the rampant of black money and its causes.
The rampant black money has seriously affected the national economy and the people’s livelihood and has become an incurable chronic disease in Indian social life.
Black money refers to money generated through illegal means.
One category is illegal income, such as income obtained through illegal price increase, private sale of houses at high prices, arbitrage of foreign exchange, speculation, black market trading, human trafficking, bribery, gambling and other activities.
This part of black money accounts for the majority in India.
The other is the income concealed, that is, the part of the income evaded by companies, enterprises and professionals such as lawyers, doctors and artists.
This kind of black money cannot be underestimated in India.
According to the quasi fatigue report on black money submitted by the National Institute of public finance and policy of India (hereinafter referred to as the Institute of Finance) to the government in March 1985, the income of tax evasion in 1975-1976 was 57% to 87% of the income of tax payment, and 68% to 139% in 1980-1981.
The report points out that these percentages should be adjusted for other reasons.
After adjustment, they should be 186% in 1975-1976 and 243% in 1980-1981.
This shows that the vast majority of taxable income has evaded tax.
India has a wide range of sectors or industries producing black money, mainly including real estate industry, large-scale manufacturing production sector, construction industry, wholesale industry, film industry, special occupation, smuggling, etc.
Other countless illegal acts in real life also produce black money all the time.
Among them, bribery is the most important.
For example, tips paid for the smooth and rapid progress of legal and normal activities (including activities outside the economy).
Remuneration paid for obtaining benefits (illegal or legal) in the fields of production, consumption and distribution interfered by the state.
Financial gifts given to obtain the qualification of public office or university admission.
The income obtained by the leaders of social groups through some unjust acts, such as the money obtained from the factory by the trade union in favor of the factory and harming the interests of workers.
The remuneration earned by some officials for arbitrarily modifying the existing laws and regulations to meet the needs of a certain class.
Money obtained in violation of various government regulations.
Obtaining rewards for foreign businessmen for violating the regulations on the control of foreign exchange. wait. Bribes or disguised bribes are joked with various names: “service money”, “quick money”, “secret Commission”, “smooth money”, “pretend to be deaf and dumb money”, etc.
In short, India’s black money has a wide range of sources and many ways.
It can be said that black money is everywhere in Indian society.
How much money is there in India? For more than 30 years, economists, including the special investigation committee appointed by the government, have investigated black money in different periods.
The first is the research and analysis of economist n.
kaldow in the 1950s.
He divided the national income into three parts: wages, the income of self-employed people and profits, interest and rent.
He removes the wage part to obtain the non wage income, then subtracts the non wage income from the income exempted from income tax, calculates the non wage income after tax exemption, and finally estimates the non wage income actually paid tax.
The difference between the two is black income.
According to his estimation, the black money in 1953-1954 was 6 billion rupees, which was 6% of the gross national product of that year.
In 1971, the government appointed a “direct tax investigation committee” (also known as the Royal Hill Committee), which basically used the method of kaldow to estimate the black money in 1961-1962, 1965-1966 and 1968-1969.
They were 7 billion rupees, 10 billion rupees and 14 billion rupees, accounting for 4.4%, 4.2% and 4.
2% of the GDP respectively.
However, in his “memorandum of dissent”, D. K. lanecka, one of the members of the committee, proposed that the Committee underestimated the value of black money.
His own estimates were 11.
5 billion, 23.
5 billion, 28.
33 billion and 30.
8 billion in 1969-70, accounting for 7.2%, 9.8% and 8.
6% of the gross national product respectively, which is much higher than the committee’s estimates.
In addition, laneka estimates that the annual growth rate of black money is 1:3%, while the annual growth rate of national income is 11%.
Burst into the 1980s, 0 P.
Jopala slightly revised the method of the Royal Hill Committee and estimated the generation of black money from 1960-61 to 1976-77.
It was 100 million rupees in 1960-1961, accounting for 6.
1% of the gross national product, and 80.
98 billion rupees, accounting for 10.
5% in 1976-77.
There were ups and downs in the middle years, but the basic trend was almost the same as that of jopala, Pram Gupta and sanjif Gupta estimated the amount of black money from 1967-68 to 1978-79.
The result of their calculation is that the black money in 1967-68 was 30.
34 billion rupees, accounting for 9.
5% of the official GDP, and then increased year by year, reaching 168.
67 billion rupees, accounting for 48.
76% in 1978-79.
There are great differences in the amount of black money estimated by economists using different methods.
Even with similar methods, the estimates made by different scholars also have a large distance.
Since black money is an illegal underground asset, it is impossible to make accurate statistics.
Scholars who make these estimates also believe that their figures are a push.
The curse is that, regardless of the differences between various estimates, the basic fact over the past four decades is that the scale of Indian black money is expanding, both in absolute value and as a proportion of GDP.
Moreover, compared with some other capitalist countries, India’s black money problem is serious.
It is estimated that black money in the United States and Canada accounts for 20% of GDP, Italy and Sweden account for 15%, Britain and the Soviet Union account for 10% and Japan accounts for 5%.
Indian economists have done a lot of research and Analysis on the causes of black money.
They put forward them from different angles such as “cause”, “factor” and “opportunity”, which can be summarized as follows.1. High tax rates.
The tax rate is too high, and there is a big gap between the income people expect and have the ability to obtain and the income allowed by the law, which drives people to evade taxes.
This phenomenon existed until 1972-73, when the income tax rate levied on high-income people above 200000 rupees was as high as 97.75%. For example, a surgeon who has declared an income of 200000 rupees can make a net income of 1000 rupees for a flat gland operation, but after paying tax at this tax rate, he can only earn 23 rupees.
In order to earn 1000 rupees, he must have 44 such operations, which naturally drives him to evade tax.
However, since then, the tax rate has been reduced, and the phenomenon of tax evasion has not been reduced.
The tax reduction is just more comfort for tax evaders. K. Dr. n. cabola’s survey of income tax rates and tax evasion from 1971-1972 to 1978-1979The conclusion is: “reducing the tax rate can not guarantee the reduction of tax evasion.
It is difficult to expect people to obey the tax law by using” soft “methods (such as cutting the tax reduction rate) instead of” hard “methods (making tax evaders bear high costs and risks).”.2. License system, license system, quota distribution, legal price of some commodities and a series of controls.
In order to obtain convenience in these controlled areas or violate them for the purpose of obtaining private interests, some people bribe officials of relevant functional departments of the government, thus forming black money.3. The increase of government expenditure and the expansion of public sector funds.
These two provide more opportunities to collect illegal commissions, resulting in more black money.
Black money sucking of the Institute of Finance ǜ Over the past three decades, government spending has increased 50 times in absolute terms, rising from 9% of GDP in 1950-1951 to 27% in 1982-1983.
When implementing the five-year plan, there is always a large amount of investment for the development of public enterprises.
The officials in charge of these projects need to recruit some contractors and consult with government leaders.
Therefore, the contractors, officials in charge of the project and government leaders work together.
They often artificially increase the cost of the project, and black money will be generated and enter their pockets.4. Donations to political parties.
In 1968, the government decided to prohibit the business community from donating to political parties.
This decision was intended to weaken the influence of large business consortia in the election, but it backfired.
The ban prompted the business community to donate black money to political parties, especially to the ruling party.
Over the years, from members of the state legislature to members of the central parliament, they have to rely on black money to buy votes.
For example, some people familiar with the election estimated that the 1980 people’s assembly election generated at least 1.
689 billion rupees of black money.
They are based on this foreign analysis: imagine that among the 4633 candidates participating in the election, the real enthusiasts are 3633.
They spend at least 1 rupee per vote, that is, each candidate spends at least 500000 rupees in his constituency of 500000 voters.
According to the Eucalyptus election law, the election expenses of each candidate shall not exceed 35000 rupees, and the industrial and commercial enterprise companies have to provide election funds to candidates or political parties.
In this way, 465000 rupees exceeding 35000 rupees must come from or become black money.
Therefore, these 3633 candidates spent (i.e. generated) at least 1689 million rupees of black money in the election.
In fact, many candidates often spend several times as much black money as 465000 rupees.
Some economists estimate that the amount of black money caused by an election may reach four billion rupees.
India’s official estimate of election costs is much lower.
In the early 1980s, the Chief Commissioner for Electoral Affairs s.l. shakhdel believed that the funds used for election campaigns in the past five years were one billion rupees.
Even from this estimate, he still pointed out that the change of election and debate system was a major cause of black money and proposed to reform the election law.5. High inflation.
The shortage of commodities leads to the illegal rise of prices and forms black money.
In particular, some important commodities with prices and unified distribution set by the government have caused serious black market transactions due to insufficient supply, resulting in more considerable media money.
For example, before the government implemented the double price of cement in 1981, the price set by the government was 28 rupees per bag.
Due to its long-term shortage, the black market price reached 100 rupees.
The houses built with cement purchased at this price are bound to be sold at an illegal high price, which has generated a new amount of black money.
In addition, inflation has reduced the real income of some people.
Many of them, including government employees, take advantage of various powers or opportunities to make extra money, while others try to evade taxes in order to maintain their original income.6. Public moral standards have generally declined.
This phenomenon contributes to the generation of black money. B. K. Nehru said in a memorandum in 1981: “the whole generation has degenerated from an honest society to a dishonest society.
” According to the black money investigation report of the Institute of finance, the widespread black trade makes honest people have to ignore the tax law, as is the case with real estate transactions.
The report also points out that the situation of tax consultants sheltering and helping tax violators proposed by the Wangqiu Committee has become very common today.7. Corruption (including corruption, corruption, fraud, bribery, etc.). In recent years, corruption in Indian society has become more and more intense.
It has penetrated into every corner of society and has become a “routine” rather than an “exception” in life.
What is more serious is that government departments, law enforcement agencies and public officials are infected with corruption habits from top to bottom, which provides convenience for all kinds of illegal acts, including the generation of black money. II. The impact of black money on India’s economic and political life.
The huge amount of black money beyond the control of the government has done whatever it wants in the economic field, forming a black money economy parallel to white money, which has seriously affected the normal development of India’s economy.
First, Because the main activity area of black money is the business sector (in particular, some industrial sectors that lack a wide range of commodity sectors, have a short production cycle and high profits, and their turnover is faster and more active than white money, which often undermines the country’s normal investment arrangements and commodity control.
For example, in June 1978, the National Institute of practical economics investigated the circulation of black money in six important commodities, such as urea, cement, paper, automobile tires, vegetable oil and copper It is pointed out that from 1965-1966 to 1974-1975, they generated a total of 8.
4 billion rupees of black money.
Another example is in Mumbai’s construction industry.
Generally, a 60 rupee white money transaction requires 40 rupees of black money.
Second, serious tax evasion has reduced the revenue of the state treasury.
According to a rough estimate in previous years, the amount of tax evasion each year is 25 billion rupees, which is more than twice the total tax of non wage earners.
Third, black money activities have led to a vicious rise in prices.
Hoarding, speculation and black market trading not only make scarce goods more scarce, but also cause many man-made shortages.
Fourth, the luxury consumption of black money holders affects the production of mass consumer goods, thus disrupting the production structure and consumption structure of the national plan.
Fifth, black money activities in foreign trade lead to capital outflow.
Sixth, the black money activities of the public sector victimize them in terms of cost, price and benefit, and affect the completion of the national economic plan.
Seventh, when the government implemented policies such as credit compression and monetary tightening, black money activities undermined the implementation of the policy.
Eighth, a new black money rich class has been formed, aggravating the gap between the rich and the poor.
The adverse effects of black money on the economy can also be listed.
The final crisis window on the economy can be summarized in two sentences by former president Reddy and Wang Qiu Committee.
Reddy said, “black money has become a serious threat to the national economy.
It has frustrated the whole economic process and failed several economic policies.
” “Black money is like a developing cancer in the national economy.
If it is not stopped in time, it will certainly lead to economic collapse,” Wang Qiu Committee said However, black money is not only an economic problem, but also endangers politics, law, morality and so on.
Black money has seriously corroded the ruling Congress party.
The electoral system relies heavily on black money.
From members of the State Legislative Council to members of the central parliament, they use black money to buy votes.
It is increasingly difficult for real wise people to be elected.
Those who can get a lot of black money for the party in the Congress party will become powerful figures in the party.
Once those elected by black money are in power, they will double their efforts to get back the black money spent in the election.
As rudal Datta revealed, “officials at all levels, members of the state legislative assembly, members of the central assembly, ministers and functionaries of political parties all make money openly and shamelessly.
Officials at the local level ask for money from local small businesses, and chief ministers and ministers at the state level ask for money from large businesses.
” Since the funding of the Congress Party (mostly black money) mainly comes from the industrial and commercial circles, especially the large industrial and commercial consortia, under the pressure of black money, the government’s policies often succumb to the interests of the industrial and commercial circles.
Rudal Datta pointed out that although the ruling Congress Party ostensibly makes a gesture of opposing large industrial and commercial consortia and protecting small industries, in fact, It is increasingly relying on large industrial and commercial consortia, which are the main funders of the Congress Party’s election campaign.
Businessmen everywhere know that they should give some black money to political parties, and then they can ensure that the political leaders “just shout at them and don’t bite them”.
The vital interests of government authorities and officials at all levels are so closely related to the black money economy that they are bound to be weak or even shelter and encourage in preventing tax evasion and other economic violations.
In turn, violators become more and more vulnerable.
Those who rely on black money will become legal and illegal and will not be punished.
As a result, honest people will not enjoy the rights given to them by the law, and dishonest people will not be punished for breaking the law.
As the black money investigation report of the Institute of Finance pointed out, “in India, laws and regulations are too often used to increase private illegal profits rather than serve the society”.
Regulations lose their legal meaning and become private tools.
Corruption breeds black money, and the activities of black money greatly contribute to the spread of corruption.
As some scholars have pointed out, they have become so born that we do not oppose this kind of corruption that destroys morality and decency, but accept them as a way of life. III. The government’s Countermeasures in the face of the increasingly serious black money, the government has taken many measures to dig out the black money and stop its generation.
The main measures are as follows.
The first is called copying, that is, copying suspects.
This is a regular means, sometimes two or three thousand times a year.
However, a considerable number of cases often return to the owner because “insufficient evidence” can not be classified as black money.
Therefore, the actual amount of money copied is very small.
For example, from April to December 1977, the amount of money copied from Shun was 687 times, and the amount of money searched was only 21.
7 million rupees, which is like a drop in the ocean for hundreds of millions of huge black money.
The second measure is to cancel the currency qualification, that is, to cancel the banknotes with high denomination.
It was first adopted in 1946, when the total value of banknotes issued was rs.
3 million, and the value of banknotes disqualified was rs. 1439.7 million.
Later, it was adopted again in 1978.
The government announced that the currency qualification of banknotes with denomination of more than 1000 rupees would be abolished from January 16 of that year.
At that time, the currency issued was 83 billion rupees, and such high denomination banknotes had 1455.
2 million rupees.
By August 1981, the value of such banknotes declared to the central reserve bank was 1.
25 billion, but 700 million of them were approved by the bank to be converted into low denomination banknotes, In fact, only 550 million rupees is cancelled as black money, which is insignificant for all black money.
The third measure is the “active recognition plan”, that is, within the specified time limit, black money holders take the initiative to admit their concealed income to the relevant authorities, and then pay part of it as tax according to a certain proportion, and the rest will become the legal assets of the original holder.
It was first implemented in 1951, and the total amount recognized was 710 million rupees, of which 110 million were paid as taxes.
The total amount of assets paid in 1965 is called “black tax”, which is 3.
6% of the total amount paid in 1965.
Since then, an active recognition plan called “black plan” has been implemented.
It no longer pays taxes according to the fixed tax rate, but sets different tax rates according to the recognized black income.
This time, a total of 1.
46 billion rupees have been recognized, of which 680 million have been realized as taxes.
The fourth was in 1975, called “active recognition of income and property plan”.
At that time, when the central government implemented the domestic state of emergency, the effect was greater than before.
The recognized income and property amounted to 15.
78 billion rupees, and the realized income tax and property tax amounted to 2.
487 billion rupees.
The fourth measure is the “special bondholder plan” implemented in 1981.
This decision was made under the circumstances of serious government budget deficit and difficulties in obtaining production funds.
The issuance target of the plan is RS 100 million, the par value of each bond is RS 10000, the maturity of which is 10 years and the cash is RS 12000.
Shortly after the implementation of the plan, the “special bond holder act” was approved by the parliament.
The decree stipulates many exemption clauses: the bondholder is not required to explain the nature and origin of income, legal investigation and litigation or punishment in this regard are prohibited, legal proceedings on income tax, property tax and gift tax are not allowed against the bondholder, the debt transferor does not pay capital income tax and gift tax, and the debt itself is exempted from property tax.
According to the central top calculation report from 1982 to 1983, the subscription amount of special e bonds reached 8.
75 billion rupees.
From the content and effectiveness of these measures, it is obvious that they have not achieved the purpose of combating black money.
In the process of copying and flattering onions, a considerable number of cases return the copied money to the owner due to insufficient evidence.
In fact, the so-called evidence is often enough for black money holders to bribe and sell.