India would soon have an authentic number about the size of its black economy. The finance ministry has embarked on a plan to survey the unaccounted Indian income, within and outside the country, and also profile-specific sectors of the economy that generate such black money.

Finance minister Pranab Mukherjee has asked economic think tanks NIPFP, NCAER, Indian Statistical Institute and NIFM to come up with proposals by November 30 on how to go about filing a report on the parallel economy. The national-level institutes may work together in tandem, or one or more may be shortlisted for the purpose, official sources said.

India has little experience in estimating its black economy. An NIPFP study in 1983 put the size of India?s parallel economy at between Rs 31,500 crore and Rs 36,786 crore, less than 30% of the then GDP of the country. In absolute terms, that figure looks a gross underestimate at present with the GDP in 2009-10 estimated at Rs 44.5 lakh crore. Although there have been efforts in recent years to expand the tax base through various measures, the parallel economy seems to have only flourished. Even as percentage of GDP, the parallel economy today is believed to be much more than 30%.

According to official sources, the need for a fresh assessment arose as there is no official estimate of the black money from India stashed away from the country and held in secret bank accounts overseas, resulting in a great amount of speculation and talk around it. While the Swiss government gives a figure of $1,500 billion of unaccounted money in banks in that country, the US-based Global Financial Integrity said in a recent study India had been drained of $462 billion (over Rs 20 lakh crore) between 1948 and 2008.

?Assessment of black money being a humongous task, it might take an year to complete it,? a finance ministry source told FE. The important aspects (terms of reference) to be considered while preparing the report would be to profile the nature of activities which lead to money laundering within and outside India, and the threats these could have for national security.

The think tanks would also examine the methods employed to generate the black money and its conversion and recycling into the normal economic system. The report would also suggest as to how this money could be brought in the tax net.

Further, to avoid the entire exercise from being only academic, there would also be inter-ministerial participation while preparing the report. The departments involved will be the Central Board of Excise and Customs (CBEC), the Central Board of Direct Taxes (CBDT), Department of Economic Affairs, Enforcement Directorate, Financial Intelligence Unit and Foreign Investment Promotion Board. Among other ministries would be the ministry of statistics and programme implementation (MOSPI), ministry of home affairs, ministry of external affairs and the Cabinet secretariat.

The idea was mooted by the Parliamentary standing Committee and the documentation on the idea kicked off last month.