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DMPQ: What is black money? Discuss its implication in context of India?

RAS/RTS Prelims and Mains Exam Preparation

Black money is defined  as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during the possession. The problem with  black money is huge . It has serious socio-political and economic implications. According to sources the estimate of GDP is to the extent of 60% of GDP.

The implications of Black money are:

  • Political:
  • Black money infusion into the economy lead to the weakening of institutions. The trust on the institution decreases. Transnational crimes increases as they act as a source of terror funding and antinational activities. Black money also affects the elections. Especially in a country like India, it infuses money power. Money power does not allow genuine candidates to compete in the election.


  • Economic
    • Corruption raises its ugly head. Black money also lead to inflationary tendencies in the market. It also effect the transmission of monetary policies. It also demoralised the genuine tax payer. Loss of tax revenue is also its serious implication. It brings inefficiency in the economic architecture.
  • Social
    • Black money lead to widening of inequality. Concentration of wealth in the few increases. So it destroyed the work ethics.


Thus Black money is a menace to society its implication does not restrict to economy but it has wider connotation.


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