Arun Jaitley says govt to announce more steps to ease cash crunch in rural areas

New Delhi: The government will announce more measures to ease the cash crunch in the rural areas, finance minister Arun Jaitley said on Tuesday, even as he stressed that partial demonetisation will benefit the Indian economy in the long term.

He was speaking at the parliamentary party meeting of the Bharatiya Janata Party (BJP), chaired by Prime Minister Narendra Modi.

“The situation is normalizing in the urban areas. In the next few days, the focus will be on the rural areas so that farmers have enough funds because it is rabi sowing season. Few decisions were taken yesterday (Monday) night which will be made public today,” he said.

Jaitley acknowledged that businesses have been hit but pointed out the impact will be only short term.

“Demonetisation may impact business but it will only be a short term impact. In a calibrated way, the money will be infused into the banking system. Right now, this is cessation of legal tender. Some more legal steps are needed to make demonetisation effective which the government will take according to the requirements,” he said. “When remonetisation will reach a reasonable level, the restrictions will be removed. Businesses will start functioning normally,” he added.

All praise for Modi, Jaitley said, “The Prime Minister has tried to create a new normal through this radical step. Many have talked about this but no one had the guts to implement such a drastic decision.”

“Very few decisions taken by the government have this kind of economic, social and political impact like this move. That is why it has been welcomed by the people as it now puts a premium on honesty,” Jaitley said. “If a system gets established where everyone honestly pays their taxes, then you can imagine what will be the impact on the tax revenues and subsequently on fiscal deficit.”

Jaitley also sought to highlight how increase in tax revenues could help the government spend more in the rural sector and help reduce poverty. He also pointed out how this move will bring down the cost of funds for banks and will ensure increased lending to key sectors at low interest rates.

After the meeting of the parliamentary party, the BJP leadership said some political parties were disturbing the proceedings of the ongoing winter session of Parliament using demonetisation as a reason.

Senior leaders of the party argued that there was a malicious attempt by political parties to provoke violence and chaos on the initiative taken by the government to act against counterfeit currency, funding of extremist organisations and black money. BJP’s parliamentary party met to discuss the party’s strategy in both houses of Parliament.

“Parliamentary party hails the historic, pro-poor, revolutionary move by the Prime Minister. It welcomes the historic announcement made by the PM... BJP is supremely confident that this bold initiative will achieve the intended objective of cutting off financial support to terrorist organisations, extremist organisations, address the problem of counterfeit currency, besides checkmating unaccounted money in the system and serving as a serious warning to those engaging in corruption,” said M. Venkaiah Naidu, Union minister of urban development, housing and urban poverty alleviation and information & broadcasting.

The National Democratic Alliance (NDA) is facing criticism from within and opposition parties led by the Congress on demonetisation. Political parties have demanded that Modi should give a statement on the floor of the house.

“BJP condemns malicious efforts by some political parties who are desperate to provoke violence and chaos having been rattled by widespread support by the people to the government’s initiative and are bent upon disturbing the proceedings of Parliament,” Naidu added, after BJP’s parliamentary party meeting.