The income illegally obtained or not declared for tax purposes. Prime Minister Narendra Modi has acted to arrest the drift in his popularity and place constraints on election funding, which will benefit him in crucial state elections next year. Money earned through illegal channels is also termed as black money. Such funds are hoarded as cash and paid in the same way so that there is no official record of the proceedings. Unaccounted earnings for which taxes have not been paid to the authorities are popularly known as black money.

The use of unaccounted money harm a country’s overall economy but also rips it off transparency, leading to corruption in the system. For instance, the government of India loses thousands of crore rupees every year in its revenue earnings owing to the circulation of black money into the economy; the impact is more prominently seen in the real estate sector. Being a capital-intensive sector, the real estate sector is a favourite asset class for money hoarders to park their money.

In a major step to curb the black money menace, Prime Minister Narendra Modi on November 8 said his government would withdraw the existing notes of Rs 500 and Rs 1,000 denominations and replace them with fresh notes. The move is likely to clean the system of unaccounted money in an effective manner.

At a roadside shop in the state of Uttar Pradesh, a heated argument broke out over a small packet of chips and a 1,000 rupee note. Even the offer of extra money to accept the now banned note could not change the young shopkeeper's mind.

"For the success of this decision, the government will have to make sure that the execution is flawless -- the new notes are made available, bank branches and ATMs are stocked. If this is done, this decision will definitely improve the health of the Indian economy."