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Q. How to fix the issue of Black Money: Discuss the ways to fix the issue of Black Money in India.
Nov 23, 2016 Related to : GS Paper-3

Ans :

Introduction-
Ever increasing issue of black money is haunting the Indian economic system. Though the total value of black money is unknown (as it is unaccounted money), but some reports claim that more than 100 billion rupee is slashed out of India in the form of black money.
Issue-
  • The government is undertaking various measures to unearth the black money and demonetisation of high value currency notes (Rs. 500 and Rs.1000) is the recent step for crusade against the black money.
  • To some extent demonetisation will unearth the black money, but it can’t unearth the entire black money.
  • In India, most of the income in circulation is untaxed, and it resulted into creating more untaxed income. Bulk of this money lies as gold, real estate and overseas assets.
How to tackle black money?
  • The black money cannot be generated without collusion by the state machinery, as it is difficult to generate or sustain untaxed incomes and wealth.
  • This collusion entails corruption, and it includes involvement of both politicians as well as civil servants. Hence this issue must be addressed first and it can be done through making funds of political parties transparent.
  • There is a need to bring the comprehensive reforms in the governance, so that citizens do not have to pay bribes for the state to perform its obligations.
  • The other most important reason for black money in India is higher rate of taxation, which resulted into evasion and avoidance. Hence efforts must be undertaken to reduce the tax rates.
  • General administration must be made more efficient as it ensures the low cost services in public service delivery mechanism.
Conclusion-
Since long time, the problem of black money is haunting the prospects of India in many ways. The black money has created parallel economy and posed severe threat to Indian economic system. The government’s recent decision of demonetisation of high value currencies is one of the important step to curb the black money, but it won’t suffice. Hence there is an need to bring comprehensive reforms in the governance as well economic system of the nation. 

 


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