In the first part, the Accounted Sector was explained, and also how the transparent money, sometimes does not stay within that sector, but morphs into Unaccounted & Informal Sectors. Before we plunge into those forms, let us try to understand the other extreme, the Illegitimate sector.
When people talk of Black Money, it is this Illegitimate form they think of. But people being illogical, attribute all the bad aspects of this Black Money on anyone who protests – even when those who protest actually fall under the Accounted, Unaccounted, or Informal cash economies.
Illegitimate Black Money is the one which is generated purely based on criminal activity. It is money generated by anyone of these activities – bribes, corruption, drugs, terrorism, counterfeiting, smuggling, hawala, illegal betting, over & under invoicing, video piracy and even ordinary thievery. Thus, this sector too contains 2 different forms of money flow. The almost white-collar section with bribery and corruption, and the fully organized crime section of the rest.
BTW, admit it. When the bogeyman of Black Money is raised, you and most everyone, visualize this sector, and support the the counter-measures in all your fervour with the belief that this illegitimate cash should be stopped and will be done so.
But remember this, not one single rupee from this sector will ever Queue up to the banks. Probably half the money has already been laundered by now, in the 20 days between 8 Nov and 29 Nov.
Contrary to beliefs, the amount of money actually stashed, kept as a cache under the settee, without being circulated, in this sector, is a very low percentage. Crime would not pay, if you start accumulating cash, without a way to move it.
This sector of course pays no taxes at all – neither direct, nor indirect – except when the stash comes out as laundered money to be used in legitimate purposes, when it coughs up the indirect taxes – VAT, Service Tax, etc., or even some direct taxes – Property Tax etc., when invested in real-estate or in stocks.
For all the deadly dangerous activities, and scare, this is one of the smallest sectors of the four.
According to studies, the white collar section would add up to just 2% of the GDP, and the counterfeiting even less – under 0.5%. The biggest section of them all, the hawala-hundi field is suspected to be as large as the official remittances from NRI, which is about 4% of the GDP. In all, this Illegitimate sector would be between 8-10% on the whole.
(TBC part-3)
When people talk of Black Money, it is this Illegitimate form they think of. But people being illogical, attribute all the bad aspects of this Black Money on anyone who protests – even when those who protest actually fall under the Accounted, Unaccounted, or Informal cash economies.
Illegitimate Black Money is the one which is generated purely based on criminal activity. It is money generated by anyone of these activities – bribes, corruption, drugs, terrorism, counterfeiting, smuggling, hawala, illegal betting, over & under invoicing, video piracy and even ordinary thievery. Thus, this sector too contains 2 different forms of money flow. The almost white-collar section with bribery and corruption, and the fully organized crime section of the rest.
BTW, admit it. When the bogeyman of Black Money is raised, you and most everyone, visualize this sector, and support the the counter-measures in all your fervour with the belief that this illegitimate cash should be stopped and will be done so.
But remember this, not one single rupee from this sector will ever Queue up to the banks. Probably half the money has already been laundered by now, in the 20 days between 8 Nov and 29 Nov.
Contrary to beliefs, the amount of money actually stashed, kept as a cache under the settee, without being circulated, in this sector, is a very low percentage. Crime would not pay, if you start accumulating cash, without a way to move it.
This sector of course pays no taxes at all – neither direct, nor indirect – except when the stash comes out as laundered money to be used in legitimate purposes, when it coughs up the indirect taxes – VAT, Service Tax, etc., or even some direct taxes – Property Tax etc., when invested in real-estate or in stocks.
For all the deadly dangerous activities, and scare, this is one of the smallest sectors of the four.
According to studies, the white collar section would add up to just 2% of the GDP, and the counterfeiting even less – under 0.5%. The biggest section of them all, the hawala-hundi field is suspected to be as large as the official remittances from NRI, which is about 4% of the GDP. In all, this Illegitimate sector would be between 8-10% on the whole.
(TBC part-3)
Hey keep posting such good and meaningful articles.
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