On the eve of one year of demonetisation, Finance Minister Arun Jaitley said that 18 lakh people were identified whose deposits were disproportionate, and they are now answerable to the income tax authorities. Asserting that the 99% of demonetised notes which came to the system was not a failure of demonetisation, the Finance Minister said that when the cash comes into the bank, it’s found out who owns that money.
The cash has come to the banks — so whether it is put into mutual funds, insurance, capital markets — in all these areas resource availability has risen in one year. This in itself is an indication that more means are going into the formal economy, Arun Jaitley said while addressing a press conference on one year of demonetisation.
Arun Jaitley said that the “status quo” in the Indian economy which was dominated by excessive cash needed to be “shaken up” to crackdown number of tax evasion in the country. He said that the excessive domination of cash usage in India was at 12.2% of GDP. He further said that when there is excessive cash domination, there is more tax evasion. The taxpayers not only pay for themselves but also for tax evaders, which is a “double whammy” on taxpayers, Arun Jaitley said.
The Finance Minister also listed several steps like Benami property, indirect tax reform taken to make India free from corruption and tax evasion. He further said that demonetisation as a single step was enough to improve the situation, but it has changed the agenda towards that direction, towards a less cash economy — rise in the number of assessees, increase in the digital transaction. High denomination currency was seized, Arun Jaitley said.
On November 8, 2016, Prime Minister Narendra Modi, in a televised nationwide address, announced to ban high-denomination notes of Rs 500 and Rs 1,000, and announced new notes of Rs 500 and Rs 2,000. The public was given 53 days to deposit or exchange old notes. Then, terrorism, corruption and black money were at the centre of Prime Minister’s decision to ban high-value notes.
“To break the grip of corruption and black money, we have decided that the 500 rupee and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016. This means that these notes will not be acceptable for transactions from midnight onwards. The 500 and 1,000 rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper,” the Prime Minister had said.