31 August, New Delhi
Union Finance Minister Arun Jaitley has said that the fallout of demonetisation was on predicted lines and economy will benefit in medium and long term.
Addressing the inaugural session of ‘India Summit’ in New Delhi Thursday, Jaitley said that money deposited in that period in banks does not mean that all of it is legitimate. He said, demonetisation’s prediction was that more and more people would come under the tax net and it will also help in increased direct tax collection.
Finance Minister also said, demonetisation was widely politically accepted and it helped in bringing transparency to the system. Jaitley said, that in the third quarter when demonetisation was implemented there was no impact on GDP, however, fourth quarter was slightly affected.
On the Goods and Services Tax (GST), Jaitley said, it is too early to estimate the gains from it but the gains would be significant. He said, the GST will have a multiplier effect on direct tax a little later.
The Minister said, manufacturing may have suffered as people were clearing their stock due to GST. He said, one GST rate for such highly disparate population would not be equitable and the goverment expects two standard GST rate converging into one in the future.
The Finance Minister said, if compliance is high, the council may take a decision on convergence of GST rates.
On Index of Industrial Production, Jaitley said, it has not been very encouraging in the past few months. He also expressed hope that Prevention of Corruption Act will be ratified by the parliament soon.
Jaitley said, that the government has now started opening defence sector for private players and it will help boost defence manufacturing in India.