1. RBI demonitisation data report: Object of note ban was never to confiscate cash, says FM Arun Jaitley

RBI demonitisation data report: Object of note ban was never to confiscate cash, says FM Arun Jaitley

RBI demonetisation data report: Union Finance Minister Arun Jaitley spoke to the media in the wake of Reserve Bank of India's 2016-2017 annual report being released.

By: | New Delhi | Updated: August 30, 2017 8:31 PM
RBI demonetisation data report, RBI demonetisation data, RBI on demonetisation, Reserve Bank of India, Arun Jaitley, Arun Jaitley on demonetisation, Arun Jaitley on demonetisation report, Arun Jaitley on demonetisation data, note ban, Narendra Modi, P Chidambaram, new currency, finance ministry Finance Minister Arun Jaitley speaking on RBI demonetisation data report. (Image: ANI)

RBI demonetisation data report: Union Finance Minister Arun Jaitley spoke to the media in the wake of Reserve Bank of India’s 2016-2017 annual report being released. It revealed that all but 1.4 per cent of the old Rs 1,000 notes have come back into the banking system. Former finance minister P Chidambaram reacted by hitting out at the government and saying “99% notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” In its annual report for 2016–17, the RBI said that out of 632.6 crore pieces of Rs. 1,000 currency notes in circulation, 8.9 crore have not been returned post the note ban last November. FM Jaitley today said, “Object of demonetisation is that India is high cash economy and that scenario needed to be changed, give blow to black economy,” said FM Arun Jaitley.

“Volume of cash currency in system has come down by 17 pct. Direct tax base has increased substantially post note ban.” FM Jaitley added. “It is unfortunate that those who never fought against black money, tried to confuse the object of demonetisation. Integration of the formal and informal economies was among the principle objectives of note ban,” Jaitley revealed.

In his statement, FM Jaitley made a number of points. Among them was his highlighting the gains derived by country from demonetisation exercise. FM said, “It’s obvious that direct tax base expanded substantially after demonetisation and the government is trying to sustain momentum of digital transactions.” Demonetisation also led to cash available with terror elements in Kashmir being reduced, FM said.

FM Jaitley said that the NDA government intended to give a blow to black money and at the same time widen tax base. Significantly, FM said, “Object of note ban was never to confiscate cash. Next step will be to cleanse political funding.”

He hit out hard at critics who have said that there were no gains from demonetisation, FM said, “Some people confusing note ban with amount of money which has come back.”

In his attack on critics, FM Jaitley also said, “People who haven’t taken a single step against black money haven’t understood aim of note ban; deposits in banks don’t legitimise it.

Among the major gains that FM Jaitley said the system has derived is that income tax returns rose over 25 pct.

Jaitley finished by saying, “With 99% of junked currency coming back into banking system, money has now been identified with its owner.”
  1. H
    harish
    Aug 31, 2017 at 3:29 pm
    finally, with demonitization,i can only spend 20 rupees. My fake cash of 50 rupees will be returned back to the person who controls me, That person cannot pay any terrorist as his fake cash is useless. Meantime I dont have enough money to buy an asset for 100 rupees. I say to the seller , I cannot buy unless you reduce the value. He waits for other customers and all tell the same story. So the real estate guy will now slash to 90 hope for some buyers. He will then slash to 80, hope for some buyers and keeps slashing down. One house he manage to see for 70 but no takers for other home so he slashes that to 60. Meantime a real tax payers buys property for 60 and declares it. Government has controlled inflation as well ? So the next game is how will government prevent next cycle of black money. If they get that right, inflation is boxed. Meantime fake currency will start circulating. That has to be controlled, So demonitization was right step but more is required.
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      harish
      Aug 31, 2017 at 3:15 pm
      contd from last post In this case I converted 50 rupees of fake currency into 60 additional rupees of real cash. I have kept this with me and govt cannot tax me. Government does not know anything about that those 50 fake currency in circulation either nor do they know that I have made a profit . This fake currency what happened to it. It has made the assets in market more costly. If no fake cash or black money was in circulation 100 ruppes of asset would have actually been only 40. This has ensured that only rich can own assets and poor dont have assets unless they have fake currency. That is country is owned either by rich with black money or anti social elements. In the way some genuine tax payers buy these costly assets and make the middle men more rich. The people who control the middlemen and get back their cash with huge profits have unaccounted money which neither goes to poor nor to government., Instead goes to terrorist. Hope this is clear why we need demonitization
      Reply
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        harish
        Aug 31, 2017 at 3:05 pm
        Contd from last post. Now government does not understand with whom those 40 rupees lie. They think it may be with a poor farmer of worker ineligible for tax as it is not in tax arm. However reality is I have only 20 rupees out of which only 5 rupees will go to poor. That remaining 15 ruppes inflated asset of 100 ruppees is what I have . Meanwhile someone who does not have any black money wants to purchase the asset I buy. He buys the asset with 100 rupees but says he spent only 40 ruppees. Remaining 60 he says he spent on vegetables fruits servant maid auto driver etc who dont pay tax. Government thinks 60 rupees is now with poor. What is the end result can we not realize? I meantime sell it for 100 but claim i sold for only 40. So no capital gain and no tax. I got 60 more rupees now all real currency to be contd..
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          harish
          Aug 31, 2017 at 2:54 pm
          If 100 rupees was in circulation ,99 rupees came back to government. However only 20 rupees is available now in circulation and rest in deposit. What this means is that 79 rupees has been locked down. Fake currency used in circulation made it appear as though 150 rupees was in circulation. Those with 150 rupees now only have 20 rupees cash and 79 rupees deposit. I have to pay tax on 79 rupees as Government knows that it belongs to me. And I have only 20 rupees to spend, Without demonitisation, the scenario would have been like this. Out of 150 rupees in circulation with me, I purchase property for 100 rupees and give it to someone without black money. However I register that property is only for 40 ruppes though networth of asset is 100. I have converted 50 rupees of fake currency and 10 rupees of real currency into an asset without accounting for it. I declare I have asset for 40 ruppes and cash for 20 ruppees. Government thinks I have only 60 rupees( to be cont
          Reply
          1. Amitava Dhar
            Aug 31, 2017 at 2:07 am
            Arun Jaitley did not even make the demonetization decision. How does he know the objective? RBI and BJP including Modi did it to give India a surprise, being in dearth of accomplishments they made till that time and since they came to power. At that time, they pulled the demonetization trigger to show that they are doing something. The demonetization only created a ton of extra work and enormous hassle for the people of India. Some people thought it was a great idea, and mostly all Indians remained patient at the cost of their sufferings. If Arun Jatley is saying that he could not have identified tax defaulters without demonetization, then either he and his team are not competent, or, he is lying to cover up for a bad decision made by Modi. He has no guts to tell/admit the truth. Income Tax department is full of corrupt employees--if he could fix that, then India would have become truly a "New India".
            Reply
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              Rajendran
              Sep 1, 2017 at 9:52 am
              You are absolutely correct! DeMo was been handled by the most corrupted people ..Bankers who pay loans to people like Malya and income tax officers who as ask bribe even when assessee wanted to pay legitimate taxes. Therefore it only helped black money holders to convert it into white.
              Reply
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              Dominic Pullen
              Aug 30, 2017 at 8:48 pm
              The Demonetization exercise has helped in establishing the following: (1) There was practically no black money in India in the form of cash (2) There was no fake currency in circulation (3) Pakistan had not distributed any fake currency in Kashmir towards promoting terrorism (4) The poor was just day-dreaming that the rich were holding a lot of cash and they will lose all that money.
              Reply
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