Thats not entirely true. People are making a good amount of money from businesses that have an edge. Though I have to admit, the profits are because of avoidance of Customs duties, GST, and consequently, Income tax. I know people in Bombay, who buy a few properties every year.
As far as law abiding businesses goes, yes, the going is not tough, but outright impossible. We have to pay all sorts of taxes, while doing businesses, as well as on the income earned from it. Also, the paperwork involved is massive.
So, in my opinion, businesses using the parallel economy are still thriving, and conventional small businesses are struggling to pay even salaries.