A report by Ambit Capital estimates India’s black economy to be around 20 percent of India’s GDP
GN Bureau | June 6, 2016
The Modi government’s crackdown on black money has “jammed” traditional black money laundering machines in the country, resulting in an increase in preference for cash and a decline in the usage of formal banking channels. This was highlighted in a report titled ‘The unintended consequences of India’s battle with black money’, prepared by Ambit Capital.
The report, however, adds that “this crackdown has also led to an increase in the cost of debt capital in the economy owing to a confluence of certain unique factors. As banks are unwilling to lend to sub-investment grade creditors owing to their own NPA [non-performing asset] troubles, this credit demand has shifted entirely to informal channels of lending. This, in turn, has driven increase in lending rates in the black economy to as high as ~34% p.a. as per our primary data sources (vs ~24% a year ago).”
According to the report, as of today, India’s black economy is equivalent to 20% of the size of India’s GDP. “Given that India’s GDP in CY16 is expected to be US$2.3tn, the size of India’s black economy is about S$460bn, which is larger than the stated GDP of emerging markets like Thailand or Argentina.”
“Even as India is characterised by a high savings rate of 33% of GDP, India has a high cost of debt capital and poor accessibility to capital mainly because more than two-thirds of India’s household savings are held in physical form, which includes real estate and gold,” says the report.
The report is also of the view that given that liquidity in the formal banking system is likely to remain under pressure and the cost of borrowing in the black economy appears to be rising, GDP growth is expected to remain flat at 6.8% in FY17.
Harshdeep Kaur is a playback singer better known for her Sufi renditions. She sings Hindi as well as Punjabi. She sang ‘Ik Onkar’ in Rang De Basanti apart from several other soulful songs. Her track ‘R.I.P.’ composed by AR Rahman was part of Oscar-winner Danny Boyle’s film
Out of all MPs and MLAs in office, 58 have declared cases related to hate speech. This includes union minister for drinking water and sanitation Uma Bharti along with 14 other Lok Sabha MPs. The list also includes 8 state ministers. A party wise analysis reveals that BJP has the highest numb
After its withdrawal from Meghalaya and Arunachal, is it time to review AFSPA in other areas too?
There is an uncanny similarity in the pathological opposition to prime minister Narendra Modi by two members of the right wing, Pravin Togadia and Yashwant Sinha. They come from a diverse social and political background; yet they share a common strand that shows an unmitigated hatred towards
Data is the new oil; and it needs to be protected. In an interaction with Governance Now, Lionel Baraban, CEO of Famoco, talks about how the French tech firm is developing secure business devices to safeguard data against going to other countries. What are the major roles o
Goa Shipyard Ltd (GSL) and MTU, Germany have agreed to cooperate in the local manufacturing of technologically-advanced MTU series 8000 engines in India. Under the agreement, which was signed at India’s leading defence trade show Defexpo-18, the companies will manufacture the 16-