Finance Minister Arun Jaitley in a blog on two months of demonetisation said that the difference between Prime Minister Narendra Modi and Rahul Gandhi was that the former was thinking of the next generation while Rahul Gandhi was only looking at how to disrupt the next session of Parliament.
Regarding demonetisation, Mr Jaitley wrote that the situation is now returning to normal as the period of pain and inconveniences is getting over and economic activity is being restored.
“There was a marked difference in the approach of the Prime Minister and his opponents,” Mr Jaitley wrote. “The Prime Minister was being futuristic, and thinking of a more modern, technology driven cleaner economy. He is now speaking of cleaning the political funding systems. His opponents want a cash dominated, cash generating and cash exchange system to continue.”
“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,” he added.
Mr Jaitley also wrote about this government’s ongoing attempt to create a new ‘normal’, where the existing one is based on poor tax compliance and hence reduced government spending on necessities like education, healthcare, and sanitation.
He pointed out that only 3.7 crore assesses out of a total population of about 125 crore filed income taxes return in 2015-16. Even out of these, nearly three crore reported an income of less than Rs 5 lakh a year, and only 24 lakh declared income above Rs.10 lakh a year.
“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,” Mr Jaitley wrote. “Expenditure required for poverty eradication, national security and economic development have to be compromised with on account of tax non-compliances. For seven decades the Indian ‘normal’ has been to undertake transactions partly in cash and partly in cheque.”
“The Prime Minister’s decision is intended to create a new ‘normal’,” he added. “It seeks to change the expenditure pattern of India and Indians. It is obviously disruptive. All reforms are disruptive. They change the retrograde status quo. The demonetisation puts a premium on honesty and penalises dishonest conduct.”
The Finance Minister added that the period of pain and inconvenience due to demonetisation is getting over, with banks having a lot more money available to lend, and also gaining the ability to lower interest rates
“Lakhs of crores which were floating in the market as loose currency have now entered the banking system,” he said. “Not only has the money lost is anonymity, it’s owners, after being taxed, are entitled to put it to more effective uses. The size of the banking transactions and consequently the size of the economy is bound to increase. In the medium and long run, the GDP would be bigger and cleaner. Money entering into the banking system and officially transacted would give an ample scope for higher taxation — both direct and indirect.”
The Finance Minister in his blog post also wrote about the various steps apart from demonetisation that the current government has taken to combat black money, such as signing international agreements for the exchange of information, renegotiating the double taxation avoidance agreements signed with Mauritius, Cyprus and Singapore, the passage of the Black Money Law, and the launch of the Income Declaration Scheme.
He also pointed out the disadvantages of cash, such as its ability to facilitate real time untraceable payments, fund bribery, corruption, counterfeit currency and terrorism.
“There was no social unrest while implementing such a major decision,” Mr Jaitley wrote. “All opinion polls conducted by independent media organizations have shown that an overwhelmingly large percentage of people have supported the Government’s decision. The opposition disrupted a full Session of Parliament. Their protests have been ineffective. Their exaggerated claims on the disruption of the economy have proved wrong.”
“It is a tragedy that a national party like the Congress decided to adopt a political position, opposing both technology, change and reforms,” he added. “It sided with a black money friendly status quo.”
