If use of local currency or other forms of money has proven effective in countering debt money, black money can prove...
If use of local currency or other forms of money has proven effective in countering debt money, black money can prove to be smart strategy especially for an inefficient economy, says a new book.
“In the Indian context, one of the high-ranking black-market operating countries, it is a combination of curse and boon. It is a curse because if black-market economy were to merge with the mainstream economy, India will probably be one of the top economies in the world right at this moment,” writes Samar Vijay in “A Tryst with Money: An Account of our Journey with Money to an Unknown Destination”.
Besides, tax collection will jump overnight and our government will not be running a fiscal deficit budget, he says.
The book says though black money is viewed as cheaper money, it is not a true assertion. Whenever a system tilts to one side, new forces will prop up to offer counter balance.
“Black money is the fallout of mainstream money. These are notorious brats who deliberately evaded tax. If it were possible to impose tax on black money, it would be treated equivalent to its ‘white’ counterpart.
“In other words, black money has tax component removed from it. Clearly black money has an edge over white money, which is subjected to government’s share,” the book says.
According to the author, black money undoubtedly enjoys the benefit of tax advantage but the advantage does not just get passed to the beholder so easily.
“Natural reaction to any free advantage in the system is that every stakeholder would want a piece of it. This is the reason why prices of goods in black economy are relatively higher than the ones transacted in white money. Apparently, black money does get taxed, indirectly,” says Vijay, who runs private equity and financial advisory firm InvestCare.
The author says the book is “not a technical journal aiming to expose optical illusions; instead it is an effort to highlight the designs in which money operates. It offers a few tips that may help people take better decisions in matters related to money”.