Expressing concern over notes ban, states warn of recession

RSTV Bureau

A special meeting convened by the Finance Minister Arun Jaitley to sort out issues surrounding Goods and Service Tax provided an opportunity for states to raise questions over government’s note ban move.

File Photo:  Finance Minister Arun Jaitley in New Delhi after the meeting of GST Council.

File Photo: Finance Minister Arun Jaitley in New Delhi after the meeting of GST Council.

On Sunday, States, including West Bengal, Uttar Pradesh and Tamil Nadu, raised the issue of demonetisation of 500 and 1000 rupee notes and its impact on state treasuries with Finance Minister

West Bengal Finance Minister Amit Mitra said the ban on old currency notes would trigger recession as industrial activity would be hurt and tax collection would recede.

Tamil Nadu too joined the chorus saying that industrial activity is hurt and while Uttar Pradesh said factories in Kanpur and Moradabad have closed operations.

Kerala Finance Minister Thomas Isaac said many states have “reported informally” that they have seen a “significant decline in revenues”.

“If  86 per cent of your money disappears, there is a problem for the people. There is a collateral impact on investments sentiments,” Isaac told reporters .

In a major assault on black money and terror financing, Prime Minister Narendra Modi on November 8 announced demonetisation of 500 and 1,000 rupee notes and asked holders of such notes to deposit them in bank accounts.

As much as Rs 14 lakh crore or 86 per cent of India’s currency has been withdrawn and is getting replaced with new Rs 500 and Rs 2,000 rupee notes.

Sources said that all states were in agreement that their revenues will get impacted and employment will be hit, but nobody demanded a roll back.

While West Bengal Chief Minister Mamata Banerjee and Delhi Chief Minister Arvind Kejriwal, have been demanding a roll back of demonetisation exercise, Samajwadi Party supremo Mulayam Singh Yadav demanded a short-term roll-back of demonetisation move saying that people should be given at least a week’s time before the ban on old currency notes.