This is how India can reduce the size of its black economy

A deeper understanding of the economy is needed to figure put ways to deal with black economy

November 8, 2016 will be a memorable day for Indians in years to come. On this day, Prime Minister Narendra Modi eliminated more than 85% of Indian currency notes in circulation, wreaking havoc in common people’s lives. While the effects of this policy may take some time to unfold, will they include reduction in the size of black economy and corruption? To explore the answer to this question, it might be a good idea to look at what are the determinants of black economy and corruption.

Regulations and the Indian black economy

India has a substantial informal economy, or transactions