2021 GS Paper I, all questions

UPSC Prelims 2021 · GS Paper I

Question 9: Economy and Social Development

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?

aDiversion of resources to the purchase of real estate and investment in luxury housing
bInvestment in unproductive activities and purchase of precious stones, jewellery, gold, etc.
cLarge donations to political parties and growth of regionalism
dLoss of revenue to the State Exchequer due to tax evasion

AnswerUPSC’s answer is (d).

Black money is income hidden from the tax authorities, so the direct damage the Government stresses is the loss of revenue from tax evasion. That reduces the money available for welfare and infrastructure and pushes the tax burden onto honest taxpayers. Diversion into real estate, gold and political funding are consequences, but they are secondary to the revenue loss. Remember: the central concern with black money is the loss to the exchequer.

Why each option is right or wrong
  • (a) Wrong: a real consequence, but secondary to the revenue loss.
  • (b) Wrong: unproductive investment is a side effect, not the main worry.
  • (c) Wrong: political donations and regionalism are not the main worry.
  • (d) Right: tax evasion directly reduces the revenue the State collects.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2021, General Studies Paper I, Series A. The paper on upsc.gov.in.