His response to the debate on demonetisation thwarted by a protesting Opposition, Finance Minister Arun Jaitley declared at a BJP parliamentary party meeting on Tuesday that Prime Minister Narendra Modi had created a “new normal” of white transactions with the crackdown on black money.
“Today every honest citizen feels that a premium has been given for his honesty. In the long term this landmark step will increase the size of the official economy and reduce the shadow economy,” Mr. Jaitley said.
He drew a direct link with the ongoing process of demonetisation, and a subsequent “remonetisation” with new notes, and a future jump in private investment, more public spending and welfare measures.
Mr. Jaitley explained all aspects of the move to the MPs and said, “demonetisation has a direct relationship with the poor, with poverty and with poverty alleviation.”
“The cessation of legal tenders of Rs. 500 and Rs. 1,000 is followed by remonetisation so that alternative currency reaches people. Once this remonetisation reaches a reasonable level, we will take back all restrictions but till then there will be difficulty for some days,” Mr. Jaitley said.
According to him, about Rs. 8 lakh crore would be collected from income tax this year and Rs. 8.5 lakh crore from indirect tax but despite that another Rs. 4-5 lakh crore is required for running the country.
“So if the honest tax paying system establishes in the country, then do we need to borrow money? And in this case these borrowings of about Rs. 4-5 lakh crore annually can be utilised in rural areas for poverty alleviation and other similar measures,” Mr. Jaitley added.
He took a dig at Congress vice-president Rahul Gandhi for saying the demonetisation decision was selectively leaked to the BJP top brass and also claiming “that even the Finance Minister, that means I, was not aware.”
