Bgs: Corruption in India
Cause of black money: 325 Black money is cash received from underground economic activity or black market on which tax is not been paid to the government. Black money in economic terms is regarded as unaccounted money or unrecorded gains. Rationing system: Black economy originated in India during World War II when India was facing acute shortage of daily necessities. This was the time government adopted rationing as a remedy measure to resolve the demand supply mismatch. By rationing government introduced a system of control where prices of goods were no longer decided by Interaction of market demand and supply. This led to the beginning of unauthorized sale goods at higher price. This control over the price continued post 1947 promoting black marketing in India and once government institutionalized price control, it grew enormously. High tax rate- Tax rate were abnormally high during initial tax regime of India. Tax rate applicable to an individual were as high as 97.50%. Such high Tax rates probed individuals to evade tax as much as possible resulting in huge accumulation of Black Money. Complicated tax law- Tax Laws in India are so complicated that even honest tax payer fails to file correct Income Tax returns. This compels the individuals to evade tax to avoid long complicated procedures involved in paying tax. Bribe-- Bribe is one of the main source for generation of Black money as this money is not disclosed to Income tax office. Bribe is used as means to get work done at a faster pace by all kinds of people from peon of a company to the owner of a company and is used for all kinds of work i.e. from getting admission in school to getting a job in a company, from getting birth certificate of a new born baby to the pension of a retired person. Even Entertainment industry has leveraged the concept of bribe to make their scripts juicy, they have used this topic over and over to make famous movies and serials like movie “Kala Bajar” and serial “Office Office”