BLACK MONEY IN INDIAN ECONOMY- REASONS AND IMPACTS

Black money is one of the hot topics of discussion now a days in our country. The black economy represents not less than one fifth of the aggregate economic transactions. Black money results in the functioning of a parallel economy.  In India, black money refers to funds transacted in the black market, on which income and other taxes have not been paid. It practices those activities which are contrary to the principles of economic policy pursued in an economy. Therefore it is called illegal economic operation. It is well-known that there is a large quantity of money, income and wealth which has been unaccounted in our tax system and therefore, has not suffered tax. Black money can also be termed as production of goods and services whether done legally or illegally but which is not taken into account for the official estimation of the country's Gross Domestic Product (GDP) because it is neither detected by the authorities nor is declared by its creators.