There are several factors responsible for the outgrowth – of parallel economic system. It would be relevant to discourse those factors so that a right apprehension about the generation. growing and enlargement of black money can be made. The chief factors are: 1. Rigid and Complicated revenue enhancement & A ; high revenue enhancement rates implemented by the government- High revenue enhancement rates and faulty revenue enhancement construction have besides been responsible for the being of black money to a big extent. Take for case direct revenue enhancement.
Till late the revenue enhancement on income and on wealth was really high to ask for equivocation. The fringy rate of income revenue enhancement was every bit high as 75 per cent. And when it was combined with the revenue enhancement on wealth. it was still higher. The corporate revenue enhancement rate excessively was really high. In these fortunes the enticement / addition from revenue enhancement equivocation was significant. 2. Quantitative and qualitative Controls and licencing system- The system of controls. licenses. quotas and licences which are associated with misdistributions of the trade goods in short supply consequences in the coevals of black money. Since considerable discretional powers lay in the custodies of those who administered controls.
This provided them with a range for corruptness – ‘speed money’ for turning a blind oculus to the misdemeanor of controls. All this gave rise to trading in licenses. quotas and licences. malpractices in distribution and in the procedure ; it generated ample amounts of black money. 3. Monetary value and distribution controls- Price and distribution controls have in the yesteryear led to the coevals of black money on a important graduated table. Any monetary value control without any equal machinery of distribution and speedy agreement for increasing supplies is potentially a beginning of black money coevals.
4. Hawala market as the chief cause of black money generation- It is really good known that the international runners or the bargainers in other illicit trade can non finish their pecuniary minutess through any nationalized or other private legal Bankss in India. Besides. the sum of money in which the drugs and other arms are imported or exported is rather big. normally in one million millions. 5. Minutess is existent estate property- Since the sale of belongings on rental clasp is permitted by the authorities merely at a payment of certain sum of premium to it. the leaseholder by and large completes this dealing through the power of lawyer so that they escape from paying the premium which is fixed on the footing of the difference between the current market monetary value and the monetary value fixed by the authorities.
6. Inflation – Both a Cause and Consequence of Black Money- During rising prices there is a general rise in the consumer monetary value index or merely the cost of life of the people. As such. the workers and the assorted labours in the production procedure demand a rise in their rewards to run into the rise in outgo. This lead to increase in the cost of production of the merchandises. They try to run into this increased cost of production by increasing the net incomes margin through gross revenues monetary value. 7. Deterioration of the Quality and Morality of the General Masses- The aim of the concern is by and large profit maximization and that of authorities is societal justness and quality that goes against each other.
But it seems that both have joined custodies to maximise their ain net incomes at the interest of the common people. Bribing the authorities functionaries and allowing them gain some committees on the foreign export and import by pressing them to cut down the imposts responsibilities and simplify the process of certification are some of the common phenomenon in our day-to-day life. 8. Contribution to Political Parties- Ever since the Government decided to censor contributions to political parties in 1968 ; it prompted business communities to fund political parties. particularly the governing party. with the aid of black money. Apparently. this determination was taken to cut down the influence of large concern on the electoral procedure. but in pattern what happened was exactly the antonym.
Businessmens everyplace have by now learnt that they should pay a certain charge out of the black money to the caissons of political parties. ensuing. relaxation of assorted controls. allowing concern houses to come in countries reserved for the public sector. seting a big figure of banned points on the Open General License list etc. 9. The Political Instability Witnessed in the Country- In assorted provinces widespread horse-trading of the MLAs at the province degrees and MPs at the Central degree. In this procedure of purchasing political support. black money plays a important function. Consequently the finding of the governing political party to control black money has become really weak. As a effect. business communities feel they have an unchained licence to whirl black money. pay a little portion to the political parties as contributions and so bask the remainder the manner they like.
Unless the nexus between black money and political power is broken. there is no hope of commanding the coevals of black money or its nexus with offense. 10. Ineffective Enforcement of Tax Laws- Whereas the Government has an armoury of revenue enhancement Torahs refering to income revenue enhancement. gross revenues revenue enhancement. stamp responsibilities. strike responsibility etc. . their enforcement is really weak due to widespread corruptness in these sections. . The high rates of these revenue enhancements induce business communities to avoid recording of these minutess. This equivocation mostly goes unbridled and therefore sets in a concatenation reaction for the coevals of black money at the wholesale. retail every bit good as production degrees. 11. Coevals of Black Money in the Public Sector- Every consecutive five-year program is planned for a larger size of investing in the populace sector.
The undertakings undertaken by the populace sector have to be monitored by the administrative officials in Government sections and public sector projects. Tenders are invited for the assorted plants and these stamps are awarded by the bureaucratism in audience with the political foremans. 12. A Symbiotic Relationship Develops between the Contractors. Bureaucracy and the Politicians- A symbiotic relationship develops between the contractors. bureaucratism and the politicians and by a big figure of devices costs ‘are unnaturally escalated and black money is generated by underarm trades. Instability of the political system has given a farther impulse to this procedure.
Since the curates are non certain of their term of office and in a bulk of instances. the term of office is really short. the principle ‘Make hey while the Sun shines’ is adopted by most of them. The larger Numberss of dirts that are unearthed by the Opposition merely support the contention that immense investing in the populace sector is a large potency beginning for black money coevals. In this procedure. administrative officials act as agents for political leaders and therefore the link between concern. bureaucratism and politicians promotes the coevals of black money. 13. Ceiling on Depreciation and Other Business Expenses- Government has imposed limitation. It has besides circumscribed disbursals on advertizement. amusement. invitee houses. and payment of fringe benefits to managers.
The intent of these limitations is to protect the stockholders and consumers from the unscrupulous action of business communities. But business communities feel that these limitations are undue. They take the maximal advantage of these commissariats but do non like to portion with the staying portion of by assorted cloak-and-dagger devices ; they convert it into black money and utilize it either for conspicuous production to fulfill the wants of the rich and elect subdivisions of society. 14. Capitation Fees- Capitation fees are a really common term used in the context of admittances in large educational institutes and universities.
Capitation fees if another term used for the contributions given to these universities for the intent of seeking admittances when the pupils fails to procure the minimal cut off per centum required. By and large. the money rose by these colleges and institutes through these methods are non revealed to the income revenue enhancement sections. They are besides called the concealed income of these educational temples. Furthermore. the sum of capitation fees for large in Small Scale institutes scopes in hundred thousand and non merely in 1000s. 15. Unknowingness of the Consumers’ Rights and Duties- Unawareness of the consumer’s rights and responsibilities is besides another cause for the coevals of black money.
For illustration. the consumers fail to take a proper bill from the tradesmans so as to hedge the revenue enhancement to be paid on the purchase of those goods. There are more of such cases where the tradesman excessively fools the consumers. Sometimes. they charge more that mentioned as MRP on the package. They even paste false spines on the packages to conceal the existent value of the good. The excess money charged above the MRP is kept by them as black money. They do non pay revenue enhancements in such income. 16. Contributions to Charitable and Temple’s Trusts- Donations to charitable and temples trusts are another beginning of black income.
There are assorted issues related to the income of these trusts. It is by and large the ignorance of fans that prompt such a big sum of contributions to these temples. 17. Paying Bribes- Paying payoff to the authorities functionaries for assorted intents has become really common in modern times. Paying payoffs for obtaining legal countenances for the illegal immoveable belongings. paying payoffs to the traffic constables and others on the misdemeanor of the regulations and norms etc. are some of the illustrations of our malicious Acts of the Apostless. It is we that prompt and promote these public retainers to accept payoffs from the populace and work them.
