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Demonetisation Impact Positive, Aim Was Not to Confiscate Money, Says Jaitley

Jaitley argued that demonetisation had other benefits like reducing dependency on cash and increasing digitisation. He cited the RBI’s numbers and said the total cash volume in the economy has reduced by 17 per cent.

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Updated:August 31, 2017, 10:12 AM IST
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Demonetisation Impact Positive, Aim Was Not to Confiscate Money, Says Jaitley
Attacking the Opposition, Arun Jaitley said those who never fought against black money are confusing the people. (Photo: Reuters)
New Delhi: Finance Minister Arun Jaitley on Wednesday said the impact of central’s government demonetisation drive was “extreme positive,” despite the RBI revealing in its annual report that around 99 per cent of the scrapped currency notes had returned into the system.

Facing flak from the Opposition for the note ban's “failure,” Jaitley said that the main objective was not to “confiscate notes” but to deal a blow to black money in the country.

He said that another aim was to integrate the informal economy with the formal economy and the exercise had helped expand the tax base – both direct and indirect - over the last 10 months.

Citing the recent Income Tax department’s figures, he said that an increase of nearly 25% has been recorded in the I-T returns filed this year because of demonetisation. He rationalized this by saying that those dealing with cash were compelled to deposit it in banks and their money “got an identity.”

The RBI has revealed that Rs 15.28 lakh crore of the Rs 15.44 lakh crore scrapped currency notes came back into the system after demonetisation. Only Rs 16,000 crore of demonetised currency was not deposited with banks, according to data in the Reserve Bank of India's annual report.

The numbers have once again renewed the scrutiny about the effectiveness of the measure announced by Prime Minister Narendra Modi in November. By rendering 500 and 1,000 rupees illegal in one stroke and imposing restrictions on how the money could be returned to lenders, Modi had been intending to make it difficult for hoarders of undeclared wealth, or black money, to exchange their undeclared cash for legal tender.

But Jaitley argued that demonetisation had other benefits like reducing the cash dependency in our economy and increasing digitisation. Jaitley cited the RBI’s numbers and said the total cash volume in the economy has reduced by 17 per cent and digital transactions were on the up.

The finance minister also took a swipe at the Opposition, saying those who never fought against black money are confusing the people.

In a series of tweets, former finance minister and Congress leader P Chidambaram chastised the government and said the RBI should be “ashamed for recommending demonetisation." “99% notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” he tweeted. “RBI 'gained' Rs 16000 crore, but 'lost' Rs 21000 crore in printing new notes! The economists deserve Nobel Prize,” he further said.

Left leader Sitaram Yechury called the note ban anti-national and said boasts of black money, terror and counterfeit currency ending with it have all fallen flat. “Lives & livelihoods lost, the economy got a shock and workers lost their jobs. India can never forgive Modi govt for this anti-national act,” he tweeted.
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