Impact of black money as a black hole in Indian economy

Overview of back money

These days every where we are hearing the word black money/corruption from the news channel, news paper, Magazines etc. Corruption is increasing in India with full swing. Lots of scams was done by big co-operates, politician, High profile government executive persons. There are estimate that more $1500 billon USD are in Swiss bank from Indian account holder. This huge black money which is slashed though in Swiss bank is 20% of Indian economy. This black money put a great effect in Indian economy. As a result in India richer are going richer and poor are going poor every day in India. This type of economy is really threatening to India.

Black money

Black money is that money in which tax is not paid to government from that money and that money is generated by illegal activates likes bribes etc.. That black money remains unaudited /accounted in the duration of country's tax assessment period. It causes big losses of tax revenues to the government.

Impact of Black Money

Country's Economic Growth

The biggest impact of black money is that it halts the country GDP growth due to lack of funds from government. Government earning is depends upon the tax revenue. If the public will not pay the tax to government, Government cannot fund to particular sector which needs the funds for their better operation. Due to lack of funds government force to have take loan from World Bank or other's countries. Which will increases the burden of foreign debit on the government.

Increase the Inflation

The inflation rises while the black money circulates in the market. The price of eatable /others goods are increased to supply of that black money and less production of things in the market. So people which have that money they offer more price in the market. As compared from other person in the market.

Eliminating the national resources

The impact of black money heavily putts on the national recourses of the country. Our national recourses are eliminating not for the sake of our government purpose. Because some corrupt person are using the national resource for his own profit.

Increase corruption in society

Black money leads to increase the corruption in the society. The person who has the black money they will give bribes to politician, government officials for their business or for their personal work. These people can get everything what they want from the society. So other people face the problem. In that case qualified and eligible person have to do more hard work to get that job or business from government or from other source. Because they cannot give bribes for getting the job , contract etc. When they will get disappointed from his effort then they have force to gives bribes for particular task to politician, high profile government person. So they also involves in corruption.

Effects on Income distribution system

Black money increases the personal income difference in the society. The person who is paying his tax regularly, his income didn't match with other person who is not paying tax. So it widens the income gap in the society.

Ill legal transfer funds from India to other countries

Black money is transfer to foreign country through secret channel. This transaction of black money to foreign country violates the law of exchanges regulations.

Formation of parallel economy

The money generated through ill legal activities that are kept hidden from the concern government authorities. Taxes are not paid on that money. In opposite to this white money shown in accounts and tax paid on it. There is not transaction record of black money in the market. This is two different economy one is accountable and other is not accountable. Now a day's plenty of case of black money rises. The black money involved in illegal transaction accounts that its between the range of 20% to 50% of country's growth. The effect of parallel economy is too much on Indian economy.

Impact of India's reputation on the world

This Black money and corruptions put a very impression in India reputation on the world. Many big businessmen in world are pulling their hand back from India. They are not interested in to do business with India due to this corruption. It's also effect on Indian economy. In corruption perceptions index (CPI) India is ranked 87 numbers out of 178 countries. Due these big scams like 2G scam, common wealth game scam.

Cannot predict the key indicators of economy

Due to the presence of this black money in the market, which was not reported to the government. Government cannot give the exact figure of country GDP Growth, saving income ratio, sector wise national income of India etc.

Conclusion

Black money is big black hole in Indian economy. Overall the entire burden comes to the shoulder of common people of India. These scams broke the backbone of Indian economy and common people. These common people are fight for their bread and butter and these. These scams were done by politician and other high profile person but common people of India have to pay that scam in society.

To stop this corruption, we all people of India have to come forward like Anna Hazare and Baba Ramdev for fight against the corruption. So that government of India has to take some strict steps to stop this corruption in India.