Black Money

Black money is the money on which tax is not paid. It is hidden from the government just to keep it exempted from tax. There are a number of means used by people to keep their money under wraps and escape from paying the tax. Here is a look at some of these and also the way government has tried to curb this problem in the recent past.

Many big business men, ministers and celebrities are known to have deposited their money in foreign banks. Though the total amount deposited by Indians in foreign bank is not known, there are many reports claiming estimate amount of money deposited by Indians in their foreign accounts. It has also been claimed that illegal funds of Indians in foreign tax havens amount to around US$ 500 billion.

government took a major step to eradicate the problem of black money. On the 8^thof November 2016, Narendra Modi announced that 500 and 1000 rupee notes would cease to be legal from midnight. ATMs all across the country were closed on 9^th and 10^thof November. These were refilled with 2000 rupee notes and new version of 500 rupee notes. The old notes were removed completely from circulation. As per the government this action would bring down the accumulation of black money and bring down the illegal businesses and activities that are funded by the same.

The sudden announcement of the withdrawl of old currency notes and the shortage of new notes created havoc in the country and disrupted the normal functioning across of various sectors for several weeks. The decision had mixed reactions from the public. The decision was condemned by many stating that it has only caused inconvenience to the general public. It has been criticized for being poorly planned. Public came out to protest against the government in various parts of the country.

However, the government claimed that the move is aimed at improving the overall condition of the society and people will see the positive results in the long term.

While the move was condemned and criticized by many here is a look at the positive impacts of demonetization:

• Black money was majorly destroyed due to this move of the Modi government.
• It came as a shock for the political parties and ministers who used black money for campaigning and other activities. It disrupted the ill practices used by these parties to win votes.
• The amount of black money floating in the real estate sector saw a huge dip.
• Hawala transactions that promote terror activities came to a halt.
• It has also impacted Maoists and their movements negatively.

The issue of black money has been eating the country like a parasite. While demonetization has helped in controlling it to some extent there is still a lot that government should do to get rid of this issue.