FACULTY OF LAW

JAMIA MILLIA ISLAMIA

MAJOR SOCIAL PROBLEMS IN INDIA

CORRUPTION AND BLACK MONEY

PRESENTED TO:
PROF. RASHEED C A

PRESENTED BY: SAMEER B.A.LL.B.(Hons) SELF FINANCE

SEMESTER-II (2021-22) ROLL NO. 36 STUDENT ID: 202101657
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ACKNOWLEDGEMENT

I would like to express my special thanks and gratitude to my mentor-teacher Professor

Rasheed C A, who gave me the golden opportunity to express my views on the topic of
Major Social Problems in India: Corruption and Black Money. Without his constant
support, this project would have been a distant reality.

I would also like to express my special thanks to the Dean of Faculty, Dr. Eqbal Hussain
for their thorough counselling.

This work is an outcome of the unparalleled support that I have received from
The Faculty of Law, Jamia Millia Islamia

Thank You
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TABLE OF CONTENTS

Sr. No. Topic Page number

1 Introduction 3

2 Corruption 3

3 Preventive Measures 5

4 Black Money 6

5 Remedial Measures 8

6 Conclusion 9

7 Bibliography 10
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Major Social Problems in India: Corruption and Black Money

INTRODUCTION

When a particular social phenomenon or condition disturbs the social order and hinders the
smooth working of social institutions, that comes to be identified as a social problem. Once a
social problem takes its roots and develops beyond the bounds of tolerance, there arises
resentment against it and there is a demand for remedy in the interest of social harmony.

India emerged as an independent nation-state on 15th August 1947, after a long struggle against
British colonial domination. Social institutions such as varnashrama, caste, joint family system,
and village communities emerged in the early phase of Indian society which is also responsible
for several of the social problems in the modern period. The founding fathers and the people
of India made the country a Sovereign, Socialist, Secular, Democratic Republic with a
parliamentary form of government. Though the country has shown tremendous growth in all
spheres of national life after independence, many problems plague the society till now. The
problems, many a time, are interrelated.

CORRUPTION

Corruption is one of the social problems found in all the societies of the world. In some
societies, it is more pervasive than some others. The dictionary defines corruption as “an
inducement to wrong by bribery or other unlawful means: a departure from what is pure and
correct”. C.B. Mamoria writes, “We may define corruption as an improper or selfish exercise
of power and influence attached to a public office or a special position in public life”.1

“Power corrupts and absolute power corrupts absolutely”.2 India is regarded as one of the
countries in which corruption has become very much widespread in recent years. Corruption
is one of the factors that has contributed to the degradation of Indian politics. The practice of
corruption at lower levels by some clerks, peons, and attenders for some petty amount, is
understandable and tolerable. They may practice it due to tough financial conditions, excessive

1
CB Mamoria, Social Problems and Social Disorganization 839
2
English historian Lord Acton in his letter to Bishopp Mandell Creighton
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demands from family, friends, or society, health hazards, or some other kinds of pressures.
What is more disturbing, and dangerous is corruption at higher levels. With time, corruption in
India has become a 'convention', a 'tradition', 'psychological need', and 'necessity'. Corruption
is there at the very root of our social life. Most people are guilty of corruption in one way or
another; at one time or another, for one purpose or another. G.S. Bhargava observes “Again
the milk vendor, who adulterates milk; the sanitary inspector who connives at it; the grocer
who uses false weights; the contractor who does a shady job of road building; the engineer
who puts the seal of approval on it and the city father who has a 'cut' in the contractor's ill-
gotten wealth, all these are corrupt. But there is an even more banal form of corruption when
men who wear the purple of commerce control party machines and political power and those
with political power trade it for money. This type of dishonesty is more dangerous because it
set; in motion, the machinery of corruption, eating into the very vitals of the society”.3

▪ Causes of Corruption

Corruption is like blood cancer. It has taken deep roots in our country. Corruption in Indian
public life is ‘all-pervasive’ and businessmen, bureaucrats, contractors, industrialists,
entrepreneurs, journalists, vice-chancellors, teachers, doctors, nurses, and politicians all come
under suspicion. The various causes responsible for corruption as enlisted by C.B. Mamoria
are:4

1. Economic Security: This is regarded as the most important cause of corruption. The
poor people become corrupt in hope of becoming rich. The rich indulge in it for fear of
losing what they have.
2. High Rate of Income Tax: Since tax rates are comparatively high in India even the
honest people are often tempted to escape from it by making false returns on their
property and income.
3. Meagre Salary Being Paid to the Government Servants: Employees in some of the
government departments are paid comparatively very less salary. This situation is said
to be the cause of corruption in the administration. It has been estimated that 60%-70%
of the officers are corrupt in one form or the other.5

3
Surendranath Dwivedy and G.S. Bhargava, Political Corruption in India 149
4
CB Mamoria, Social Problems and Social Disorganization 844-847
5
Ibid
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4. Emergence of New Sources of Wealth and Power: As Lincoln Steffens has said,
“the politicians take bribes because businessmen give them and businessmen give them
because they have to”. This unholy understanding between the businessmen and the
politicians always encourages corruption.
5. The Very Presence of Black Money: The existence of large amounts of unaccounted
black money, is one of the main sources of corruption.
6. The System of Democracy: All parties, especially the ruling party spend crores of
rupees on each election. This money comes from big businessmen, industrialists, and
other rich men who have their own vested interests in financing the elections. They
supply money to the party elections in the form of "black money". This, in turn, gives
them a license, a 'moral' justification for accumulating number-two money in different
forms.
7. Social and Economic Modernisation: It is said that modernisation breeds corruption
in industrial society, which offers prizes for doing evil i.e., money, position, and power,
besides bringing about attitudinal changes in the system.

PREVENTIVE MEASURES

Corruption which has gone deep in, to our social life cannot be removed very easily. It can only
be reduced or minimised, and can hardly be stopped. altogether. No nation has been successful
in this regard so far. The Santhanam Committee on the Prevention of Corruption, instituted
by the Central Government in 1964, observes, “Corruption cannot be eliminated or even
satisfactorily reduced unless preventive measures are planned and implemented in a sustained
and effective manner. Preventive action must include administrative, legal, social, economic,
and educative measures”.6 Some recommendations of the committee alongside some remedial
measures are listed as follows:

1. Constitution of the Central Vigilance Commission and Administrative Vigilance

divisions in all Departments and major organizations of the Government.
2. Administrative delays should be reduced to the minimum to avoid corrupt practices.

6
Government of India, Report: Committee on Prevention of Corruption (1964)
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3. Attempts should be made to educate citizens regarding their rights, responsibilities, and
the procedures of the government.
4. Improvement must be made to increase the salary of the employers besides making
necessary provisions for housing, medical facilities for the government employees, etc.
5. Companies and businessmen should be obliged to keep detailed accounts of
expenditure.
6. Officers for the administrative posts should be selected with great care. Only those
whose integrity is tested to the fullest satisfaction must be appointed for the key posts.
7. There should be a complete ban against government servants accepting private
commercial or industrial employment for two years after retirement.
8. The taxation laws must be modified, and licenses and permit systems must be
thoroughly reviewed.
9. The law enforcement authorities must see that the laws are rigorously enforced without
any fear or favour.
10. Mass communication media must play a more positive role in encouraging honesty and
discouraging and condemning dishonesty and corruption

BLACK MONEY

Black Money which is often referred to as ‘parallel economy’ or ‘unrecognised economy’ or

‘unofficial economy’ is both an economic and a social problem. Black money is that “which is
earned or received in contravention of the prevailing Government acts and regulations, or
money that has been retained without the payment of taxes that are due to the Government.”
It was during the Second World War that the terms ‘black market’ and ‘black money’ came
into vogue. Due to the imposition of various controls on distribution and prices a clandestine
market had sprung up in which things were still available, but at prices higher than the
controlled ones. The term ‘black money’ became rife to describe the money received or paid
in such black-market deals.7 It has both social and economic consequences on society. Black
money is a problem with a difference. The problem of poverty affects those who are poor, the
problem of unemployment affects directly those who are unemployed, but the problem of black

7
Black Markets during World War II, available at: https://iu.pressbooks.pub/perspectives2/chapter/black-
markets-during-world-war-ii
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money does not much affect those who have ample black money, but it affects the common
man and the society at large.

In simple words, it can be said that black money is tax-evaded money. This kind of money can
be earned through either legal or illegal means. Its legitimate source is when those who earn
income through various ways do not reveal their entire income for tax purposes. For example,
teachers earning money through private tuition and book royalty not included it in their income
tax returns. Its illegitimate sources are many. Bribes, black marketing, smuggling, and selling
commodities at prices higher than the controlled prices are all such examples.

▪ Causes of Black Money

Black money damages the economic development of the nation by hampering developmental
programs and plans. It adds to inflation. It contributes to economic instability. The social
consequences of black money are also severe. It increases social inequality, creates frustrations
among honest people, and increases crimes like smuggling, bribery, etc. The government may
not get enough revenue to undertake social service programs for the upliftment of the poor and
downtrodden. It leads to shifts in income and wealth. Needless to say, it contributes to
unemployment and poverty. Prof. Ram Ahuja lists out the following important factors of
black money:8

1. High Rate of Tax: An unrealistic and disproportionate increase in taxes and duties
compel some people to evade tax and accumulate black money. There is an argument
that if income tax is reduced there are fewer chances of people hiding their income and
paying more tax.
2. Different Rates of Excise Duty: The Government has fixed different rates of excise
duty. Based on the quality, the products (such as pipes, electric wires, etc.) are classified
into different grades, and tax duties are levied based on the classification made by the
manufacturer. Manufacturers, sometimes degrade a product to pay lower rates of
excise, which helps them generate black money.
3. Price Control Policy of Government: The Government often regulates the prices of
some commodities (such as sugar, vanaspati, etc.) by following what is known as the

8
Prof. Ram Ahuja, Social Problems in India 384-387
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‘price-control policy’. The private manufacturer and merchants take undue advantage
of this policy and resort to hoarding, fraud, artificial scarcity, etc., which results in black
money.
4. Inflation: Inflationary situation is said to be one of the causes of black money. In this
situation, the prices of certain commodities (like petrol, gold, etc.) go up and rich people
start spending their unaccounted money.
5. Quota System and Scarcity: The Government, has a fixed quota for import, export,
and foreign exchange. This quota system is misused to make black money.
6. Elections in a Democratic System: Elections are a part of the democratic process.
These elections are generally financed by the black money holders. There is an unholy
alliance between the political parties and the business tycoons. These business-oriented
black money holders expect political patronage and economic concessions. These
concessions will help them to generate more and more black money.
7. Real Estate Transactions: People amass black money through real estate transactions.
Purchasing a house or land at a cheaper rate and selling it at a higher rate by
manipulating to pay very less stamp duty has become a profitable business in almost
all major towns and cities.

REMEDIAL MEASURES

Concerning this problem, the harsh truth is that the government policies are the biggest sources
of black money generation. Hence, the government must take extra precautions in framing its
policies to give no scope for black money. The problem of ‘black money’ has to be confronted
in a realistic and at the same time intelligent manner. Since it is not a problem with the poor
but with the well-off people, it should be handled carefully. The following measures will help
in eliminating this problem:9

1. Politicians, ministers, senior civil servants, intellectuals, and the media people must
play an important to raise the standards of public morality. They must set up an example
for others to imitate by paying taxes properly.

9
C.N. Shankar Rao, Principles of Sociology with an Introduction to Sociological Thought 638
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2. Public expenditure must come down and there must be stringent monitoring of
expenditure, especially of public sector projects.
3. There must be much more effective supervision of private sector investment
expenditures, particularly where there is greater reliance on development finance
institutions and banks.
4. Tax system must be realistic. Inordinately high rates of tax are counter-productive.
5. Price controls should be done away with.
6. Tax collection machinery must be made more efficient than what it is now. Honest
officials in this department must be amply rewarded.
7. Attractive incentives must be given for voluntary disclosures of income.
8. A thorough overhauling of the economic intelligence unit must be made. Trusted
officials must be recruited for this department.
9. Administrative corruption at different levels must be stopped.
10. Exempting tax on money spent on house construction may help mostly middle-class
salaried people who are normally made to pay taxes without fail.

CONCLUSION

These social issues hinder the path of India toward development. However, with the changing
time and society evolving, there is an increase in the awareness among the common people,
which will solely curb these ailments of social issues in the country. As the U.S. author and
Educator Helen Keller rightly said, “Alone we can do so little, together we can do so
much”.10Both the government and the people should walk hand in hand to tackle the current
social issues in India.

10
Joseph P. Lash, Helen and Teacher: The story of Helen Keller and Anne Sullivan Macy 489
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BIBLIOGRAPHY

1) C.N. Shankar Rao. Principles of Sociology with an Introduction to Sociological

Thought

2) Ram Ahuja. Social Problems in India

3) Vidyabhushan and Dr. Sachdeva. An Introduction to Sociology

4) Dr. Lalita K. Sharma. Social Issues in India: Causes and Measures

5) Corruption in India, available at:

https://timesofindia.indiatimes.com/readersblog/corruption-of-india/corruption-in-
india-40567

6) The Black Money Saga in India, available at: https://www.clearias.com/black-money-

india