationofGDPinIndiaasanenormousvolumeof income isdivertedto thisunaccountedsectorresulting ingrowingcontinuationofparalleleconomyofthecountry.


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Thedirecteffectofblackincomeisthelossofrevenuetothestateexchequerasataxevasion.

Blackmoneyhasresultedinthediversionofresourcesforthepurchaseofrealestateandluxuryhousing.

Blackmoneyhasresulted intransferoffundsfromIndiatoforeigncountriesthroughclandestinechannels(Dhar,2003,721).

The availability ofblack incomes withbusinessmen and capitalists and theconsequent inequalities of income place a large amount of funds at theirdisposal.

Apartoftheblackincomesisheldincashandasaresultthereisanabundanceofliquiditywhichbecomesavailablethroughtheadditionofsavingsheldintheformofcash,bullion,gold,silver,etc.

Moneyevadedbyillegitimatewayisspentinundesirableandvulgarmanner.Virtueslikehardworkandhonestyareunderestimated.

Thustheexistenceofparalleleconomyhastotallydistortedanddisruptedtheplanningoftheeconomyofthecountry.

GOVERNMENTINITIATIVES

Thegovernmenthastakenanumberofstepstocurbblackmoney.Searches,seizures,

surveys, and scrutiny of income tax returns arebeing doneby the Income TaxDepartment.AmendmentshavealsobeenmadetotheFinanceAct2004tointensifyefforts to curbblack money. These include prosecution for falsificationofbooks ofaccountsandtaxingofgiftsworthmorethanRs.25,000tounrelatedpersons.Therehavebeen two amendments of the Voluntary Disclosure of Income Scheme (VDIS)underwhichblackincomesandassetscouldbedeclared,thetaxpaidatcurrentratesandamnestyavailedfrompenaltyandprosecution.Forthesmoothfunctioningoftheeconomy,thefollowingmeasuresaresuggestedtocombatthemenaceoftheparalleleconomy:

i.

Demonetization: In 1946, demonetization was resorted tobut the Direct

Taxes Enquiry Committee in its interim report observed, Demonetizationwasnotsuccessfulthen,becauseonlyaverysmallproportionoftotalnotes

in circulation were demonetized in 1946 and its worth was Rs.1,235.93crores.OnJanuary16,1978demonetizationofhighdemonisationnoteswasintroduced.ThehighdemonetizationratesasonthatdayamountedtoRs.146crores.NotestenderedtoReserveBankofIndiaamountedtoRs.125croresasperdataavailabletillAugust1981(Lekhi,2003,195).

ii. VoluntaryDisclosureSchemes:TheGovernmenthasfloatedvariousvoluntarydisclosure schemes to determine theblack money. In 1951, a voluntary


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disclosure scheme with relaxation in panel provision was introduced. ItresultedintotaldisclosuresamountingtoRs.71croresandtaxcollectionofRs.11croresonly.Upto1968atotalconcealedincomeoftheorderofRs.519crores was declared on which Rs. 131 crores were paid as tax; this furtherhighlightsthefailureoftheGovernmenttounearthblackincomes.Thewealthdisclosedundertheschemewillattractincometax,butnotwealthtax.Underthescheme,previouslyundisclosedincomereportedbythedeclarant,willbesubjecttotaxattherateof30%forindividualsand35%inothercases.Further,theFinanceMinisterhasannouncedthatthedeclarantwillnotbeliabletopayinterestorpenaltiesandwillbegrantedimmunityfromprosecutionundertheIncometaxAct1961,WealthtaxAct,1957,ForeignExchangeRegulationAct,

1973

and

Companies

Act,

1956.

This

scheme

will

remain

in

force

till

December

31,1997(HighlightsofUnionBudgets,1997).

iii.

Special

Bearer

Bond

Scheme:Bearerbondsweremostlikelyfirstusedinthe

United States during thepostCivil War era to fund Reconstruction (18651885).arebonds thatareownedbywhoever isholding them,rather thanhavingregisteredownerslikemostothersecurities.Likemostotherbonds,theyhaveastatedmaturitydateandinterestrate,butcouponsrepresentinginterestpaymentsaregenerallyphysicallyattachedtothesecurityandmustbe submitted to the company for payment (Bernfeld, 2010). Special BearerBonds Scheme (1981) was intended for canalizing unaccounted money forproductivepurposes.TheSpecialBearerBonds,1981ofthefacevalueofRs.10,000eachwereissuedatparwithamaturityperiodof10years.

iv.

Measures

to

Check

Tax

Evasion:

Dealingwith taxevasionhasalwaysbeenoneofthemostdifficultchallengesforgovernmentsallroundtheworld.Taxevasion isdoneby individualsbelongingtodifferentstrataofthesociety indifferentways.Asper thesurveysand reports, therearemanypeoplewhoprovide false income details to the tax authorities to reduce the amount ofliability.The income taxevasionpenaltiescanhelp thegovernment recovermaximumamountsintheformoftaxandutilizethemoneyforthebenefitofthecommonpublic.Taxevasionisoneofthebasiccausestogeneratetheblackincome.Therefore,variousmeasureswereundertakentoplugtheloopholesintaxevasion.Mostofthesemeasureswerebasedontherecommendationsof various committees and commissions viz Taxation Enquiry Commission(1953), Administrative Reforms Commission (1969), Direct Tax Enquiry

Committee

(1971)

etc.

Most

of

these

recommendations

were

an

upgrading

in

taxlaws(Charlie,2010).

v. Economic Liberalization: Introduction of economic liberalization hasdetached the regime of controls and regulations and thereby the extent ofblackeconomywouldbereducedregularly(Lekhi,2003,196).

vi. VoluntaryDisclosureScheme:FinanceMinisterMr.P.Chidambaramwhilepresenting199798budgetsannouncedaVoluntaryDisclosureScheme(VDS).


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VoluntaryDisclosureScheme whichwas extensivelyadvertisedyielded taxrevenueofRs.10,500crores anunprecedentedrevenuegainfromanyVDSschemelaunchedsincetheindependence.

vii. Other Measures: The Government has also introduced some measures tocontainthegrowthofblackincomeinthecountrywhichincludesDepositintheNationalHousingBankin1991,NRIforeignexchangeremittance,issuingNationalDevelopmentBondsinUSdollars,controllingtheelectionexpensesincurredby the candidates, conducting searches, seizures, raids and otherstepstoplugloopholesinthetaxadministrationetc.

The

Prevention

of

Money

Laundering

Act,

2004

came

into

effect

on

1

July

2005.

Section

3of theActmakes theoffenseofmoneylaunderingcoverthosepersonsorentitieswhodirectlyor indirectlyattemptto indulgeorknowinglyassistorknowinglyarepartyorareactuallyinvolvedinanyprocessoractivityconnectedwiththeproceedsofcrimeandprojectingitasuntaintedproperty,suchpersonorentityshallbeguiltyofoffenseofmoneylaundering.Section4oftheActprescribespunishmentformoneylaunderingwithrigorousimprisonmentforatermwhichshallnotbelessthanthreeyearsbutwhichmayextendtosevenyearsandshallalsobeliabletofinewhichmayextendtofivelakhrupeesandfortheoffencesmentioned[elsewhere]thepunishmentshallbeuptotenyears(MoneyLaundering,2010).Moneylaunderingnetworkshaveandcontinuetoprovideavenuestosiphonmoneybetweenindividuals,groups,andnationsacrossnationalbordersandacross theworld for legitimateand illegitimatepurposes(Lambert,1996).

InJuly1991,theUnionFinanceMinisterprojectedanewscheme NationalHousingBank Scheme to persuadeblack moneyback into the legitimate operations of thenational economy. The scheme offered possessors of unaccounted for money anopportunity todepositanyquantityofmoney (withamaximum limitofRs.10000)withNHBwithoutdisclosingthebasisoffunds.

Somescholarshavemaintainedthatallthesemeasureshavetouchedonlythetipofthe iceberg.AllofschemeshavehardlyfetchedRs.5000croreoveraperiodoffiftyyears.Themaindrawback intheseschemes is thattheytouch theproblemofblackmoneyalreadycreatedbuttheydonotgointotherootcauseofgenerationofblackmoney.Unless thisproblem is tackled, themenaceofblackmoneywillcontinue to

increase.

Indiahastriedtocombattaxevasionbyrequiringanidentificationnumberforallmajorfinancialdeals.Thepermanentaccountnumber (PAN) isacompulsory10characternumberissuedtotaxpayersbythetaxdepartment.Butmanytransactions,especiallythose related toproperty,areconducted incashandareunlikely tobereported. Inthe fiscal year 20072008, the countrys highvalue transactions amounted to more


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than55.7 trillion rupees,according to IndiasAnnual InformationReturn filedwiththegovernment.Butnearlyonethirdofthe3.3milliontransactionswereconductedwithoutaPAN.Inmanyothertransactions,PANnumberswerefake(Chopra,2010).

CONCLUDINGOBSERVATION

ParalleleconomyisanewthreatfortheIndianeconomy.InIndiaparalleleconomyisexpandingveryrapidly.GovernmentofIndiaintroducedcommissionsunderKaldor,Wanchoo, Rangnekar, Chopra, and Gupta for estimatingblack economy. There aremany factors likeControlsandLicensingSystem,HigherRatesofTaxes, IneffectiveEnforcementofTaxLaws,Inflation,Fundingofpoliticalpartiesetc.that influenceits

growth.

InIndiaamountofblackmoneyareincreasingcontinuouslywhichbadlyimpactstheeconomicgrowthofthenation.SuchmoneyisanewchallengeforIndianeconomy.Indian economy isbadly affectedbyblack money as it is underestimating GDP,increasinginequalityofincome,increasingillegalactivitiesetc.Overthepast50years,thegovernmenthasatvarioustimesannouncedseveralschemesofferingopportunitiestobringblack money overboardbut the result are not so effective. Some of theseschemes are: introducing the scheme of Special Bearer Bonds, demonetizing highdenomination currency notes, stringent raids and scheme of voluntary disclosures.Theseinstrumentsareexpectedtoreducethevolumeoftheblackeconomy.

References

Ahuja,R.(2007).SocialProblemsinIndia(2nd Ed).Jaipur:RawatPublications.

Bernfeld, G. (2010). Bearer Bonds: From Popular to Prohibited. Retrieved from http://www.investopedia.com/articles/bonds/08/bearerbond.asp#12913328237032&close

BlackEconomicEmpowerment(2010,November12).Retrievedfromhttp://en.wikipedia.org/wiki/Black_Economic_Empowerment

Blackmoneyisacurseofournation(2010).Retrievedfromhttp://www.slideshare.net/sridharababu/blackmoneyisacursetoournation

Charlie, S. (2010).TaxEvasionsPenalties. Retrieved from http://www.buzzle.com/articles/taxevasionpenalties.html

Chopra,A.(2010).Indiatargetsblackmoney.Retrievedfromhttp://www.thenational.ae/business/economy/indiatargetsblackmoney

Datta,R.,&Sundharam,K.(2004).IndianEconomy(49th Ed).NewDelhi:S.Chand&CompanyLtd.376&378379.

Dhar, P. K. (2003). Indian Economy: Its Growing Dimensions (11th Ed). Ludhiana: KalyaniPublishers.

HighlightsofUnionBudgets.(1997).Retrievedfromhttp://iic.nic.in/iic4_g.htm


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Important Events 194661 (2010). Retrieved from http://www.incometaxindia.gov.in/HISTORY/19461961.ASP

IndiaToday(2005,December19).CoverStory:BlackMoney.Retrievedfromhttp://www.indiatoday.com/itoday/20051219/cover2.html

Lambert,L.(1996).UndergroundBankingandNationalSecurity.Retrievedfromhttp://www.subcontinent.com/sapra/bulletin/96febmar/si960308.html

Lekhi, R. (2003). The Economics of Development and Planning (8th Ed). Ludhina: KalyaniPublications.

MoneyLaundering.(2010,November30).Retrievedfromhttp://en.wikipedia.org/wiki/Money_laundering

Rajaram,K.(2006).IndianEconomics(6th ed.).NewDelhi:SpectrumBooksPvt.Ltd.

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