Finance Minister Arun Jaitley said the currency situation has stabilised to a great extent but did not give any indication on lifting curbs on cash withdrawal from banks and ATMs though the 50-day window of demonetisation ended on Friday.
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“RBI has sufficient stock to inject a lot more currency which they will continue. Yesterday, I had gone around Delhi and we’re getting reports from all over the country the crowds at the banks have eased significantly,” he said.
Prime Minister Narendra Modi in a surprise announcement on November 8 declared the old Rs 500 and 1,000 notes invalid. While RBI will continue remonetisation exercise which is market driven depending on how much currency it will require.
“RBI keeps in releasing that money. There are three categories. One, legitimate currency which continues to be a legal tender…the second category is that Rs 500/2,000 notes are being added every day by the RBI. There is third category which is not new currency, but with effect from tomorrow the entire currency in recirculation will be the legitimate permissible currency,” he said.
The Finance Minister further said that from Saturday onwards banks will have only valid currencies. When asked when the cap on withdrawal limit would be lifted, Jaitley said “please wait. When we decide we will let you know.”
RBI directed banks to put a withdrawal ceiling of Rs 24,000 per account in a week and the withdrawal from ATMs have been limited to Rs 2,500 per day.
On rise in search and seizure operation by the tax department, he said “that only shows the mass scale and manner in which people have indulged in currency racketeering itself justifies the Prime Minister’s decision of November 8.”
On reaction to former Finance Minister P Chidambaram comment, Jaitley said “I would like to learn that economics where lower GDP leads to higher tax revenues.”
Chidambaram wondered that how could there be buoyancy in revenue collection if GDP is moderating as projected by RBI due to demonetisation.
Giving reasons for surge in revenue collections, Jaitley said direct taxation is directly related to economic environment and economic activity, and expansion of economic activity can lead to higher income.
As far as indirect taxes are concerned, he said there has been modest increase in customs duty due to reduction in gold imports among other things.
“Service tax also relates to economic activities. Excise duty relates to larger manufacturing plus some part of it may relate to additional revenue measures which were taken earlier this year on account of certain excise duties,” he said.
Till December 19, net increase in income tax collections has been 14.4 per cent and even after accounting for large refunds, the net rise in collection is 13.6 per cent, Jaitleyhad said.
Indirect tax collections soared 26.2 per cent between April 1 and November 30, with revenue from excise jumping 43.5 per cent, that from service tax by 25.7 per cent and customs by 5.6 per cent, he had said.