It refers to man-made and reproducible resources which help in generating output and income. Financial capital consists of all income earning financial assets such as holdings of money stocks, bonds, deeds or mortgages, etc. These are items of personal wealth. They are a claim on other individuals. The same is the case with bank deposits. The rupees we spend or hold in our accounts are part of our personal wealth. They are a claim on goods and services, as in the case of stocks and bonds.
Money holdings are financial capital and not real capital. Since financial capital is the claim on assets, it does not generate output and income. Capital is that wealth which is used in the production of goods. Capital is the result of human labour. Thus, every type of capital such as roads, machines, buildings and factories etc. It is a produced factor of production. Capital cannot produce without the help of the active services of labour. To produce with machines, labour is required.
Thus, labour is an active, whereas capital is a passive factor of production.go
Essay on Capital : Meaning and Characteristics
Capital on its own cannot produce anything until labour works on it. The composition or supply of capital is not automatic, but it is produced with the joint efforts of labour and land. Therefore, capital is a produced means of production. The total supply of land cannot be changed, whereas the supply of capital can be increased or decreased. If the residents of a country produce more or save more from their income, and these savings are invested in factories or capital goods, it increases the supply of capital.
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Of all the factors of production, capital is the most mobile. Land is perfectly immobile. Labour and entrepreneur also lack mobility. Capital can be easily transported from one place to another.
The Debate Over Make Money Writing Essays
As we go on using capital, the value of capital goes on depreciating. When machines are used continuously for some time, these depreciate and their value falls. Scholars like Marx admit that capital is stored-up labour. By putting in his labour man earns wealth. A part of this wealth is spent on consumption goods and the rest of it is saved. When saving is invested, it becomes capital.
In other words, capital is the result of accumulation of savings of a man.
Essay on Revenue Generation Measures - Words
The increase in the taxes and duties has forced people to take the route to illegal wealth accumulation. Tax free income limit in the country is just Rs. This amount is not sufficient to run a household these days when the cost of living is sky high. The prices of certain commodities such as fertilizers, sugar, cement, etc are regulated by the government by way of its Price Control Policy. The policy is rigid and does not go by the ups and downs in the market. The private manufacturers and retailers take advantage of this policy that results in black money.
The government has set different rates for excise duty based on the quality of products.
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In order to avoid paying higher rate of excise duty, the manufacturers at times downgrade a product. This leads to the generation of black money. Real estate transactions involve huge amount of money. People accumulate black money via real estate transactions. Purchasing property at a cheaper rate and selling it when the prices rise has become a lucrative business and a lot of black money is generated with this.
The government has set a certain quota for export, import and foreign exchange. While this is set for the benefit of the people it is often misused to accumulate black money. It creates economic disparity in the country which undoubtedly is the basis of social disparity.
Such practices are the reason why the rich here are getting richer and the poor are getting poorer. Social inequality leads to frustration among people and gives rise to crimes such as robbery, bribery and more. If the government does not get enough revenue it would be unable to take up new projects for the development of the country and the uplift of the poor sections. The countries where people pay taxes religiously are far better off as compared to those where there is huge amount of accumulation of black money.
Role Pastoral Women in Income Generating Activities Essay
The government has taken certain steps to eradicate the issue of black money. The recent and one of the major steps taken in this direction was demonetization. While this step helped in eliminating black money to some extent many people condemned it. However, even if it helped, it definitely was not enough. A lot more needs to be done in order to stop this ill practice. The government must look for more effective measures to curb this problem. And remember, the government alone cannot bring this issue to an end.
It can only be curbed if each and every citizen of the country contributes his bit. It is usually earned through corrupt practices and is not declared fearing legal action. Sometimes, the amount of black money stalked up in a country is so higher that it could run a parallel economy. Black money is accumulated by corrupt officials, politicians, businessmen, criminals, smugglers and any other individual trying to evade taxation.
In the below essay, we will go through the sources of black money, its socio economic effects and its possible counter measures. There are various sources of generating black money. One of the basic areas where black money is generated and exchanged is in the government sector. This money obviously cannot be declared and is purposely hidden from the tax net; though, it is invested in a new venture through shell companies or money laundering.
Thus, the money which should be taxed and the taxed amount utilized for public welfare schemes, escapes the tax agencies, having a deteriorating affect on the overall economic health of a nation. The modus operandi used in this method is to manipulate the price of transaction between two parties, in order to deceive tax agencies and benefit both the parties.
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Though the money is not earned by dishonest means, it is purposely hidden from tax authorities to evade taxation and is still considered black money. Many other anti national, anti social and criminal activities are the sources of black money. Anti national activities mostly rely on black money generated internally or unscrupulously provided as foreign donations. Accumulation of black money by few corrupt individuals, damages the economical growth of the nation, as the money hidden from tax agencies is further invested into other businesses or sent outside to tax haven countries, with lighter tax laws.
Crores of rupees collected as tax, could have been used for public welfare schemes- building schools, colleges, hospitals and roads etc. Black money not only weakens the economy of a nation, but also widens the economical gap by making rich richer and poor poorer. Presence of huge amount of black money pollutes the social structure of a nation and adversely effects the functioning of government agencies. Money earned by dishonest means, is used to bribe government officials and other relevant agencies, in exchange to a certain favor.
Black money increases the purchasing power of people, automatically resulting in higher prices of commodities. An increased price of everyday commodities put a strain on the pocket of common man, while it hardly affects those who have black money. This in turn widens the gap between rich and poor, by making the poor poorer. Many steps could be taken by the government to counter black money.
The government of India had from time to time announced voluntary disclosure scheme for people who have stacked black money. The scheme persuades them to declare their money and other illegal assets and to pay the tax at a lower rate than usual. Take a resolve to not to bribe any government official for personal gains.