Which one of the following effects of creation of black money in India has been the main cause of worry to…

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?
  1. Diversion of resources to the purchase of real estate and investment in luxury housing
  2. Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.
  3. Large donations to political parties and growth of regionalism
  4. Loss of revenue to the State Exchequer due to tax evasion

Solution

The main worry of the Government of India regarding black money is the loss of revenue to the State Exchequer due to tax evasion, which reduces fiscal capacity for development and public welfare.

Asked in: UPSC Prelims 2021

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