Finance Minister Arun Jaitley on Friday hit out at critics who had expected growth to plummet in the wake of the Centre’s decision to demonetise high-value currency notes on November 8. He cited an upward trend in revenue collections and green shoots in several sectors, such as life insurance, mutual funds, aviation, petroleum and agriculture, since then.
“Of course, there would be areas which would be adversely impacted, but what was predicted by the critics has to have a rationale with the revenue collection. Assessment can be unreal but revenue is real,” Mr. Jaitley said, highlighting a 13.6 per cent rise in net direct tax collections till December 19.
“Already a large part of benefits of this historic move are visible. A lot more money has come into the banking system… the ability of the banks to lend has now increased,” the Finance Minister said, adding that the remonetisation process had substantially advanced and there was no unrest reported in the country. “What comes into the banking system gets identified with the person and therefore its impact on taxation and revenue collection is already being seen,” Mr. Jaitley said.“The indirect tax figures are also available and notwithstanding what the critics had predicted in all the categories till November 30 there is a significant increase in indirect taxation,” he said, citing a 26.2 per cent rise in central indirect taxes collection till November 30.
As per official data on tax collections released on December 9, net direct taxes grew 15.12 per cent between April and November this year, compared with the same period last year. The growth of indirect tax collections between April and October was 26.7 per cent.
Overall crop sowing in the rabi season was up 6.3 per cent compared with last year, he said.
“Now the rabi crop sowing has been higher than last year, life insurance businesses have increased, international tourism has increased, air passenger traffic has increased, petroleum consumption has increased, the flow into mutual funds has increased by 11 per cent,” Mr. Jaitley said. Many of these indicators, when taken together with the fact that the critical part of remonetisation was “already behind us,” suggested that things “should certainly be much better in the weeks and months to come than it was in the last six weeks.”
The Reserve Bank of India had “very large amounts of currency available” and it would continue to support the market to the extent it needed liquidity, the Minister said. He said more ₹500 notes were also being released, so a lot of currency could be seen “coming into recirculation.”
