India's Black economy - Affect on the growth !

Tax evasion, corruption, red tape are rampant infact it's a way of life in India and  has huge economic implications. The past 2 decades of economic growth that India witnessed has been relatively easy starting from a very low base almost 2 decades ago starting with the economic liberalization. But repeating  these growth rates into the future is not going to be easy.  The estimated cost of over $300 billion dollars in lost revenue in evaded taxes is signficiant, almost 20% of the country's output or the  GDP. Over a 5 year period this amounts to a staggering 1.5 trillion dollars and this is more than enough to put in place a world class infrastructure in the form of better highways, ports, energy infrastructure.

A recent  business week article gives some perspective on this in good detail.

http://www.businessweek.com/news/2011-07-19/india-sees-growth-imperiled-with-greek-like-tax-evasion.html