Twenty years ago, cement traders made more money than cement manufacturers, because cement prices were 'controlled' and the traders made the huge black money premiums -- until partial decontrol was introduced in the 1980s.

Fifteen years ago, smuggling gold, watches and synthetic cloth was a thriving racket, with payment made through the hawala network -- another thriving racket.

Ten years ago, much of corporate India was cheating on income tax by paying employees chunks of their salary through fictitious reimbursements.

And even five years ago, the bulk of the money in a real estate transaction was paid with unaccounted cash. It is remarkable how all this has changed.

Price and distribution controls have all but disappeared; import restrictions have been removed, and today's customs/excise rates leave little room for smuggling anything other than cigarettes and liquor.

Income tax rates have dropped and reduced the incentive for cheating on pay-roll taxes. And with the rapid spread of housing finance, even real estate transactions are now overwhelmingly settled by cheque. In short, the bulk of the Indian system has become legit.

Few would have believed that such a transition could have been achieved, and so painlessly. Sure, the bulk of political funding is still unaccounted money, and by definition all the corruption money that has been estimated to run into tens of thousands of crore is also black money.

But while estimates of the black economy are inherently unreliable, the scope for generating black money today is probably just a tenth of what it was a couple of decades ago.

This is not something most people are conscious of as they go about their daily business, but it is important to remember these things every time someone in power argues in favour of public sector ownership and government controls (on cooking gas prices, or sugar, or whatever).

Indeed, to hark back to the controls and resultant shortages that used to plague everyday living serves to tell us what lunacy prevailed in policy-making. For you couldn't buy milk in the open market; or carry rice into Kolkata; or buy a train ticket without queueing up overnight at the booking counter.

The prices of toilet soap were decided by the government, and of bread. You couldn't switch from making 100 cc bikes to making 110 cc bikes without satisfying many babus in the bhavans of Delhi; and you couldn't import newsprint except through the State Trading Corporation, which bought cheap newsprint at high prices and then slapped on a service charge -- at a time when the government also told you how many pages of a newspaper you could print, and what would be your newsprint quota. This last didn't change till P Chidambaram became commerce minister.

Many of the Indians who ran away from all this and became NRIs were thus economic refugees, fleeing the living hell created by socialist policy-makers who exempted themselves from most of the rigours of the system that they imposed on the rest of the country.

Those who couldn't escape, and only managed short trips overseas, would be given six dollars by the RBI; so they would beg or borrow from relatives overseas to shop like madmen for all the stuff you couldn't get in the country, like a reliable steam iron.

And five or 10 years from now, when more changes will have taken place, we will look back and wonder how we tolerated a situation where you weren't allowed to make toys or biscuits or matches, except in small-scale units, and where electricity was sold free to select customers.

The minute gold imports were liberalised by Manmohan Singh at next to no tax, remittance receipts jumped by a massive sum because the bottom had fallen out of the hawala market and the inflows were now showing up in the Reserve Bank's books.

But equally, if more of GDP is accounted for now than before, then the reported economic growth from one year to the next is being exaggerated by the growing legitimisation of economic activity.

This might well explain why, despite the Asian crisis, despite droughts and high oil prices, the growth rates each year continue to flatter. Or is there some other explanation?