Updated on March 1, 2023
The true meaning of the black economy can be referred to as a parallel economy that involves illegal practices. The most common of these practices is tax evasion. However, the meaning of this economy is not limited to tax evasion but also includes illegal practices like money laundering, human trafficking, and selling of illegal weapons and substances, etc.
What gives rise to black economy?
The rise of the black economy can be attributed to many factors like scarcity of supply of intended goods in the open market, extensive government regulations, etc. The black economy can be part of legal transactions too when cases of bribes are involved or in case of undue favours being extended in exchange for money that remains unaccounted. The government has attempted huge crackdowns on the black economy and the demonetisation drive was part of these attempts. While success on that front is often disputed, it is a fact that the extent and reach of the black economy can be found in every sector and industry and is a huge deterrent to the growth of any country.