Which one of the following effects of the creation of black money in India has been the main cause of worry to the Government of India?
- Diversion of resources to purchase of real estate and investment in luxury housing
- Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.
- Large donations to political parties and growth of regionalism
- Loss of revenue to the State Exchequer due to tax evasion
Explanation
Option (d) is correct
- The creation of black money in India has various adverse effects, but one of the main concerns for the Government of India is the loss of revenue to the State Exchequer due to tax evasion. When individuals and businesses engage in activities that generate black money (unreported and untaxed income), they often do so to evade paying taxes. This leads to a reduction in the overall tax collection by the government. The loss of revenue has significant implications for the government’s ability to fund essential public services and developmental projects.
