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Resource centre on India's rural distress
 
 

Black economy in India: The path to growing inequality in India -Arun Kumar

-CounterCurrents.org

The single most important aspect of the Indian economy is its very large black economy. In fact, it impacts not just the economic aspect of society but also its social and political facets. All the macroeconomic variables like, growth rate of the economy, inflation and fiscal policies are affected by the black economy. The microeconomic variables like education, health, drinking water and other services received by the citizens are also adversely impacted by it. Elections, quality of leadership, governance, criminalization and governance are also adversely impacted by the black economy. Unfortunately, most policy makers and analysts ignore the black economy. As such, their analysis is partial and often incorrect.

India is characterized by large and growing inequality as various recent reports indicate. At a low level of per capita income India has one of the highest number of billionaires in the world. But these reports are based on the data from the white economy alone. If the black economy is included in the analysis, inequality would turn out to be much higher since black incomes are concentrated in the hands of the high income earners. Some of the key aspects of the black economy that lead to increase in inequality are presented below.

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