Finance Minister Arun Jaitley on Friday said demonetisation was a shake-up which achieved its “principal objectives” of decreasing cash transactions, expanding the tax base and increasing digitisation. “Confiscating” the money was not the aim, he pointed out. “Demonetisation was certainly a shake-up,” Jaitley said at the Bloomberg India Economic Forum in Mumbai. “I think the demonetisation debate in India actually is being held at two different levels. The first level was ‘there’s an inconvenience caused, there are queues which have come up’. (The second argument being) ‘Oh the money has come back into the system’. But that was the whole idea. The idea is not to confiscate money,” the finance minister said.
“The idea is to make sure that this anonymous cash operating in the system itself becomes a part of the system,” he said. “There were three principal objectives besides the big picture that we wanted to shake and break the Indian normal. We wanted to create a new Indian normal,” he said.
While announcing the decision to ban Rs 500 and Rs 1,000 notes on November 8 last year, Prime Minister Narendra Modi had said the move was aimed at reducing black money, checking counterfeiting and curbing extremism. Referring to the “principal objectives”, Jaitley said on Friday note ban helped reduce the reliance on cash, particularly high denomination currency. “In the first round itself we have managed to squeeze a significant part of it (currency),” Jaitley said.
It also helped increase the tax base as the anonymity associated with the cash was no longer available, he said. “A lot of people had to (come into tax net) because once you put money into the banking system, the anonymity of cash was lost. Cash got identified with its owner,” he said.
On digitisation, the third “principal objective”, Jaitley said digital transactions have “multiplied” and digitisation has now become “centre stage agenda of economic governance in India”.