The Causes of Black Money Generation 
Causes for Generation of Black Money
There are several factors responsible for the emergence – of black money. It would be relevant to discuss those factors so that a correct understanding about the genesis, growth and expansion of black money can be made. The principal factors are:
(i) Beginning of the evil: The beginning of this evil can be traced to the Second World War. During this period supplies of industrial goods from the traditional suppliers of the West were cut off. This resulted in severe shortages in many vital lines. The British Government indulged in large inflationary finance for war efforts. This led to price escalation. Taxes too were raised sharply on higher incomes and excess profits. In these circumstances many indulged in black marketing. And at the same time, they evaded taxes. Huge profits were made in respect of goods that were in short supply. This created a psychology of making money out of shortages and not out of production / expansion of sales. These circumstances and the psychology formed the backdrop of what followed subsequently.
(ii) Controls and licensing system: The system of controls, permits, quotas and licenses which are associated with misdistributions of the commodities in short supply results in the generation of black money. The Wanchoo Committee explaining this factor as a source of black money observed, “In spite of the vigilance exercised by the Government, controls and regulations came to be used by the unscrupulous for amassing money for themselves. Since considerable discretionary powers lay in the hands of those who administered controls~ this provided them with a scope for corruption – ‘speed money’ for turning a blind eye to the violation of controls. All this gave rise to trading in permits, quotas and licenses, malpractices in distribution and in the process; it generated sizeable sums of black money.”
Price and distribution controls have in the past led to the generation of black money on a significant
There are several factors responsible for the emergence – of black money. It would be relevant to discuss those factors so that a correct understanding about the genesis, growth and expansion of black money can be made. The principal factors are:
(i) Beginning of the evil: The beginning of this evil can be traced to the Second World War. During this period supplies of industrial goods from the traditional suppliers of the West were cut off. This resulted in severe shortages in many vital lines. The British Government indulged in large inflationary finance for war efforts. This led to price escalation. Taxes too were raised sharply on higher incomes and excess profits. In these circumstances many indulged in black marketing. And at the same time, they evaded taxes. Huge profits were made in respect of goods that were in short supply. This created a psychology of making money out of shortages and not out of production / expansion of sales. These circumstances and the psychology formed the backdrop of what followed subsequently.
(ii) Controls and licensing system: The system of controls, permits, quotas and licenses which are associated with misdistributions of the commodities in short supply results in the generation of black money. The Wanchoo Committee explaining this factor as a source of black money observed, “In spite of the vigilance exercised by the Government, controls and regulations came to be used by the unscrupulous for amassing money for themselves. Since considerable discretionary powers lay in the hands of those who administered controls~ this provided them with a scope for corruption – ‘speed money’ for turning a blind eye to the violation of controls. All this gave rise to trading in permits, quotas and licenses, malpractices in distribution and in the process; it generated sizeable sums of black money.”
Price and distribution controls have in the past led to the generation of black money on a significant