Black money saves India & makes it Asian tiger, says economist Basu

India is no doubt the real Asian tiger. Buoyed up by increased manufacturing output, India's economy grew by 7.4% in the third quarter of 2015, the fastest growth of any major country in the world, BBC reported. But there is a dark side to India's success, says one of the country's most eminent economists, Kaushik Basu, the chief economist of the World Bank and former chief economic adviser to the Indian government. He says the nation's tradition of petty corruption helped India avoid the worst of the banking crisis that has crippled most other large economies in the last few years. It is an extraordinary claim for such an influential figure to make but, as he says in his new book, `An Economist in the Real World,' `Economics is not a moral subject.' His argument is that the pervasive use of black money -- illegal cash, hidden from the tax authorities -- created a bulwark against a crisis in the banking sector. Explaining, Basu says black money saved India from the financial crisis that engulfed the rest of the world. In the 90s, India's economy was looking just as frothy as the rest of the world. It had been growing at an astounding 9% a year for the three years to 2008. What's more, India's growth had been fuelled, at least in part, by a dramatic housing boom. Between 2002 and 2006, the average property prices increased by 16% a year, way ahead of average incomes, and faster even than in the US. The difference in India is that all this "irrational exuberance" did not end in disaster. There was no subprime loans crisis to precipitate a wider crisis throughout the banking sector. The big question is why not. There were some shrewd precautionary moves by India's central bank, concedes Basu, but he says one important answer is all that black money. In most of the world, the price you pay for a property is pretty much the price listed in the window of the local realtor or estate agent. Not in India, most of the house purchase is done with cash, black money at that. What about the black money in trillions stashed away in Swiss banks? Although this question was not posed to him, the answer is obvious. It's neither here nor there, it's for the benefit of the Swiss.