BANKING AFFAIRS

Detailed explanation-1: -The other names of the black economy are parallel economy, black money, informal economy etc. Basically black economy consists of all the activities in which black incomes are generated which do not get reported to tax authorities. Black economy exists everywhere, from developed countries to developing countries.

Detailed explanation-2: -The existence Black money lead to the creation of a parallel economy. It also makes the monetary policies less effective as the government cannot account properly account for the money which is not formally included in the system.

Detailed explanation-3: -Other terms used include: the shadow economy, cash economy, underground economy or the cheating economy.

Detailed explanation-4: -Parallel economy is the functioning of an unsanctioned sector in the economy whose objectives run in opposite to the objectives of official, sanctioned or legitimate sector. The parallel economy has political, commercial, legal, industrial, social and ethical aspects.

Detailed explanation-5: -In India, black money is funds earned on the black market, on which income and other taxes have not been paid. Also, the unaccounted money that is concealed from the tax administrator is called black money. The black money is accumulated by the criminals, smugglers, and tax-evaders.