Finance Minister Arun Jaitley has defended Modi government’s decision of demonetisation on its second anniversary while Former Prime Minister Manmohan Singh has called it “ill-fated and ill-thought.”
Defending demonetisation in a facebook blog Jaitley said that it is “key step in a chain of important decisions taken by the Government to formalise the economy.” Jaitley said, “The Government first targeted the black money outside India. Asset holders were asked to bring this money back on payment of penal tax. Those who failed to do so are being prosecuted under the Black Money Act. Details of all accounts and assets abroad which have reached the Government, resulted in action against the violators.”
“India was a cash dominated economy. Cash involves anonymity in transactions. It bypasses the banking system and enables its possessors to evade tax.
Demonetisation compelled holders of cash to deposit the same in the banks. The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through non-invasive method. The violators faced punitive actions. Larger deposits in banks improved lending capacity for the banks. A lot of this money was diverted to the Mutual Funds for further investments. It became a part of the formal system,” Jaitley added.
Earlier former Prime Minister Manmohan Singh issued a press statement criticising demonetisation.
Manmohan Singh said demonetisation continues to have devastating impact on the Indian economy. He added that, “the scars and wounds of demonetisation are only getting more visible with time.”
Jaitley called the criticism of demonetisation “ill-informed.” “An ill-informed criticism of the Demonetisation is that almost the entire cash money got deposited in the banks. Confiscation of currency was not an objective of Demonetisation.
Getting it into the formal economy and making the holders pay tax was the broader objective. The system required to be shaken in order to make India move from cash to digital transactions. This would obviously have an impact on higher tax revenue and a higher tax base,” he said.
Other opposition leaders have also criticized demonetisation on its second anniversary. Bengal Chief Minister Mamta Banerjee said that the government cheated the nation with demonetisation.
— Mamata Banerjee (@MamataOfficial) November 8, 2018
Andhra Pradesh Chief Minister Chandrababu Naidu said that “the country still hasn’t overcome the economic setback caused by hasty decisions of BJP govt.”
2 yrs after #DemonetisationDisaster, the country still hasn’t overcome the economic setback caused by hasty decisions of BJP govt. Implemented in the name of destroying black money, demonetization succeeded in destroying employment, markets, business, liquidity & economic growth.
— N Chandrababu Naidu (@ncbn) November 8, 2018