Black Money is the money on which income tax is not paid. This is one of the reasons behind the economic disparity that in turn causes social inequality which is the root cause of several problems in the country. Thus black money causes a rise in prices and increases the misery of the poor people. So the rich grow richer while the poor become poorer. This money is earned through corrupt practices and not declared fearing legal action. There are a number of factors that lead to this problem. Black money is collected by corrupt officials, politicians, businessmen, criminals, smugglers and any other individual trying to evade taxation. Some of these include the high rate of tax, increased cost of living, inflation, different rates of excise duty and the real estate market. Thus, Black money is one of the major drawbacks of a nation’s growth.
Black money symbolizes something which violates moral and social and legal norms. It is important to control the problem of black money as it is hampering the growth and development of the country to a large extent. Its effect on the economic set up is dangerous. It has an evil effect on the moral fiber of the society, integrity is placed under a discount and vulgar display of wealth is at a premium. Here are some of the ways in which we can control this issue:
- The tax system should be realistic. People must not see it as a burden. The high tax rate would only make people look for ways for tax evasion.
- The government must work on its price control policy as it is also one of the reasons behind the generation and accumulation of black money.
- The public sector projects must be monitored stringently so as to bring down their expenditure.
- The evils of black money can be checked by bringing monopolistic trends under control. Incentives should be given to those who provide voluntary disclosures of income.
- More industries shall be brought under state control. Small producers shall be encouraged by the grant of industrial licenses, import quotas of raw materials and loans from banks.
The concentration of wealth in the hands of a few people is also a cause for black money. Smuggling is another cause of black money.
The people who have black money are a danger to society. The government must take action against corrupt officials who in many ways contribute to the growth of black money. To control and ultimately eradicate the evil of black money, the Government must fight with an iron glove. Administrative corruption must be controlled at various levels. When they caught and found guilty, they shall be debarred from getting any license or import quota or any other trade concession from the Government. The exchange rates must be realistic and should reflect our comparative rates and position in the world economy. Higher rates of taxation on higher expenditure will curb extravagance.