Black Money

Black Money

Recently, news on black money is doing the rounds in India. The black money which is the synonyms of corruption has found its place in almost every nation of the world with varying degrees. In India, the situation looks grime with successive governments facing the problem of black money. While the media is busy doing the post-mortem on issue of stashing the black money abroad, lets our knowledge on black money and the various aspects associated with it.

Ø  The terms black money was first used around 2000 AD.

Ø  The term black money is simply defined as income illegally obtained or not declared for tax purpose. Black money is generally sourced by weapons trading, drugs trafficking, prostitution etc.

Ø  When any financial transaction inside a nation carried out in black money, a parallel economy is crated Vis a Vis nation economy.

Ø  People from all walks of life including senior bureaucrats, politicians and business tycoons can be involved in black money creation.

Ø  In 2010, a report by Global Financial Integrity (GFI) stated that in 2010, India was among the top 10 developing countries in the world with a black money outflow of 1.6 billion  US dollars (8,720 crore rupees).

Ø  The creation of black money also takes place when corrupt citizen shy away from paying the taxes to the government.

Ø  Due to black money transaction, the funds allocated by the government for the welfare projects fail to reach the right beneficiaries. Due to this, the government is always misinformed about national income. It also increases inflation.

Ø  Swiss Banks are preferred location for black money because they do not disclose the particulars of the account holders who stash their income in order to avoid the payment of taxes.

Ø  The amount of black money stashed by corrupt Indians in Swiss Banks is so huge that if it is brought back to Indians and deposited on government treasury it can help in boosting the economy of the country.

Ø  As per the report released by the Swiss Banks, Indians are the largest group who has deposited money in the Swiss Banks.

Ø  As per the global Financial Integrity Study condition in 2006 calculated that developing countries have lost around 50 lakh crores rupees due to black money creation.

Ø  Hawala route is one of the greatest sources of creation and use of black money where money transaction takes place through non-Banking channels.