UPSC Prelims 2021— Question 99

A major fiscal concern arising from black money is loss of government revenue through tax evasion. Black money can also distort resource allocation and finance conspicuous consumption, but the direct concern for the public exchequer is the loss of tax revenue. Political donations and regionalism are not the principal fiscal effect identified by the question. The final answer-key position for Set C identifies option D as the correct option. Option A — Diversion of resources to the purchase of real estate and investment in luxury housing — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. Option B — Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc. — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. Option C — Large donations to political parties and growth of regionalism — is not correct because it does not satisfy the specific condition tested in the question; it represents an alternative that is contradicted, incomplete, or less precise than the accepted answer. Option D — Loss of revenue to the State Exchequer due to tax evasion — is correct because it is the alternative that matches the constitutional, historical, geographical, scientific or economic principle established above. For PYQ interpretation, the distinction between the correct alternative and merely related facts is important. UPSC often places plausible distractors beside the precise statement that matches the underlying rule, chronology, definition or empirical relationship. The answer should therefore be read against the exact wording of the question rather than against a broadly related fact.