Black Money In India : Disadvantages, Effects, How to Curb? – Essay, Speech, Article
Black money Meaning
Black Money In India : Black money refers to the money which is earned and hoarded by dishonest means and are not declared to the Government and relevant authorities to avoid payment of taxes. The massive amount of black money in our country has created a parallel economy.
Parallel Economy and Black Money
Parallel economy refers to an economy which is unofficial or unsanctioned and running parallel to the official and legitimate economy of the nation. Parallel economy is also referred to as ‘black economy’, ‘unaccounted economy’, ‘illegal economy’, ‘unreported economy’, etc. The unofficial economy is popular among the masses as black money and the official economy as white money.
How Black Money Generated in India ?
Black money is generated in India in various ways. Let us look at some ways how black money gets generated from legal transactions. The rates of various taxes in India are too high. Many business concerns disclose reduced income in their financial statements by showing some expenses which have not occurred so as to pay less tax. Some people purchase properties or residential houses but only partial amounts of actual price are recorded in the documents which are registered with the relevant authorities. Huge amounts of black money are generated from antisocial, immoral and illegitimate transactions as well. Drug trafficking, smuggling, prostitution, bribery, Havala transactions, etc. pumps huge amounts of black money in the Indian economy.
Impacts of Black Money on Economy of India
Generation and accumulation of black money give rise to a huge threat to our economy and also endangers national security. The combination of money and power gives birth to black money. Origination of black money disturbs the balance of trade, commerce and industry of the country. Essential commodities can be hoarded, healthy competition can be driven out of the market and honest men and Government servants can be blackmailed.
Dishonesty and corruption (Read Also : Corruption in India) have become an usual way of life for many people in India. The moral standards have fallen to drastic extents as a result of these. Growth of black money in the country has been growing at a rapid pace in the recent years. Many economists in India have opined that black money has become a major factor for the high growth rate of inflation.
Measures to Prevent Generation of Black Money in India
Some measures may be considered to curb the generation of black money in India. The income tax returns filed by people in positions, high net worth individuals and established corporate should be scrutinised by a special agency. The tax regime in the country should be made liberal to reduce tax evasion. Availability of licenses and permits should be made hassle free. Income from agriculture can be made taxable like various other sources of incomes. Taxes on income from capital gains can be reduced. Government can withdraw specific denominations of currency notes so as to curb the circulation of fake notes and black money in the economy. The legal framework in the country should be made more strict so as to incorporate punishments for people who are found guilty of hoarding, smuggling, profiteering, etc.
Verdict on Black Money in India
Black money in India is generated on a continuous basis in our country. It can affect the stability and can eventually paralyse the entire economy. It is very likely that unless it is ruthlessly combated and reduced in size, it will affect the economic planning and policy formations to a substantial extent.