It is a very common perception and notion that human needs and wants are unstable. We are never satisfied with what we have the want for more increases rapidly each day. The greed for the accumulation of more money prompts one to resort to illegal ways thereby resulting in the emergence of black money. While on the other hand white money is that source of income generated through legitimate means. In many cases, the black money is also converted to white money to prevent stringent actions by the governments. 

Black money vs white money

Black money 

In its spectrum of definition black money consists of all the income or funds that are collected in an illegal way or legal income which has not been recorded for tax consideration. In simple words, it can be said that black money is that money is hidden from the government to avoid taxation. The problem of black money is a vexed issue for any economy and results in various multi-dimensional problems. 

Moreover one of the main reasons behind the stagnant growth of an economy is the increased circulation and incidences of black money. The advancement in the scientific and technological arena has resulted in increased growth and development of the world economy and this growth of the economy has magnified the issue of black money to much greater limits. Black money is usually received in the form of cash and comes from underground economic activities. 

Sources of black money

The means of procuring black money or black currency are many that include the following:

White Money 

As compared to black money, white money is that income that is generated through legal means and undergoes tax consideration as per the provision of the government. It is imperative to mention here that in various cases even black money is converted to white money through various means such as through social services, or by using the money for donation proposes, etc. While the existence of black money can negatively impact the economy, white money holds the potential for the growth and development of a nation since it enables the government to generate revenue to make plans for the advancement of the nation. 

Impact of black money on the economy 

Black money is one of the many socio-economic evils that result in the stagnation of an economy resulting in various issues. Moreover, the holders of black money also resort to various ways to change black money to white money and this can hamper the working of the economy. The existence of black money and its increasing growth results in various negative impacts on the economy. The impact of black money on the economy is as follows:

Conclusion

Thus, there are two types of money in the economy, black and white money. Black money refers to the illegal type of money which is gathered due to different means like tax evasion, etc. Whereas, white money refers to the legal type of money. In terms of exchanging black and white money, it is easier to exchange the latter than the former. However, black money comprises of tremendous negative impact on the economy