Impact of Black Money
Black money is socioeconomic evil. It is the money on which tax is not paid. It does not only have a negative impact on the country’s economic condition but also has adverse social consequences. The existence of rapidly growing black money in an economy has grave and disastrous consequences. It creates an economic disparity in the country which undoubtedly is the basis of social disparity. Such practices are the reason why the rich here are getting richer and the poor are getting poorer. It eroded the values of our common people which are a dangerous sign for the nation as a whole. Social inequality leads to frustration among people and gives rise to crimes such as robbery, bribery and more.
The various mediums of generating black money are Land transactions, Payment of bribe, Misuse of public property, Misappropriation of public funds, Evasion of taxes, etc. Tax evasion also means the amount that could have been used for the country’s growth and development did not reach the government. The most unfortunate aspect is that it has come to be accepted as a normal fact of life. If the government does not get enough revenue it would be unable to take up new projects for the development of the country and the uplift of the poor sections. People hardly feel say qualms of conscience while dealing with it.
The countries where people pay taxes religiously are far better off as compared to those where there is a huge amount of accumulation of black money. The major effects of black money are discussed below:
Dual Economy: The increase in the amount of black money over a period of time leads to the perpetual growth of economic dualism which consists of a Parallel economy operating side by side with the Official or Reported economy on the country. A parallel economy is one that is illegal and runs opposite to the legal economy.
Under-estimation: A large underground economy and growth of black income lead to under-estimation of the true size and incorrect picture of the economy by the officially complied national income data.
Loss of Revenue to the Government: Black money is mainly attributed to tax evasion. Its direct impact is the loss of Government revenue.
Widening the Gap between the Rich and the Poor: Growth of the black economy causes the regressive distribution of income in the society. When the black money grows faster, the rich become richer and the poor become poorer.
Average Effect on Production: As a consequence, the consumption pattern is tilted in favor of the rich and elite, at the cost of encouraging the production of articles of mass consumption.
The government has taken certain steps to eradicate the issue of black money. The recent and one of the major steps taken in this direction was demonetization. Note help from captive but this help was definitely not enough. While this step helped in eliminating black money to some extent many people condemned it. There is a lot to do to prevent this bad practice. However, even if it helped, it definitely was not enough. A lot more needs to be done in order to stop this ill practice. The government must look for more effective measures to curb this problem. If every citizen of the country contributes to it, it can be stopped. It can only be curbed if each and every citizen of the country contributes his bit.