But other, unauthorised estimates peg it at 25-30% of GDP or $600 billion annually. Just how big is India’s black money economy? In 2011, three government think tanks were asked to estimate that. And while some of this is legitimate tax-paid money, quite a bit of it is not. Nearly two-thirds of India’s GDP, ($1.4 trillion or Rs 90 lakh crore), is a cash economy where buying goods, paying for services, or paying wages are all in cash. And much of the cash that flows around in such transactions are from incomes that are not disclosed to the government in order to avoid paying taxes.
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The thing is cash continues to be the dominant mode of transactions in India - never mind what you’re buying. But have things really changed? Last weekend, while shopping for a new laptop for my daughter, the sales guy at the store asked me whether I’d pay in cash or by card and when I said card, he seemed noticeably disappointed. That changed, of course, and in a few years, at least for salaried employees across industries, cheques and bank transfers replaced cash. There were no credit cards cheque payments weren’t in vogue and, in any case, you got paid in cash. Those days everything was bought in cash. I don’t know who benefited from this - the company we worked for, perhaps, but certainly not us because the cash would evaporate with remarkable speed every month. For the newsroom’s nether form of pond life like us, the pay was too paltry and, therefore, tax-exempt but even those who had to pay taxes got paid in cash. This was in the early 1980s I was working at a newspaper in Calcutta and on the first day of every month, an office peon would hand me the envelope and have me sign a ledger to acknowledge that I’d received it. In a white envelope - the sort that opens at the side and not along the length.
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Once upon a time, my salary used to be paid in currency notes.