Impact of black money on Indian economy:
Preventing and controlling the circulation of illicit funds is a precondition for the establishment of a fair, transparent, and efficient economy. Because the economy is the backbone of a country, the presence of black money will cripple the economy, causing the country to fall into a state of stagnation. It is an obstacle to the development of the economy and will almost certainly bring it to a grinding halt. The existence of black money, also known as the parallel economy, has caused major disruptions in the country's economic planning. And the flow of this water is having a negative impact on India's entire economic system. Some of the most significant are as follows:
Poverty on a large scale:
The growth of the underground economy in our country has had a significant impact on the distribution of wealth and income in our country. The general public is harmed in a variety of ways by the government. Tax evaders are preventing the money from reaching those who deserve it. If the Indian government is successful in recovering and utilising all of the black money stashed away in tax havens, it will be able to pay off all of the country's outstanding liabilities while still having money left over for investment and development.
Inflation that is uncontrollable: When black money is allowed to circulate in the market, the amount of money in the system exceeds the amount of money that the government anticipates. As a result, the prices of commodities rise to levels that are significantly higher than normal. Having more money and offering more money on specific items is the direct result of more people having more money. Even if the government attempts to control the credit flow in the market by implementing the necessary measures, the amount of black money in circulation causes the process to be disrupted, resulting in some form of economic pressure.
Economic loss to the state exchequer: The Indian government has failed to collect the estimated amount of tax439 from the people on numerous occasions, and the underground economy that is fueled by black money must be given credit for this failure on many occasions. A report has been submitted to the Indian Finance Ministry, which depicts the spread of black money in various sectors such as real estate, mining, telecommunications, and so on. The study, which was overseen by NIPFP chief P.Kavita Rao, explains how illicit wealth is likely to exceed 10% of GDP in the near future.
The price of surrounding land tends to rise in tandem with the price of the piece of land being sought after, resulting in an artificially inflated price for the entire area when people with deep pockets are willing to pay more for a piece of land. As a general rule, people involved in the black money market are always willing to pay more for land because it allows them to convert their coloured money into legal currency more quickly.
Underestimation of GDP: Because a large portion of India's income is diverted to the unaccounted sector, the country's GDP has been underestimated. As a result, the parallel economy in the country has continued to grow and prosper.