“India has the second highest number of shadow entrepreneurs in the world. For every business that is legally registered in India, there are 127 shadow businesses that are not,” says a report in Times of India, quoting a study of 68 countries led by Professor Erkko Autio and Dr Kun Fu from Imperial College Business School, UK.
Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register their businesses. This means that they do not pay tax, operating in a shadow economy where business activities are performed outside the reach of government authorities.
In short, it is a problem of law enforcement.
Indonesia has 131 unregistered businesses for every one legally registered business, while India has 127 such businesses for every legal business. UK has just one unregistered business for every 30 legally registered business.