Finance Minister Arun Jaitley on Thursday said the demonetisation of Rs 500 and Rs 1,000 banknotes carried out in November 2016 led to formalisation of the economy, increased tax collection and higher growth. In a Facebook post, Jaitley wrote, “The larger purpose of demonetisation was to move India from a tax non-compliant society to a compliant society.”
The finance minister said the positive impacts of demonetisation also included bringing back more money into the system, higher expenditure, and a higher growth after the first two quarters.
His comments come a day after the Reserve Bank of India in its annual report for 2017-’18 said over 99.3% of the banned notes in circulation before demonetisation have been returned to it. It said the the total value of banknotes returned after demonetisation on November 8, 2016, was Rs 15,310.73 billion (Rs 15.311 lakh crore). The total value of such notes in circulation on November 8, 2016, was Rs 15,417.93 billion (Rs 15.418 lakh crore), the RBI said.
However, it also said that a huge increase in fake Rs 2,000 currency notes was detected in the banking system in 2017-’18.
In his Facebook post, Jaitley said that the RBI twice released reports stating that the demonetised Rs 500 and Rs 1,000 notes have been substantially deposited in banks. “A widely stated comment has been that just because most of the currency came back into the banks, the object of demonetisation has not succeeded,” he wrote. “Was the invalidation of the non-deposited currency the only object of demonetisation? Certainly not.”
Jaitley said that the number of Income Tax returns filed in 2017-’18 had increased to 6.86 crore from 3.8 crore in March 2014. “In the last two years, when the impact of demonetisation and other steps is analysed, the Income Tax returns have increased by 19% and 25%,” he wrote. “This is a phenomenal increase.”
Jaitley said that income tax collections increased from the Rs 6.38 lakh crores in 2013-’14 to Rs 10.02 lakh crores in 2017-’18. He also wrote that in the first year since the Goods and Services Tax was rolled out on July 1, 2017, the number of registered assesses had gone up by 72.5%, up to 114.17 lakh from the original 66.17 lakh assesses.
“This is the positive impact of the demonetisation. More formalisation of the economy, more money in the system, higher tax revenue, higher expenditure, higher growth after the first two quarters,” he concluded.
Demonetisation wrecked the economy: Rahul Gandhi
Meanwhile, Congress President Rahul Gandhi on Thursday said Prime Minister Narendra Modi must answer why demonetisation, which “wrecked the economy”, was implemented. He claimed that the RBI’s report has proved that the government failed to achieve its objectives.
“The prime minister had promised that black money, terror funding, and fake currency will be eradicated,” said Gandhi. “The RBI annual report proves that all his objectives failed.”
Gandhi alleged that the real objective of demonetisation was to help the prime minister’s friends who have defaulted on bank loans. “He helped them to turn their black money into white,” said Gandhi. “Demonetisation was not a mistake, it was a deliberate move.”
Gandhi accused Bharatiya Janata Party President Amit Shah of being one of the beneficiaries. “We have seen in the case of Gujarat’s Cooperative Banks, of which Amit Shah is a director, Rs 700 crore was deposited.”
Earlier this week, the Ahmedabad District Cooperative Bank filed criminal defamation complaints against Gandhi and Congress spokesperson Randeep Singh Surjewala for saying demonetised notes worth Rs 745 crore had been exchanged at the bank within five days of the government’s announcement of the note ban.