Pointing to an improvement in a number of economic indicators, Finance Minister Arun Jaitley Thursday said that the government’s decision to scrap high-denomination currency notes of Rs 500 and Rs 1,000 did not have the kind of adverse impact on the economy as anticipated by critics.
Highlighting the rise in direct and indirect tax collections, and rabi-sowing, after the demonetisation decision, Jaitley said the “remonetisation process” has advanced substantially and should improve in the coming weeks and months.
WATCH VIDEO | Arun Jaitley Thanks People For Supporting Note Ban, Says No Incident Of Unrest Reported
“Of course, there would be areas which would be adversely impacted, but what was predicted by the critics has to have rationale with the revenue collection. Assessment can be unreal but revenue is real. And therefore, many of these indicate that now with the critical part of the remonetisation already behind us, and there being significant impact in large number of these areas, it should certainly be much better in the weeks and months to come than it was in last six weeks,” he said.
The Finance Minister said that there has been a 14.4 per cent increase in net income tax collections till December 19 and even after accounting for refunds, the net increase in income tax receipts has been 13.6 per cent. Up to November, net direct tax collections were recorded at Rs. 4.12 lakh crore, 15.12 per cent higher than the corresponding period last year.
Jaitley said that indirect tax collection has increased by 26.2 per cent till November 30. “In the central indirect taxes, the increase is 26.2 per cent till November 30. And this includes excise duties increasing by 43.5 per cent, service tax increasing by 25.7 per cent and customs duties by 5.6 per cent,” he said.
Even for November, when the government announced the currency withdrawal decision and the expectation was of lower indirect tax revenues, the Finance Minister said that the collections of all the three indirect taxes are “much high” compared with November 2015.
In the rural sector, rabi sowing has increased by 6.3 per cent from last year, Jaitley said. “The rabi crop sowing has been higher than last year, life insurance businesses have increased, international tourism has increased, air passenger traffic has increased, petroleum consumption has increased, the flow into Mutual Funds has increased by 11 per cent,” he said.
Jaitley said that a “very large part “of the high-denomination currency, which was in circulation on November 8, has already been replaced and would continue to be replaced to the extent that market requires that currency.
“More and more notes of Rs 500 are also being released through the banking and post offices and therefore we can see a lot of currency coming into recirculation which is enabling the banking system and the ATMs to further augment the supply itself,” Jaitley said, adding that more money has come into the banking system and the ability of the banks to lend has increased.
Thanking people for supporting the demonetisation move “in very large measure”, Jaitley assured that the Reserve Bank of India (RBI) has large amounts of currency available. He said the central bank will continue to support the market to the extent of liquidity needed by it.
“We are extremely grateful to the people of India who have in very large measure supported the move. The remonetisation process has substantially advanced and what is significant is not a single incident of any form of unrest has been reported in the country,” Jaitley said.
Meanwhile, Prime Minister Narendra Modi is expected to address the nation Saturday to spell out the roadmap after the expiry of the 50-day period for depositing of demonetised notes. This will be Modi’s second address to the nation since his announcement of the demonetisation policy on November 8.