Review

Abstract

The black economy, also known as the parallel or underground economy, is an intrinsic part of Indian economic life today: almost no one can escape its tentacles. Many attempts have been made to define, understand, analyze, diagnose, and apply appropriate remedies for this malaise. However, it has not been possible to define the concept clearly and unambiguously, get an accurate estimate of the size of the problem, fully understand the mechanisms of how it affects the overall economy, or find suitable policies for its containment and eventual elimination. It is one of the most intractable problems facing policy makers in India and other countries. The historical perspective is important in understanding the growth and persistence of the black economy in the developing countries, and colonialism with its distortions of the economies of the colonized countries is often overlooked as a contributing factor.