14 Lakh Crores Of Black Money In India: [Infographics]

INTRODUCTION

Factor incomes and property income that should have been declared to the relevant tax authorities but was not is referred to as black money. There are many ways of raising black money. These include payment of bribes, misuse of public property, tax evasions, illegal land transactions and embezzlement of public funds among others.

Black money in India is a very complicated and delicate affair. This is because it is part and parcel of the Indian economy. Black money in this country is mostly invested in perfectly legal ventures such as real estate and share markets. These are business ventures that rake in huge financial gains every year. Due to this, they are ideal media for the circulation of black money. It is; therefore, quite tricky trying to arrest the situation involving black money. Though it is undeclared money to the tax authorities, it forms a substantial part of the Indian economy. If you touch black money, you are also subjecting the economy to a potential threat: the domino effect.


MEDIA FOR BLACK MONEY

In India, illegal flow of money takes place through a process popularly referred to as Hawala. In this process, a transaction may involve the remittance of money from one country to another. An intermediary in the country of origin known as a Hawaladar, receives money from the sender and gives out an authentication code. The hawaladar then issues instructions to their representatives in the recipient country to effect the payment to the recipient in the country’s local currency. The recipient gives out the authentication code received from the sender and gets their money. The hawaladar in the country of origin then pays their representative in the recipient country through whichever means available to them.

This is a very common practice in India. By so doing, it is almost impossible to trace such money. This is because although money is sent to another country, there is no physical movement of the money itself. Black money can then be moved around the globe fast, easily and without a trace.


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Black Money In India

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 THE GOLD ECONOMY

The Indian economy, without any fear of contradiction, can be referred to as the gold economy. This is because India is one of the largest consumers of gold in the world. However, in the 90’s the government realized that investments in gold were not doing any justice to the country’s foreign exchange reserves. Consequently, it restricted the importation and exportation of the world’s most valuable mineral within its borders.

Due to the restriction, trading in gold on the black market went in overdrive. Consequently, black money in India got a medium of exchange. It was being used to import gold and sell it locally at the black market. Nevertheless, this would not do any good to the country’s economy. Money was flowing out of the country leaving the country’s resources depleted as few individuals grew obscenely rich.


 THE SERVICE SECTOR

Black money in India has also contributed to the growth of the service sector. This is because valuation of services is usually very tricky. Unscrupulous people have exploited this loophole to inflate the cost of services so as to hide their illegally earned money. This is a very common practice. A service costing Rs 10 lakh would be listed as having cost Rs20 lakh. The difference in the figures is the concealed black money that somebody is holding on to.

The service sector in India has grown in leaps and bounds due to specialization and increased material production. The sector is also said to be unorganized; hence, very difficult to monitor and document. The surge in the growth of the service sector in India has provided a fertile ground for the multiplication of black money. This is because it provides an easy avenue for concealing undeclared incomes.


 TACKLING BLACK MONEY IN INDIA

India is currently struggling with the technical issue of black money. However, there has been rising criticism leveled at the Indian government because it has not been seen to taking any action. A bank was revealed to have acted like a hawala. Some multinational corporations and private banks were also getting involved in the illegal activities. But there was no substantial action from the Indian government.

Under the weight of this criticism, the government has decided to crack the whip. The first stop is the Swiss accounts. It is believed that many Indians have stashed a lot of their black money in Swiss banks. Switzerland has been under intense pressure to bring down the wall of secrecy that surrounds the account holders in their banks.

The Swiss banks had to release a list of their account holders to the Indian government.  The list sensationally included names of prominent business people, politicians as well as their families. In the matter of black money abroad, India got a little help from the French government. A French investigative newspaper revealed that more than one thousand Indians were holding Swiss accounts full of black money.

However, taking actions on some of these individuals has proved difficult. It has roped in the European Union, which opposes the move saying that it is based on stolen data. Consequently, India has its hands tied at the back.

Corruption has not made things any better in India. Out of 175 countries, India is ranked 76th in the corruption index. The high corruption index has been attributed to many causes. They include excessive legislation that makes it difficult for people to conduct legal businesses prompting them to opt for the black market. In addition, the taxation and licensing systems in the country are very complicated as each government department is opaque in terms of bureaucracy. The monopoly of government enterprises in the production and distribution of goods and services has also contributed to the high rate of corruption.

Politics has also played a great role in perpetuating black money. It is strongly believed that most of the black money is actually within the country’s borders. Only about 10% is held in foreign accounts or investments. In fact, a part of the 10% also finds its way back into the country through round tripping. However, the politicians are cleverly sending the authorities on a wild goose chase. They are sending the authorities after the 10% so that there will be no attentions to the trillions stashed at home. Unfortunately, the government seems to have swallowed this bait, hook and line.


SOME FACTS ABOUT BLACK MONEY IN INDIA

The figures attributed to black money in the country can run an entire economy. In 2012, a whopping 1.34 billion Swiss francs were held by Indian individual account holders in the Swiss banks. This implies that individuals are reaping massively from black market operations. The figure is too enticing and may tempt more people to venture into the black market.

Between 2001 and 2010, a total of $123 billion represented the black money outflow from India. India is among the fastest developing countries but with a high rate of black money outflow. This is according to the Global Financial Integrity report presented in 2012. However, this may just be a tip of the iceberg. More may be lying under the surface of the sea.


THE CHALLENGE OF FIGHTING BLACK MONEY

The biggest challenge in fighting black money is its conversion to white money. In many cases, wealthy individuals may sponsor political candidates using black money. When these candidates get elected to various political offices, they feel obliged to return the favor. Consequently, they put into place policies and laws that favor their black money godfathers. The black money godfathers start winning government contracts and; hence, start making white money. This is a case whereby illegal money is turned into legal money within the country.

Some individuals also store black wealth in terms of jewelry. They approach a jewelry store and give a certain percentage of the proceeds to the owner of the store. The owner in turn gives the black marketer a receipt on which they pay the capital gains tax. The money turns white – just like that!

The biggest challenge in tackling the issue of black money is; perhaps, the fact that its contribution to the Indian economy is real. As stated above, most of the black money has been invested in legal businesses within the country. These include real estates, share capital and jewelry among others. Chasing the black money means pulling down such businesses. This, if not conducted with utmost care, may bring the economy tumbling down.

You can now understand why the government is doing very little to combat black money in India. It is clearly not a question of apprehending the suspects, most of whom are influential people in the society, but the ramifications involved. As such, the Indian government finds itself in a very unenviable position: between a rock and a very hard place.

Conclusion

The issue of black money in India is very complicated. Unless the government takes proactive measures to combat the problem, any attempts at solving it are bound to fail miserably.

References:

  • https://en.wikipedia.org/wiki/Indian_black_money
  • http://indianexpress.com/article/india/india-news-india/black-money-government-collects-rs-3770-crore-from-over-600-stash-holders/
  • http://www.bbc.com/news/world-asia-india-35610332
  • http://articles.economictimes.indiatimes.com/2016-02-14/news/70616286_1_black-money-scam-money-unaccounted-money
  • http://www.business-standard.com/article/current-affairs/swiss-surprise-may-spoil-india-s-hunt-for-black-money-116020200679_1.html

Few practical and useful Safety measures for women

Safety has always been a concern for women especially when they are alone. One cannot guarantee that a particular street or place is completely safe for women when she is alone. The increasing number of violence and crime against women has been an issue which instills fear in every woman. It is always better to be cautious and well prepared than being sorry. A quick wit and awareness can save women from getting victimized.

Here are some safety measures that can help women from getting victimized

  • Join defense classes which teach you to act promptly in realistic attacks, such programs should include proper training by instructors where you get to practice mock attacks.
  • Though there are defense classes that teach women to fight when attacked but situations at times are quick and surprising and one might not be able to act upon promptly. So as a woman you should also learn to be more aware about the surroundings and various possibilities or ways an attacker can use to attack you, for example avoid walking desolate streets alone.
  • Go by your gut feelings, often women have the power to sense danger be it from a situation or a person. So women should be alert and go by their instincts.
  • Relying completely on safety tools or personal alarms cannot be always helpful. Any safety tool is helpful only if used at the right time and right way, often during attacks women might panic and might not be able to use safety tools at the right time, so go by your presence of mind and body to fight the situation.
  • If you get trapped in a situation which was highly unpredictable, try every possible way to escape. It is never safe to act upon attackers’ orders even if the attacker assures you that you would not be harmed. Try quickly running away from the place and shout for help or use methods to alarm and grab as much attention as you could.
  • More than practice or training self defense comes from your mind. Keep yourself motivated that you can defend and fight back for yourself, because this will save you from getting static during physical attack. So make the most of the single chance you get by hitting quickly at sensitive points like eyes, nose or groin.
  • Keep updating yourself with recent and old methods used by attackers to prepare methods to fight and avoid falling prey to such attacks.
  • Various ways of being attacked while using your car include, halted traffic attack, Blocking vehicle attack, carjacking and many more. The safe way to avoid such situations is to keep the doors of the care locked and windows up. Also learn and follow protective and defensive Driving techniques.
  • Other methods include never opening the door until you are sure that you know the person outside is genuine while putting up at any hotel, not sharing your identity and personal as well as sensitive information on internet especially while using social networking sites.

With these tips you can keep yourself prepared mentally, morally and physically and save yourself from such attacks.