How 'black money' saved the Indian economy

[hubag bohol]

Justin Rowlatt
South Asia correspondent
22 February 2016


There is no question that India has the most positive economic story on the planet.

Buoyed by increased manufacturing output, India's economy grew by 7.4% in the third quarter of 2015, the fastest growth of any major country in the world.

But there is a dark side to India's success, says one of the country's most eminent economists.

Kaushik Basu, the chief economist of the World Bank and former chief economic adviser to the Indian government, says the nation's tradition of petty corruption helped India avoid the worst of the banking crisis that has crippled most other large economies in the last few years.

It is an extraordinary claim for such an influential figure to make but, as he says in his new book, An Economist in the Real World, "economics is not a moral subject".

His argument is that the pervasive use of "black money" - illegal cash, hidden from the tax authorities - created a bulwark against a crisis in the banking sector.


More at: http://www.bbc.com/news/world-asia-india-35610332

[islander]

weird. my imagination may go to the extreme---why isn't the world's most corrupt country the richest thus?

[hubag bohol]

Hmm, I suppose the "black money" mentioned here is good enough to avert financial crises but is not good enough to bring about economic prosperity.