The very concept of black money has undergone a great change.

In 1950s and early 60s evasion of income tax by big industrialists and businessmen was considered the source of black money. This evasion has been renamed as tax planning. It has resulted in saving a good amount as white money. Still huge chunks of black money are saved through more unfair means by corporate sector and businessmen of the highest level. But it accounts for not more than 20 per cent of the total black money that is generated in the country. There is a very large group of people which does not worry about tax planning. It comprises of millions of people whose income remains a little above the lowest tax limits. A cycle rickshaw puller in corporation towns earns Rs. 300 per day which is taxable. He does not pay any income tax. A large number of green grocers, petty businessmen, medical practitioners, advocates, chartered accountants, private engineers, small contractors, income tax and sales tax practitioners, mechanics, carpenters and artisans fall in this category. Some of them like medical practitioners and advocates declare only a small fraction of their income and pay nominal tax. This generates a sizeable amount of black money. These include teachers who dc tuitions, government servants who are in a position to earn through under the table dealings and those who do part time work besides the whole time jobs. Besides these are the so-called 'netas' who work as intermediaries and earn through many sources including partnership in business houses and industrial units. All this accounts for the remaining 80 per cent of the black money. It may well be named the household sector as most of the gains are shown in the names of women. Gone are the days when this Black money was kept in boxes or consumed on articles of luxury or on precious metals and stones. Apart of it is still consumed on these. But the rest is deposited in saving bank account, fixed deposits or invested directly. It has made many a man private finance- who never worries about maintaining accounts. From 1950s to 1970s the growth rate of India remained stagnant M 3.5. It was due, mainly to the dearth of capital investment as the taxes sucked the savings. It was only in 1972-73 that the saving rate rose to 16.2%. Since then it has been increasing. In 1978-79 it was 24.3% while according to Planning Commission it rose to 26% in February, 1985. The estimates depend upon the savings deposited in banks, post offices or 9 other agencies. At least 20% of the savings have always been turned inn capital directly. The result has been a steep rise in growth rate to 4.25% according to Dr. K. N. Raj. If direct investments or loans are accounted for and small industrialists are also taken into consideration the growth nm would come to about 5.5%. This boost in industrial and trade activities are with the help of black money. It is now known as parallel economy. It is the biggest source of capital investments. Thus black money has increased and the gross national product (G.N.P.) too. The 1987 estimates of 9 to 10% growth most probably depended upon capital generated through black money. The goals of 1987 having been achieved it was expected that in 1992-93 growth rate would be more

than 12% while the official projection was a mere 6.5%. The 2001-2002 estimates were much higher. With the advent of multinationals and the proliferation of kick backs there would be a quick rise in the investments and role of black money in Indian economy. By the end of the century only rise in the role of inflation gave the idea of saturation of black money in the parallel economy. Black money has benefited the business community and industries. Many new projects have been started in the corporate sector. Newspapers are full of advertisements for equity shares and debentures. They are all subscribed by the small savings which are a part of the black money owned by the people. As the government does not charge tax on the debenture interest at source there is a big demand for them. The market is stormed. The industry is no more starved. There is no tax on dividends up to Rs. 1000. A householder would take shares of different companies to evade taxes and help the industries. The number of saving bank accounts in post offices and banks more than doubled during the period from the middle of 70s to the middle of 80s. In the nineties they again increased by 80%. Most of this is black money. Banks give loans to agriculturists, small and cottage industries, business houses, big industries and the industries in the public sector. Thus all these run gainfully with the help of black money Investment planning would save him even from the withdrawal of tax redemption declared in the budget every year. Besides these the governments, specially state governments, enjoy the facility of overdraft from the banks. The government borrowings from the banks in 1984-85 were Rs. 4,951 crore. Besides these direct borrowings the banks also help antipoverty programmes started by the government. Two-third of the assets provided to poor people under Integrated Rural Development Programme (IRDP) was provided by nationalized banks from their black money deposits. During 1986-87 the Finance Minister lured black money owners to declare their black money through many schemes. A fraction was declared the rest was invested with impunity. Since then Indira Vikas Patra and Unit Trust schemes are good sources of evading taxes. The government financial establishments too secure a lot of black money. Indirectly the government too has a free access to more money. One of the greatest benefits of the black money is that it has provided jobs to more people in all the sectors as all the sectors have expanded. By capital formation black money has become job oriented specially in the small scale and cottage industries. It has also helped self-employed people through banks. If whole of this black money is netted by the government it would be spent mostly on administration i.e. on non-productive and non-planning schemes. It will add to the already surplus staffs in government establishments and public sector that are responsible for zero

growth or minus growth. The other factor is that if it is withdrawn from the capital market the whole economy of the country would be shattered to pieces as it is the most important source of capital generation. So it is allowed to proliferate. According to the Minister of State for Finance, as told in the Lok Sabha the black money in circulation in 1983-84 was about 36,786 crore. It was an unofficial estimate. It can even be double or treble of this amount as the government has no way to find the real amount. According to academicians and economists it may be simply a tip of the iceberg. One has just to guess what it could be in 1993. The amount invariably doubles every three years. Thus in 1993 it was roughly 3,00,000 crore and more than 6,00,000 crore in 1995. But if the 1983-84 amount was the tip of the iceberg what would it have been in nineties is one's guess. It may escalate to a mind boggling 48,00,000 crore or more by the end of the first decade of the century

It is a well-recognized fact that there exists in India a parallel economy based entirely on black money transactions. Black money, also described as tainted money, has seeped into every walk of life and is posing a great threat to the stability of our real economy. The most unfortunate aspect is that it has come to be accepted as normal fact of life. People hardly feel say qualms of conscience while dealing with it. In their jaundiced eyes, the black appears to be bright and beautiful. The problem of tax-evasion and black money cannot merely be looked upon as an anti-social activity or an unlawful activity. It is rather, like a cancer in the country's economy which, if not checked in time, will ruin the country's economy. One of the worst consequences of blackmoney and tax-evasion-is their pernicious effect on the moral fiber of our society which puts a premium on dishonesty and shatters the faith of the common man in the dignity of honest labour and lawful living. Black-money results in the functioning of a parallel economy in the country. The problem, therefore, needs immediate attention.

Black money in economic terms means 'unrecorded gains'. In other words, it is income which has escaped taxation. It may be hoarded in cash, but eventually gets itself converted into various assets like property, jeweler and durable consumer goods. Various estimates have been made regarding the quantity of black-money in circulation. It is estimated that the amount of black-money has reached over Rs. 20,000 crores. The black-money has now assumed vast dimensions and menacing proportions. It has been engaging the attention of the Government and the public. Black-money arises due to various reasons. Some of those reasons are : (1) The main cause of black-money is unrealistically high rates of taxes which strain human nature. India is today "the highest taxed nation", one eminent authority put it, "in so far as the rates of taxes are concerned, because no country in the world penalizes honest work and endeavour as ruthlessly as India does." (2) Tax-laws in country are so complicated that a layman fails to understand it. Even honest assesses are unable to file correct returns. This encourages people to evade tax. (3) Another cause of black-money is numerous controls, licenses and other governmental regulations it is no exaggeration to say that the controls, licensing and permit system has made black money indispensable to businessmen. Not only do import licenses command a high premium in the black market, but the licensing system has led to corruption at all levels. (4) Black money also arises from political activities such as elections where candidates spend well above the ceiling prescribed by the Election Commission. This huge expenses in turn makes them corrupt. (5) Black money also arises from illegal activities like smuggling, drug-peddling. (6) Perhaps the most important reason of tax-evasion and black-money is the genera! deterioration in the moral and civic standards of our people. Our businessmen employ very ingenious methods to generate black-money. Large amounts of black-money can be generated through the sale of fixed assets and scrap. Sometimes influential firms obtain quotas or import licenses in excess of their actual requirements and sell them at cash premiums. Industrial manufacturing licenses are similarly obtained through influences and sold to a second party at an enhanced value. Purchase bills ore over-invoiced or dummy bills are prepared. Large-scale smuggling of gold and various luxury items is an important source of black-money. Sometimes, relatives whose income is not taxable are kept on the payrolls of a company; they are paid their salary which is taken back in the forms of black-money. The laws governing the motion of black money exhibit peculiar trends. Returns on white money investments are discouraging poor and slow. But black-money multiplies at a fantastic rate. Returns on black-money investments are often to the order of 200 to 300 percent. Since money

thus generated is re-invested in such activities as hoarding and smuggling, it fetches still higher returns. Once black-money is converted into black wealth it is very difficult to track it down. Many steps have been taken by the Government from time to time to check the tax-evasion. Following Wanchoo Committee's recommendations the Government enacted the Taxation Laws (Amendment) Act, 1975. This act has brought on the statute various provisions for preventing tax-evasion and proliferation of black-money Deterrent punishments have been, provided for taxevasion. The other committees werethe Dangli Committee on Controls and Subsidies (1980), The Rajah Chelliah Committee, and the National Institute of Public Finance and Policy (1985). With a view of bringing about simplification and rationalization of the direct tax laws, the Government appointed a committee of experts known as the "Direct Tax Laws Committee1' in June 1977. The recommendations of the Committee are being processed for implementation. In 1976 the Government imposed a statutory obligation on the management to carryout physical verification of its assets for the satisfaction of the auditors to ensure that no money is created through the sale of fixed assets. Management is also obliged to maintain a proper record of the sale of scrap. Another step taken by the Government to unearth black-money was the launching of the voluntary disclosure scheme in 1975, No penalties were imposed on the persons disclosing black-money voluntarily. Demonetization of the notes of higher denomination has also been one of the recent steps of the Government to unearth black-money. Curbing of the smuggling activities in the country has been the main concern of the Government, The conservation of Foreign Exchange and Prevention of Smuggling Activities Act was passed for this matter on 19th December, 1974. la a bid to mop up black-money, the Government announced on 12th January, 1981 a new scheme of issuing a ten-year bond of the face value of Rs. 10,000 each. An ordinance for this purpose was issued by the President. The bonds will be known as 'Special Bearer Bonds.' The scheme gives immunity to the investor from prosecution as well as disclosure of the source of the money invested. Several other series of such bonds have been released in recent years. The Wanchoo Committee recommended a check on tax-evasion and proliferation of blackmoney. However, one aspect of tax-evasion was neglected by the Committee and it was simplification of tax laws. Unless the tax laws are simplified and rationalized, tax-evasion cannot be checked. Moreover, simple filing return procedure should be laid down so that even a layman could file it without resorting to the help of lawyers and experts. Some of the recommendations of the Waacboo Committee have been implemented by the Government. But a great deal of work still needs to be done in this matter. If the recommendations of the committee are implemented in the right earnestness, they would mitigate the magnitude of tax-evasion to a considerable extent. However the problem cannot be solved unless we, the people of India, realize our moral responsibility of contributing our efforts in the building of nation. This can be done only if hard work and honest enterprise become truly rewarding. Something more effective and meaningful should be done to stop the generation and proliferation of black-money

Swiss bank revealed India has more money than rest of the world This is so shocking.. ..If black money deposits was an Olympics event.. India would have won a gold medal hands down. The second best Russia has 4 times lesser deposit. U.S. is not even there in the counting in top five! India has more money in Swiss banks than all the other countries combined! Recently, due to international pressure, the Swiss government agreed to disclose the names of the account holders only if the respective governments formally asked for it.. Indian government is not asking for the details... ..no marks for guessing why? We need to start a movement to pressurize the government to do so! This is perhaps the only way, and a golden opportunity, to expose the high and mighty and weed out corruption! . Please read on..and forward to all the honest Indians to.. like somebody is forwarding to you... and build a ground-swell of support!for action ! . Is India poor, who says? . What is black money? Black money is essentially the currency used in black economy. Black, shadow, underground, unobserved, unofficial, subterranean, unrecorded, informal, irregular, second, twilight, parallel are all the synonyms used for the shadow economy. The shadow economy basically consists of legal and illegal activities outside the reach of the government. Smith (1985, p.18) provides a very broad definition of the shadow economy as market based production of goods and services, whether legal or illegal, that escape detection in the official estimates of GDP. Table 1 gives a better view of what a reasonable definition of underground economy includes. Underground economic activities are all illegal actions that fit the characteristics of classical crime transactions like burglary, robbery, drug dealing, etc. Informal household economy consists of household enterprises that (1) are small in terms of persons engaged, and (2) are not registered officially