Amidst Economic Slowdown, Arun Jailtey Launches Strong Defence Of Demonetisation And GST

News World India | 1
| October 11 , 2017 , 14:42 IST

Despite the International Monetary Fund, World Bank and hardcore figures depicting the damaging effects of Demonetisation and the implementation of the Goods and Services Tax (GST), Finance Minister Arun Jaitley, addressing students of Columbia University in New York on Tuesday extolled benefits of both the moves.

Defending the sudden announcement of Demonetisation in November last year, Jaitley said that announcing the move in advance would have caused people to use their in-hand cash to buy gold, diamond and land and the black money would not have been detected.

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"Transparency is a very nice word. But transparency in this case (of demonetisation) would have been the greatest instrument of fraud,” Jaitley said to the students.

"Secrecy was the essence of that decision making (process). I think, one of the greatest success of demonetisation was that the prime minister and the team -- obviously the RBI was involved, the finance minister was involved kept it a closely guarded secret," he continued.

"Otherwise in a process where a decision is taken, alternate currency is printed, thousands of people involved in the printing do not know why they are doing it, the currency is collected, tabulated and sent to the currency chest and one has to be ready with the alternate currency the moment it is demonetised and still we were able to keep it a closely guarded secret," the Finance Minister said.

Jaitley emphasised that the implementation of demonetisation was a "success" in India.

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"There were no single public unrest in its immediate aftermath," he claimed.

"This was the largest ever currency replacement exercise. There was inconvenience. Television reporters went and provoked people outside the banks, but still people said that though they were feeling the pinch of it, it was a good move and they support it," Jaitley added.

"Digital transactions have doubled. A large number of people have joined the tax net," he said.

Jaitley hailed the implementation of the Goods and Services Tax (GST) saying that it was the "smoothest possible transfer" from one taxation system to the other.

"These are challenges which a new system throws up," Jaitley said.

"The exporters' refund was taking a lot of time and their capital was being blocked. It was a legitimate demand and this was immediately rectified," he added.

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"Narrow base was the second challenge thrown up. After the first two months of deposits, we realised that 95 percent of the GST has been paid by only 400,000 accesses. So, it is only the organised sector which is paying the substantial part," he continued, adding that "The bottom base has to expand but the tax component coming from them is relatively less."

Acknowledging that "Building a political consensus on it was difficult," he hailed the states for their cooperation.  

"At the end of the day, I will give full credit to also the states in India, which realised that they will be the eventual beneficiaries," he said.

"And therefore even when their parent political parties were talking a different language, the state governments all acted in tandem. One after the other each one of them started supporting. The result was very obvious, we could pass the constitutional amendment, we could pass the multiple legislations," Jaitley said.

Union Finance Minister Arun Jaitley is currently on a week-long visit to the US to attend annual meetings of the International Monetary Fund and World Bank.