Finance Minister Arun Jaitley in his Facebook post today wrote about the two-month journey of the most historic and daring move made by any government till date to curb black money and corruption from the country. In his extensive post, Jaitley pointed out the expected outcome, feedback, opposition and purpose behind the demonetisation drive. Starting his note, Jaitley said, “When 86% of a country’s currency constituting 12.2% of its GDP, is squeezed out of the market and sought to be replaced by a new currency, there would obviously be significant consequences of that decision.” He further claimed that queues outside banks and ATMs have disappeared and remonetisation has moved ahead and thus he took the opportunity to analyse the rationale behind the decision and its impact on people and the economy. Here are the top 5 key takeaways from Arun Jaitley’s Facebook post:
1. A fight against black money
As per Jaitley, the demonetisation move was indeed a calculated risk and Narendra Modi Government had absolute clarity from Day1 that it would move against the shadow economy and black money. Jaitley informed that Prime Minister had proposed to the G-20 at Brisbane that international cooperation in sharing information with regards to base erosion and profit shifting should be expedited. The government also formed various treaties with countries like Switzerland Mauritius, Cyprus and Singapore and was working on the Black Money Law dealing with illegal assets outside India.
2. Back to a ‘new’ normal
Jaitley also shared that as per the Income Tax data recorded in 2015-16 fiscal, no better evidence is required to substantiate that both in the matter of direct and indirect taxes India continues to suffer being a hugely tax non-compliant society. He also explained that Indian economy has been hit by the ‘pucca’ and ‘kachha’ accounts as a part of business language, but the BJP government seeks to change the expenditure pattern of India and Indians. It is obviously disruptive. All reforms are disruptive. They change the retrograde status quo. Demonetisation puts a premium on honesty and penalises dishonest conduct, he added.
3. Where we are today?
The Finance Minister further wrote that the period of pain and inconveniences is getting over. Economic activity is getting back to normal. He also claimed that banks today admittedly have a lot more money available in order to lend for growth. Lakhs of crores of money, which was floating in the market as loose currency, has now entered the formal banking system. In the medium and long run, country’s GDP would get bigger and cleaner. The Indian economy would also be serviced by both cash and highly digitised transactions.
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4. The Opposition
Taking a jibe against the opposition parties, Jaitley wrote: “There was no social unrest while implementing such a major decision. All opinion polls conducted by independent media organisations have shown that an overwhelmingly large percentage of people have supported the Government’s decision.” Jaitley further in his note said that it is a tragedy that a national party like the Congress decided to adopt a political position, opposing both technology, change and reforms. It sided with black money friendly status quo.
5. PM Narendra Modi’s approach
Last but not the least, Jaitley pointed out that there was a marked difference in the approach of the Prime Minister and his opponents. While the PM was being futuristic, and thinking of a more modern, technology driven cleaner economy, Jaitley said his opponents wanted a cash dominated, cash generating and cash exchange system to continue. Jaitley concluded his post saying, “The difference between Prime Minister Narendra Modi and Rahul Gandhi was clear – the Prime Minister was thinking of the next generation while Rahul Gandhi was only looking at how to disrupt the next Session of Parliament.”