gs1medium
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?
- A.Diversion of resources to the purchase of real estate and investment in luxury housing
- B.Investment in unproductive activities and purchase of precious stones, jewelry, gold, etc.
- C.Large donations to political parties and growth of regionalism
- D.Loss of revenue to the State Exchequer due to tax evasion
▶ Answer & Explanation
Correct answer: D. Loss of revenue to the State Exchequer due to tax evasion
The generation of black money primarily stems from illegal activities and tax evasion. When individuals or entities evade taxes, the government loses a significant amount of potential revenue that could be used for public services and development. This loss of revenue directly impacts the state exchequer and is a major concern for the government as it hinders fiscal capacity and economic stability.
Source: UPSC gs1 2021