‘It keeps us afloat…’: Shankar Sharma says parallel economy shields India

India’s parallel economy often gets a bad name. But veteran investor and GQuant Investech founder Shankar Sharma says it’s time to look at it differently.

Speaking on a podcast with Rishi Sanghvi, Sharma said, “I love it. It’s fantastic.”

His reasoning? It acts as a buffer during turbulence.

“It keeps us afloat. It’s how India weathers most global economic crises better than others — because the parallel economy does not fall as much as the real economy,” Sharma said.

He explained that while the official economy may get hit during downturns, unaccounted-for wealth — in the form of gold, cash, or real estate — helps families absorb shocks.

“Let’s say the white economy… people have gold which is unaccounted for, people have cash which is unaccounted for, people have real estate which is off the books — that’s away from the prying eyes of a bank or the government. So in case there is a calamity, and calamities happen — personal or national — you have something to fall back on. I love it. It’s a great shock absorber,” he said.

“I know it sounds heretical to say that, but it has helped us in the past and I believe it will continue to help us in the future.”

On whether digitisation has made a dent in this parallel system, Sharma was clear: “No. I do know that the notes in circulation is a lot higher than what it was in 2016. So in India, you cannot do without cash. Forget about it. It doesn’t work. There are many, many places where you still need cash to get around.”