Documentation is
nothing more than keeping the record of every transaction and every activity in
the country. In general, people who want to avoid government regulations, habit
of utility pilferage, tax evaders and avoiders are part of the undocumented
economy. It is not necessary that all the informal activities are undocumented.
In certain cases formal sector is also undocumented.
Problem of
documentation is not just mere tax collection, but it is core part of good
governance. It helps in eradicating the problem of terrorism, for example,
having all the records of sim cards issued on respective CNICs.
Furthermore, better
documentation helps in better policy formulation such as offering social
security benefits to the lay off or unemployed persons can only be effective in
the presence of proper documentation.
Avoiding government
regulations, sometimes, is inevitable in the presence of higher inflation and
lesser purchasing power of the people. People tend to do more jobs than one and
hide it from the government. In this way they avoid legal problems as well as
they can save more but not paying taxes. Therefore, these kinds of undocumented
activities can be mitigated by change in regulations.
Documenting the economy
does not imply that our economic activity will increase. There is a good
possibility that economic activity is reduced after the documentation and will
be unemployed due to high cost of documentation including paying utility bills,
paying indirect taxes etc. As well as poverty may also increase after the
documentation. This is one of the reasons that every economy has smaller
undocumented part, where poor are working for their existence.
