• 13 June 2024

Countering Black Money in India: Key Insights and Solutions

Jul 28, 2023

Black money is a pressing issue in India, encompassing both illegal earnings and legitimate income concealed from authorities to evade taxes and other statutory contributions. This hidden wealth is a major challenge for the Indian economy, causing financial leakage, underestimation of GDP, and hindering economic growth. In this article, generally, we will explore the sources of black money, its impact on the economy, and the measures taken by the government to tackle this issue.

Key Stats & Facts

Black money in Figures

Black Money in India: Causes, Estimates, and Government Responses

Tacklement of Black Money in 
Swiss Banks

Estimates of Black Money in Foreign Banks

Some of the dark secrets of black money

Here are some of the dark secrets of black money:

Impact on Indian Economy: Estimating black money in the economy is undoubtedly a challenging task due to its clandestine nature and deliberate efforts to conceal it. Furthermore, several factors contribute to the difficulty in arriving at precise figures:

  • Hidden Nature: By definition, it is undisclosed and hidden from official records. It operates in parallel with the formal economy, making it hard for authorities to track and measure accurately.
  • Multiple Methodologies: Different studies and researchers use varied methodologies to estimate, leading to divergent results. Basically, lack of consensus on a standard approach adds to the complexity.
  • Lack of Reliable Data: As transactions occur off the books, researchers have limited or no reliable data available for analysis. This absence of data makes it hard to construct robust estimations.
  • Changing Dynamics: The dynamics of these money generation and movement are ever-changing. Those involved continuously employ new tactics and techniques, making it difficult for estimates to keep pace.
  • Informal Economy: In many developing countries, the informal sector accounts for a significant portion of economic activity, where transactions are not adequately recorded. Distinguishing between legitimate informal transactions and it becomes challenging.
  • Underground Networks: These money often flows through complex underground networks involving cash transactions, tax havens, and shell companies. Generally, these networks are challenging to trace and measure accurately.
  • International Dimensions: These money can be stashed in offshore accounts and tax havens, crossing international boundaries. Moreover, lack of cooperation from foreign jurisdictions hampers comprehensive estimation.
  • Policy Impact: Accurate estimation is , generally, crucial for formulating effective policies to tackle tax evasion, corruption, and other illegal activities. However, without reliable data, policy decisions may lack effectiveness.

Also, read https://thelogicalpie.com/blockchain-technology-cryptocurrencies-nfts-and-the-debate-real-or-bubble/

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