New Delhi: Finance Minister Arun Jaitley on Thursday rolled out higher tax revenue collection data to debunk the critics claim of the demonetisation destroying the Indian economy while Information and Broadcasting M Venkaiah Naidu hailed the higher denomination notes” withdrawal as an effective “anti-scam vaccine” brought by Prime Minister Modi to prevent scams happening through corruption and black money.
In separate interactions with the media, they as well as Law and Telecom Minister Ravi Shankar Prasad expressed gratitude to the people for supporting the demonetisation move despite suffering great inconvenience. “What is significant is that not a single incident of any form of unrest was reported in the country,” Jaitley underlined.
While everyone calls it demonetisation, Jaitley describes the PM”s November 8 shock as “remonetisation,” explaining that nobody”s money became junk as all the cash with the people was accepted for exchanging it with the new currency notes. According to him, the real demonetisation will come on April 1 when the Ordinance cleared by the Cabinet on Wednesday makes the old notes just a scrap of paper.
Prasad claimed the people”s support was reflected in 300 to 1500% increase in their quick switchover to the digital transactions, though the data released by the RBI belied his claim. At a press conference at the BJP headquarters with Power Minister Piyush Goyal, Prasad dropped hints of defamation suits against Rahul Gandhi and other leaders for misleading the people on demonetisation with false accusations on PM Modi and BJP President Amit Shah.
Jaitley denied any cash crunch in the market, asserting that the RBI has “very large amount of currency” and that it will continue support the market to the extent that “the market needs that kind of liquidity.”
He said a very large part of the demonetised currency has already been replace and would continue to be replaced to the extent the market requires, claiming a lot of currency has come into recirculation with more and more 500-rupee notes released through banks, post offices and ATMs.
“Already a large part of benefits of this historic move are visible. A lot more money has come into the banking system. Cash has an anonymity attached to it. Whats comes into the banking system gets identified with the person and therefore its impact on taxation and revenue collection is already being seen,” Jaitley said.
He said there would certainly some areas adversely impacted, but the revenue collections bely predictions of the critics. “Assessment can be unreal but revenue is real. And therefore many of these indicate that now with the critical part of the remonetisation already behind us, and there being significant impact in large number of these areas, it should certainly be much better in the weeks and months to come than it was in last six weeks,” he said.
Doling out data on the brighter economy, Jaitley pointed out a net increase in the income tax by 14.4% and a significant increase in all categories of the indirect tax till November 30, “notwithstanding what the critics had predicted.” He said the indirect taxes shot up by 26.2% till November 30 and they include excise duty up by 43.5%, service tax by 25.7% and customs duty by 5.6%.
“We have also tried to check up the figures for the month of November which could have been adversely impacted on account of the currency replacement compared to the November of 2015. On the year-to-year basis, the collection is much higher in November 2016 in terms of all the three indirect taxes,” the finance minister said.
He also expressed happiness that the demonetisation did not hit agriculture. “e were also concerned that we should not cause any distress in the rural areas, but we are happy to note that the Rabi sowing, overall for all crops, is 6.3% higher than the last year.” He went on to point out that the demonetisation did not impact growth as the life insurance businesses increased, international tourism increased, air passenger traffic increased, petroleum consumption increased and the flow into the Mutual Funds increased by 11%.
At a separate press conference on the Modi government”s achievements in the past two and a half years, Venkaiah Naidu hailed the demonetisation as the part of the government”s mandate for a “clean India,” encompassing all aspects of mind, surroundings, economy, governance and public life.
He said Prime Modi would not rest till the last rupee of black money was accounted and removed from the system. He said the demonetisation had many objectives, including ushering in attitudinal change on the part of all stakeholders be they government employees, businessmen and traders, investors, political class or the common man.
Calling for a need to change the way one looks at and uses money and switch over to the digital transactions, he said the inconvenience caused by the note withdrawal is gradually declining and the situation will further improve rapidly from January.
Naidu also talked of several initiatives of the government ranging from “Swachh Bharat” in October 2014 to “Swachh economy” in November 2016. He said the major achievement of the government was to usher in a scandal-free governance, effective inflation management, increased foreign investments, enhanced pace of infrastructure creation and stepped-up economic growth rate despite adversities.
Highlighted some of the key outcomes in various sectors post-demonetisation, Naidu pointed out a notable growth in the comparative figures of Foreign Tourists Arrival (FTA) and Foreign Exchange Earnings (FEEs) and online sale of e-tickets, noting that FTA and FEE recorded 9.35% & 14.45% growth respectively over the same month of November in 2015.