Updated: December 17, 2016 12:43:14 pm
Finance Minister Arun Jaitley sought to assuage concerns of a currency crunch in the economy by saying that the process of remonetisation will not take a very long time. “The whole process of remonetisation is not going to take very long time and I’m sure very soon the Reserve Bank by injecting currency daily into the banking and postal system will be able to complete that,” Jaitley said at FICCI’s 89th Annual General Meeting on Saturday.
The Centre’s decision to demonetise old Rs 500 and Rs 1000 notes on November 8 had led to the withdrawal of 86 per cent (estimated to be Rs 15.4 lakh crore) of the country’s currency in circulation. The decision was taken with the aim to flush out black money and end terrorist funding from counterfeit currency. Although the RBI has introduced new Rs 500 and Rs 2000 currency notes, it is yet to reduce the cash crunch in the economy. This week, Attorney General Mukul Rohatgi told the Supreme Court that the RBI has supplied Rs 5 lakh crore worth of new currency into the banking system or about 42 per cent of the currency in circulation before demonetisation. Economic Affairs Secretary Shaktikanta Das said the focus at the moment is on printing more Rs 500 notes.
Calling the demonetisation step a ‘courageous’ one, Jaitley said the government could do it as India today has the capacity to undertake bold experiments.
“One of the efforts of this exercise has to be that even though a reduced cash currency could remain, our conscious effort… (is) to supplement the rest with a digital currency,” he said. Once the remonetisation process is complete, it will mark “the creation of a new Indian normal because the normal that existed for 70 years is an unacceptable normal,” he added.
The finance minister also spoke of the country’s “stamina” to sustain a decision like demonetisation, which has “clear long-term gains even at the cost of short-term inconveniences”.
“Therefore, once we have that stamina notwithstanding fringe positions taken by national parties, one would always be able to implement these extremely successfully. Long-term benefits of these are going to be absolutely clear even if we bear the short-term pains,” he said.
(With inputs from PTI)
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