Parallel economy refers to the functioning of an unsanctioned sector in the economy whose objectives run parallel, rather in contradiction with the avowed social objectives. This is variously referred to as black economy, unaccounted economy, illegal economy or unsanctioned economy. The term parallel economy emphasizes a confrontation between the objectives of the legitimate and illegitimate sectors.
With the expansion activity in the post-independence period the magnitude of the black sector has grown and proliferated to such an extent that it has begun to play a dominant role in moulding state policies, in changing structure and composition of output, in promoting a class which derives its maximum source of power from black money. Black money or the existence of parallel economy is a major problem in our economic system. According to the National Institute of public finance and policy study in 1985 under the leadership of Dr. Shankar Aacharya, it was around Rs. 40000 crore (20% of GDP). The parliament standing Committee on Finance in 1994-95 however, estimated that black money has exceeded the total GDP.
D.k Rangnekar rightly mentions-
" If the Parallel Economy poses a serious threat to stability and growth of the official economy, surely it seem from the fact that the magnitude of black money is large and rigged deals are growing in volume and complexity at an alarming rate. Apart from the wide ramification of the the parallel economy, one might also be alive to the fact that black incomes are accentuating the inequalities of income and wealth and breeding a new class of black rich in a society which is already harshly stratified. "
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| Parallel econom |
With the expansion activity in the post-independence period the magnitude of the black sector has grown and proliferated to such an extent that it has begun to play a dominant role in moulding state policies, in changing structure and composition of output, in promoting a class which derives its maximum source of power from black money. Black money or the existence of parallel economy is a major problem in our economic system. According to the National Institute of public finance and policy study in 1985 under the leadership of Dr. Shankar Aacharya, it was around Rs. 40000 crore (20% of GDP). The parliament standing Committee on Finance in 1994-95 however, estimated that black money has exceeded the total GDP.
D.k Rangnekar rightly mentions-
" If the Parallel Economy poses a serious threat to stability and growth of the official economy, surely it seem from the fact that the magnitude of black money is large and rigged deals are growing in volume and complexity at an alarming rate. Apart from the wide ramification of the the parallel economy, one might also be alive to the fact that black incomes are accentuating the inequalities of income and wealth and breeding a new class of black rich in a society which is already harshly stratified. "
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