08 January, New Delhi
Union Finance Minister Arun Jaitley Sunday said demonetisation is obviously disruptive as are all reforms as they change the retrograde status quo. He said money has lost its anonymity post demonetisation of high currency notes.
Jaitley said, the period of pain and inconveniences is getting over and the economic activity is being restored.
In an article, he said Jaitley pointed out when 86 per cent of a country’s currency, constituting 12.2 per cent of its GDP, is squeezed out of the market and sought to be replaced by a new currency, there would obviously be significant consequences. He however added that the queues outside the banks have disappeared and remonetisation has moved ahead. He opined that large amount of cash with banks will lead to lower interest rates.
The Minister further said, India suffers as a hugely tax non-compliant society. He said, the expenditure required for poverty eradication, national security and economic development have to be compromised with on account of tax non-compliances.
He said, tax evasion has been considered as neither unethical nor immoral. But Prime Minister’s demonetisation decision is intended to create a new normal.
Jaitley further said that cash is the medium which funds bribery, corruption, counterfeit currency and terrorism. He said reducing cash may not eliminate crime and terrorism but it can inflict serious blow on them.
The Finance Minister said, the Narendra Modi Government wanted to move against the shadow economy and black money from Day One. He went on to list the steps taken including constituting SIT on black money and international cooperation in sharing information on base erosion and profit shifting.
He said, the Goods and Services Tax, GST, which is scheduled to be implemented this year, will provide a better indirect tax administration and being a more efficient law will check tax evasion.