It’s difficult to gauge the actual size of India’s economy because of the many “off the grid” businesses you find there. I would bet almost none of the economic activity you see on this page is reported to the Indian Revenue Service. To me it’s possible that India’s GDP might be double (if not more) that which is actually reported.
While driving through Rajasthan, I had my camera at hand to document some of what I saw. For example, it seems all barber shops in the country are located along a road.
There were lots of places to buy snacks and food. No one needed to go hungry if they had a few coins to spare….
You’ll find an amazing variety of other products — almost anything you can imagine is purchasable, including woks….
Pottery….
Even sheets of marble….
Besides studying roadside commerce, I was entertained to see what would roll by on a motorcycle. The bike below had just a couple and their shopping aboard, but often you’d see whole families riiding around on a motorcycle. My personal record was, amazingly, six people on one cycle (mostly kids).
You’re quite right about the small number of enterprises that pay taxes. A principal reason for this is the paltry salaries of tax inspectors, combined with the labyrinthine legal structures to enforce tax law.
One smart employee could tie up the state lawyers for decades, or more efficiently, contribute to the black money fund needed to support the inspectors family and pay for exorbitant wedding costs !