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?

Options

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 of political parties and growth of regionalism
4. Loss of revenue to the State Exchequer due to tax evasion

Correct Answer

Loss of revenue to the State Exchequer due to tax evasion

Explanation

Black money leads to large-scale tax evasion, reducing government revenue and affecting public expenditure and fiscal stability.

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