Black Money Essay

1300 Words Sep 7th, 2011 6 Pages
Causes for Generation of Black Money
There are several factors responsible for the emergence – of black money. It would be relevant to discuss those factors so that a correct understanding about the genesis, growth and expansion of black money can be made. The principal factors are:
(i) Beginning of the evil: The beginning of this evil can be traced to the Second World War. During this period supplies of industrial goods from the traditional suppliers of the West were cut off. This resulted in severe shortages in many vital lines. The British Government indulged in large inflationary finance for war efforts. This led to price escalation. Taxes too were raised sharply on higher incomes and excess profits. In these circumstances many
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It is also suggested by the Institute that the tax-evasion through the underestimation of production and sales is most pronounced in manufacturing, trade, hotels and restaurants.
(iv) Donation to political parties: Ever since the Government decided to ban donations to political parties in 1968, it prompted businessmen to fund political parties, especially the ruling party, with the help of black money. Ostensibly, this decision was taken to reduce the influence of big business on the electoral process, but in practice what happened was precisely the opposite. Businessmen everywhere have by now learnt that they should pay a certain charge out of the black money to the coffers of political parties and then be sure that the political leaders will only bark but not bite. Big business, in the process, has been able to tame the political leadership. This is evidenced by the relaxation of various controls, permitting business houses to enter areas reserved for the public sector, putting a large number of banned items on the Open General License list etc.
The political instability witnessed in the country in -various states has resulted in widespread horse-trading of the MLAs at the state levels and MPs at the Central level. In this process of buying political support, black money plays a crucial role. Consequently the determination of the ruling political

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