Black money is unaccounted money, illegally acquired wealth or other assets made through accepting bribery or other morally depraved acts. It is not just cash stashed at hidden places in the house or in benami accounts. It is in various forms like shares, bonds, securities, or other forms of instruments. It may be in the form of real estate-houses, shops, plot or other assets like cars. It may be in the form of gold, silver, diamonds or jewellery.
It is believed that there is a huge amount of black money in India, estimated to be 200 million crores. It is also said that in our country over 200 crore rupees of black money is created every year. This reflects the magnitude of black money market in India. This also bears testimony to the amount of corruption prevailing in the country and the illegal activities being carried out. The biggest means of creating black money is avoidance of income tax and sales tax.
Most of the businessmen never show the actual income they earn. They either never maintain any books of account or also keep false accounts to be shown to the authorities. As a result, the tax which is due to them is never paid. But the money they make out of their business keeps on accumulating with them. After a period of time when their wealth increases to huge amounts, they cannot show where this money has come from. This is black money. While shopping, most of us never ask for a bill from the shopkeeper or the dealer. We never realise its consequences.
Thousands of crores of rupees in sale tax is avoided because of absence of billing. Many dealers do not deposit the sales tax collected from the customers with the sales tax authorities. This is evasion of sales tax. The government has introduced the system of Value Added Tax (VAT) whereby the sellers of goods are taxed for the value added. But even here, the actual sale shown by the dealers is much less than what actually is.
It is believed that in export dealings the billing is inflated by an average of 20 per cent. This amount goes into the pocket of the dealer without payment of any tax this amount taken together runs into hundreds of crores of rupees every year. This is nothing but black money.
The other means through which large amount of black money is created is through illegal trades. All income that is received because of smuggling of gold, brown sugar, narcotics and other goods which cannot be sold is black money. The cost of these goods is so high that dealing in them makes billions of rupees. Since the dealings are illegal, the money is not genuine earning but black or illegal wealth. There are international smuggling rackets which facilitate this kind of trade. India is supposed to be on the transit route for these kinds of goods coming from West Asia to South East Asia or vice-versa.
Then there is smuggling of goods on the borders, viz. the borders between India and Pakistan, between India and Nepal, India and Bangladesh and India and Myanmar. Despite a tight vigil by Border Security Force, goods worth crores of rupees are smuggled from and into India everyday. The smugglers have millions of rupees as black money.
Politicians in India have a large amount of black money. Most of them have assets worth crores of rupees-much more than their known sources of income. Cases are pending in courts against many of them on charges of having acquired these assets by illegal means. The ministers while in power collect money, mainly from big businessmen for allotment of petrol pumps, plots of commercial land, licenses for doing particular business like liquor contracts, setting up Special Economic Zones, etc. In their tenure they accumulate several crores of rupees. Nobody checks them though everybody knows it.
The cases filed against them yield no result.
The executive classes including the bureaucrats are the other class of people who have accumulated black money by taking bribes. Some of the bureaucrats who have been under the radar of income tax authorities were caught with properties and other assets, including cash of crores of rupees. Our executives and bureaucrats are also having hundreds of crores of rupees as black money.
The black money is illegally acquired money. A large part of it is avoided tax. Thousands of crores of rupees which should have gone to the government coffers go to the personal accounts of black marketeers. If the government had received this money it would have used it to take up new projects of development or would have completed the ongoing projects in shorter time.
The government would have built new hospitals, schools, colleges, roads, set up more industries, etc. thus, the black marketeers have blocked the country’s development for their personal greed. The bureaucrats and politicians who have accepted bribes have made huge money for them, and they have encouraged favouritism, making allotments to undeserving people. This does not augur well for society. Our country is the greatest democracy in the world. It upholds the values of fairness and quality. Such favouritism and pick and choose for bribery and gratification is against the principles of democracy.
Black money is docile money. It does not play any economic function. Thousands of crores of rupees lie idle in lockers and benami accounts making no contribution to the development of the country. India, at the threshold of fast economic development, needs huge amount of capital. The government funds are short because of tax avoidance and other corrupt practices by the hoarders of black money. If the black money reaches the government, there will be faster development.
Some people believe that the black money in India is a parallel economy worth thousands of millions of rupees.
It is also performing an important economic function. This money creates demand for goods and services helping the industry and producers of services. Lying in bank accounts whether in benami or other accounts, this money is utilized by banks for lending purposes to needy businessmen. Despite these arguments, one has to say that the accumulation of black money is a poor reflection on our society. Corruption and tax avoidance must be dealt with a heavy hand so that the dues to the government reach it and are utilized for the benefit of the society.