Impact of Black Money on Government Revenue
Question
Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?
Options
Diversion of resources to the purchase of real estate and investment in luxury housing
Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.
Large donations to political parties and growth of regionalism
Loss of revenue to the State Exchequer due to tax evasion
Explanation
While all options highlight structural issues resulting from a parallel economy, the most direct and crucial worry for the state exchequer is the massive loss of tax revenue due to evasion. This resource deficit cripples the government's fiscal capacity to spend on public goods, welfare schemes, and infrastructure development. > Tax evasion directly undermines the sovereign's fiscal capacity, making it the primary administrative concern regarding black money. Answer: (d).
Question details
Year
2021
Paper
GS Paper 1
Question
Q9
Subject
Economy
Sub-topic
Fiscal Policy, Taxation & Budget
Type
Factual single
Difficulty
Easy
Nature
Static
Source hint
Indian Economy / Public Finance concepts
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