The government has once again strongly rejected opposition criticism of its demonetisation move with finance minister Arun Jaitley describing it watershed moment in the country’s economic history. The next generation with a fair and honest system to live in, he said on the eve of first anniversary of demonetisation.
The move has met its objective of reducing cash in the economy, ending anonymity of cash, bringing in more individuals in the tax net and dealing a body blow to black money, he said.
Writing a social media blog ‘A Year After Demonetisation’, the finance minister said November 8, 2016 “signifies the resolve of this Government to cure the country from ‘dreaded disease of black money’.”
“November 8, 2016 would be remembered as a watershed moment in the history of Indian economy,” he said. “In an overall analysis, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system.”
The finance minister, however, argued that “benefits may not yet be visible” but the future generations will view the move with a great sense of pride as it has provided them a fair and honest system to live in.
Prime Minister Narendra Modi had on November 8 last year announced the demonetisation of old Rs 500 and Rs 1,000 notes to combat corruption, black money, terrorism and fake currency.
Of the Rs 15.44 lakh crore worth of notes withdrawn from the circulation, Rs 15.28 lakh crore had been deposited back as on June 30, 2017. Currency worth Rs 17.77 lakh crore was in circulation on November 8 last year.
Jaitley said that post the note ban, the currency in circulation is less by Rs 3.89 lakh crore, which has met the objective of less cash economy so as to reduce the flow of black money in the system.
“With the return of Rs 15.28 lakh crore in the formal banking system, almost entire cash holding of the economy now has an address. It is no more anonymous,” he said, adding that from this inflow, the suspicious transactions under the radar range from Rs 1.6 lakh crore to Rs 1.7 lakh crore.
The tax administration and other enforcement agencies are using big data analytics to crack down on suspicious transactions, he said.
Undisclosed income admitted and detected, taken together, amounts to Rs 29,213 crore, which is close to 18 per cent of the amount involved in suspicious transactions, he said.
Jaitley also said demonetisation also led to a big leap in digital payments. As many as 110 crore transactions, valued at around Rs 3.3 lakh crore — and another 240 crore transactions, valued at Rs 3.3 lakh crore — were carried out through credit cards and debit cards respectively.
The value of transactions for debit and credit cards, in contrast, was Rs 1.6 lakh crore and Rs 2.4 lakh crore respectively during 2015-16.
With higher level of formalisation, workers have got social security benefits as reflected in large increase in opening of bank accounts for workers, enrolment in EPF and ESIC.
“The reduction in incidences of stone pelting, protests in J&K and naxal activities in LWE affected districts are also attributed to the impact of demonetisation as these miscreants have run out of cash,” he said. “Their access to fake Indian Currency Note (FICN) was also restricted.”
(With inputs from PTI)