Devangshu Datta has a great presentation on how to create black money:
DD is a good friend and a great guy – and what he’s saying is clear. Yes, there is black money but it’s not “them” that generate it. It’s us.
We do it when we pay for our houses in black, we do it when we pay in cash to those that might not declare their income. We do it when we underdeclare our income, and there are easy ways to “whiten” black money, the most obvious being to take it out of the country and bring it back as FII investment.
DD says America has a 35% black economy in 1930 and that’s down to less than 10% today. We can go there if we follow the best practices followed by the west. It isn’t that difficult but the change can’t happen while you and me continue to produce black money.