SUBJECT: POLOTICAL SCIENCE

TOPIC - BLACK MONEY

SUBMITTED TO:       SUBMITTED BY:

Dr. Sartaj Ahmed Muhammed Imran

Associate Professor B.A LL.B

1ST SEMESTER

SARDAR PATEL SUBHARTI INSTITUTE OF LAW

SWAMIVIVEKANANDSUBHARTIUNIVERSITY, MEERUT,
U.P

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 ACKNOWLEDGMENT

At the very outset, I would like to pay thanks to the almighty God. It gives me immense
pleasure to acknowledge and pay thanks, who helped me throughout the course of my work. I am
really thankful to our respected subject teacher Dr. Sartaj Ahmed, Associate Professor, Sardar
Patel Subharti Institute of Law, Swami Vivekananda Subharti University. Under whose learned
and scholarly guidance the present work has been completed. He helped us in a passive way. He
gave me moral support and guided me in different matters regarding the topic. He has been very
kind and patient while suggesting me the outlines of this project and correcting my doubts.
I thank him for overall support. Constructive suggestions have always been soothing and
desired effect, hence it is my duty to express my gratitude for his constant support and
encouragement.
I want to pay my sincere thanks to Dean, Faculty of Law, all the teachers of Sardar Patel
Subharti Institute of Law, Swami Vivekananda Subharti University. Last but not the least, my
thanks to all who have helped directly or indirectly in the completion of my work.         

Muhammed Imran

B.A LL.B (1st SEMESTER)

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As we know that in the present times, black money is used in our country up to a large extent so
it is not possible for us to define it in a very clear terms .Different people defines it in a different
way with different terms such as unaccounted income, black income, black wealth, underground
wealth, or at economy level it is known as black economy, parallel economy, shadow economy,
and unofficial economy. Therefore, all in all these terms usually refers to an income on which the
taxes are imposed by government but have not been paid. Black Money refers to that money
which is not fully legitimate property of the owner. It is normally received in terms of cash from
economic activities. i.e. Individuals who received it must hide it, spend it on for the fulfilment of
their needs.

According to National Institute of Public Finance and Policy (NIPFP) defines-

“Black Money is the aggregate of incomes which are taxable but not reported to authorities.”

Apart from this, the term black money would also include legal income that is concealed or hide
from public authorities: To evade payment of taxes which includes - income tax, excise duty,
sales tax, stamp duty, etc ;

To evade payment of other governmental or statutory contributions; To evade compliance with

the provisions of various industrial laws which exists such as the Industrial Dispute Act 1947,
Minimum Wages Act 1948, Payment of Bonus Act 1965, Factories Act 1948; To evade
compliance with other laws and administrative procedures applicable in India.

PRESENT STATUS OF BLACK MONEY IN INDIA

As we know, in the recent times the issue of black money and corruption has come into being
with participation of our civil society and parliament institutions. In this context two main issues
have come into being- Firstly, without any adequate factual basis, a large magnitude /amount
of black money and unaccounted wealth stashed abroad every year. Secondly, Govt. Response
to address this issue has been inadequate or we say considerably negligible. Now let us look at
the picture of Black Money in India Almost every sector in our country generates and uses black
money for its survival in the market, society....etc. It includes Real estate, financial market,
bullion & jewellery market, non-profit organisations, external trade and so on. Apart from this, in
India black money persists due to the existence of Demonstration Effect i.e. the way to live a life
in terms of others point of view or we say live a life by looking at others livelihood.

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People of India are very much affected by the lifestyles of other people of the society who are
maintaining considerable high status, and in turn want to be like them. For this, they want to
generate money by any means. Therefore to fulfil these desires or to maintain their status in
society they force themselves to generate and use black money Another reason for the existence
of black money is the presence of Corruption in every field of the economy. For example, 1. if
any common man wants to get a job in any public institution like in a bank, or any transport or
educational institution etc., then he will have to pay adequate consideration to the authority of
that respective institution i.e. Bribe have to be paid. For this, common man is forced to generate
money by illegal means. In this way, we can say that, both, the public authority and a common
man generate and use black money in a considerable manner. 2. Likewise, if a student wants to
get admission in any big and reputed institution, he will have to pay some extra money other than
fees in the form of Donations etc. 3. Also in some Educational institutions, more fees are charged
for examination forms or for practicals which is considerably higher than the quoted fees. In this
way, black money is generated and used in big and reputed educational institutions. Another
aspect of black money is very astonishing for society from which significant amount of black
money is generated and used and that is the spirituality. Look at the cases of NIRMAL BABA
and RADHE MAA: If anyone wants to meet Nirmal Baba personally then he shall have to pay
such heavy amount which may be out of one‟s pocket. Similarly, to listen to his teachings in
“Nirmal Darbar”, one has to pay a minimum amount of around Rs. 2000/- per seat at the back
rows, which increases as we move towards the front rows of the auditorium, with a validity of a
day only. Also his bank accounts are being credited regularly by many hidden donors. In this
way, this one person is earning a lot of money by fooling innocent people by camouflaging
himself as a spiritual leader, and uses such money for unofficial purposes, hence, generating a lot
of black money. Radhe Maa, who calls herself as avatar of „Maa Durga‟, wears heavy jewellery
and bridal dress and heavy makeup. Her jewellery and bridal dress are never repeatedly worn.
This shows her earnings which are officially concealed i.e. it is all Black Money. In India people
are very emotional towards spiritualty and many such „BABAs‟ & „MAAs‟ make misuse of
their emotions and sentiments and referring themselves as spiritual leaders generate a significant
amount of black money. Another sector which generates and uses significant proportion of black
money is the Indian Political System.

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The Leaders/Ministers of this system focus only on their personal growth instead of the
economic development of the country. At the time of elections, they spend a significant amount
of money to win or, as is said, to get a chair and after winning they just focus on earning large
amounts of money by taking bribes, even for small activities. Such Black Money is either
deposited in foreign banks like SWISS BANK or invested in Real-Estate in other countries like
Dubai etc. According to 3rd report published in May, 2012 SWISS NATIONAL BANK
estimates total deposits as below:

Country Money Deposited

INDIA $ 1,456 billion

RUSSIA $ 470 billion

UK $ 390 billion

UKRAINE $ 100 billion

CHINA $ 96 billion

From above analysis it is clear that India has a Top Position in case of black money deposits.
Even our Prime Minister „Dr. Manmohan Singh‟ lives in a house which has 365 rooms whereas
a common man with an average income lives in a simple house containing only 2 to 3 rooms.
But many are not even getting this and they are the people living below poverty line and live in
slums. This data shows that our ministers only know about Generating and using Black Money
and instead of Developing they are Deteriorating India. Another aspect through which significant
amount of black money is generated is by Manipulation of Accounts in which the accounts are
manipulated to misrepresent the authorities which help to generates large amount to black
money. Accounts may be manipulated by following ways

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 Effects Of Black Money

It leads to increase in inequalities of income which widens the gap between the rich and the
poor people of our country. It leads to wasteful consumption in our economy i.e. money which
should be used for investment but wasted at consumption. It leads to decrease in working
efficiency of people as they get used to earn Black money by easy means and they start
preferring leisure to work.

FUTURE CHALLENGES OF BLACK MONEY

Above we have studied a comprehensive analysis of factors leading to generation of black

money in our country. At the same time, it is not possible to curb, control and finally prevent the
generation of black money in near future as well as repatriation of black money. It is possible
only if a comprehensive mix of well defined strategies and policies is pursued with patience and
perseverance by the central and state government and put into practice in a very co-ordinated
manner. There are some challenges which might be faced by the government as explained
below:-

To control criminal activites

As we know, in country like India there are many illegal activities and crimes that lead to
generation of significant amount of black money incomes. It includes counter fiet currency, drug
trafficking etc. Each of them is a major source of unaccounted or black money. So to control
them is one of the greatest challenges before the society as well as for the govt... Therefore, it
requires all agencies of both central and state government to actively make strategies to bring
them to a halt.

Repatriation of black money stashed abroad:-

I think it is the one of the biggest challenge of our government of India to bring back money
from abroad .However; it is a goal that cannot be achieved by government action alone as it
requires coordination and co-operation of other countries as well as authorities to achieve this.
So, government needs to evolve an environment & create legal mechanism through global
consensus, co-ordination & by making specific bilateral treaties. Special Investigation Teams:-
In order to control and curb prevalence of black money in India, govt.has makes a team which is

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known as Special Investigation Teams to investigate on the issue of black money. So, at present
in India, it works under the chairmanship of retired SC Judge B. P. Jeevan Reddy. But its success
depends upon the team members of committee as it requires a significant effort to work on this
issue. So, government must take quick action in setting SITs, then potential black money holder
will definitely reduce. It is big challenge in front of government to properly implement the
special SIT which helps to bring back stashed black money in the country

To control corruption:

As all know that there is only one major reason behind the generation of black money is –
corruption. It is perceived as one of the biggest challenges faced by our country which is almost
impossible to counter. As we study above all the factor that leads to generation of black money
are directly related to corruption. So to control black money .it is essential to curb and control
corruption which requires multipronged strategies with assigned the responsibility to prevent it.
For this the government has introduced the Public Procurement Bill 2012 which intends to
regulate public procurement by all Ministries and Central Government Departments. This bill
aims to ensure transparency, fair and equitable treatment of bidders, promoting competition, and
enhancing efficiency and economy in the public procurement process. Therefore at last, I want to
say that if govt. really wants to control corruption, then there should be proper implementation of
Public Procurement Bill 2012.

RECOMMENDATIONS & SUGGESTIONS

After studying the concept of black money & its various sources of generation in our country,
it‟s time for some Recommendations & Suggestions that may help to control black money in
India. These are as follows: Our Government should make its foremost objective to control
black money in our country. E-Governance should be started by the Government i.e. the use of
technology be made as far as possible like ERegistration with Revenue Authorities, E-Filing of
Returns, etc. because more the involvement of human beings, more is involvement of corruption,
ultimately generating Black Money. Black money revolves around in cash only so the
Government should put restriction on cash transactions wherever possible and instead should
increase the use of Plastic Money like Debit Cards, Credit Cards, etc. and by other such means.
Agriculture income should be taxed for those who have both the agricultural as well as non-
agricultural income. The Government should not give absolute power of work to any one

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person as it creates monopoly and instead should segregate the work among many persons. All
the aspects of its generation should be looked into and stopped. Competitive bids should be
motivated.

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 CONCLUSION

This paper presents the different aspects of black money and its relationship with policy and
administrative measures in our country. It also reflects the policy and strategies that the
Government has been pursuing in the context of recent initiatives, or need to take up in the near
future, in order to address the issue of black money and corruption in public life. There is no
doubt that existence of black money has a significant impact on social, economic and political
levels of our lives which has a significant effect on the institutions of governance and conduct of
public policy in the country. So we can’t say that India is a poor nation. Infact, India is amongst
the Richest Nations if Stashed Black Money is brought back & converted to White Money and
fresh generation of Black Money is put to an end.

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REFRENCES

Gupta, S.B. (1982), Monetary Economics-Institutions, Theory & Policy, S.Chand and
Company, New Delhi. Ahuja, R. (2007). “Social Problems in India” (2nd Ed). Jaipur: Rawat
Publications. Nafees.A.Khan, P.T.Chaudhary, "Black Money: Its Impact on the Indian
Economy," Tax Reforms in India (Ed.), Srinawas Publications, Jaipur,pp. 150- 155,2003.
Sukanta Sarkar (2010). “The parallel economy in India: Causes, impacts & government
initiatives”. Economic Journal of Development Issues, Volume 11-12 no.(1-2) p.124-134. Vijay
Kumar Singh, (January 2009) “Controlling money laundering in India – problems &
perspectives” To be presented at the 11th Annual Conference on Money and Finance in the
Indian Economy- At the Indira Gandhi Institute of Development Research

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