Demonetisation a watershed moment in Indian history: Jaitley on note ban anniversary

Finance Minister Arun Jaitley on Tuesday called demonetisation a “watershed moment in the history of Indian economy”. He quoted data extensively to make a case for the announcement by Prime Minister Narendra Modi’s announcement on November 8 last year to put 86 per cent of currency out of circulation.

In a blog and at a press conference later at the Bharatiya Janata Party (BJP) headquarters here, Jaitley said the note ban had achieved its objectives of reducing the cash component in the economy, widening the tax net, exposing unaccounted wealth and reducing anonymity of cash. The FM also rejected criticism of ‘tax terrorism’ that followed demonetisation and the goods and services tax. “A more efficient system to check evasion is a fair and honest system. It can’t be a terrorism system. An efficient system enables us to check evasion. It only enables us to ensure people pay what they have to pay.”

Jaitley also responded to the criticism of demonetisation by former prime minister Manmohan Singh. Jaitley said he was “amazed that an economic exercise that has an ethical and moral rationale has been termed as loot.” What is ethically and morally correct has to be politically correct. The examples of “loot”, Jaitley said, were the sundry scams during the UPA years, like 2G, Commonwealth Games and coal block allocations scams. “As far as ethics go, our and Congress’ perspectives are different. Their primary objective is to serve the family. Ours is to serve the nation.”

On criticism by former Reserve Bank of India governor Raghuram Rajan, the FM said he doesn’t share that criticism.

“Benefits of these may not yet be visible to some people. The next generation will view post-November 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in,” Jaitley wrote in the post. The finance minister also spoke about how demonetisation led to an acceleration in savings moving away from cash and into capital markets and savings schemes. Jaitley said demonetisation also led to a big leap in digital payments. "The reduction in incidences of stone-pelting, protests in J&K and Naxal activities in LWE (left wing extremists) affected districts are also attributed to the impact of demonetisation as these miscreants have run out of cash.”