World Bank’s Research Paper
The World Bank research group’s study done in 2010 — Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to 2007, by Friedrich Schneider, Andreas Buehn and Claudio E Montenegro — is considered to be one of the most authentic report on the unofficial economy across the globe. It estimated India’s shadow economy in 2006 to be 25.1% of GDP, against 22.9% in 1999.
According to the World Bank researchers’ paper: “Shadow economy included all market-based legal production of goods and services that are deliberately concealed from public authorities to avoid payment of income, value-added or other taxes or to avoid payment of social security contributions or having to meet certain legal labour market standards, such as minimum wages, maximum working hours, safety standards and to avoid complying with certain administrative procedures, such as completing statistical questionnaires or other administrative forms.”
According to their analysis, the shadow economy had reached remarkable proportions, with an average value of 34.5 per cent of official GDP over 162 countries between 1999 and 2006-2007.The research report found that average size of the shadow economies in the 162 selected countries (developing Eastern European and Central Asian, as well as high-income OECD countries) increased only modestly from 33.7 per cent of official GDP in 1999 to 35.5 per cent of official GDP in 2007.
NIPFP Study: An NIPFP study pegged black money in 1983-84 between Rs 32,000 crore and Rs 37,000 crore (which is 19% and 21% of GDP).
Official Estimates
In March 2011, the Government had commissioned fresh study on unaccounted income/wealth both inside andoutside the country, bringing out the nature of activities engendering money ‘laundering’ and its ramificationson national security to be conducted by three national-level institutes, viz. National Institute of PublicFinance and Policy (NIPFP), National Institute of Financial Management (NIFM) and National Council ofApplied Economic Research (NCAER).
The terms of reference of the study are as under: