While acknowledging that Prime Minister Narendra Modi’s demonetisation exercise has been painful in the short-term, Union Minister for Urban Development and Information & Broadcasting M. Venkaiah Naidu said on Monday that the move has started to yield results like reduction in interest rates by banks.
“Money is coming into the system. Whether the old notes are deposited into the bank or not, notes are now coming into the open,” he said at an interaction with journalists at The Hindu office here. “More money is coming into the system and into the tax net. More people coming into the tax net means tax rates will come down.” The government was determined to go after errant people, scrutinise unusual deposits and plug leakages. But Mr. Modi did not have a magic wand to eradicate leakages, he said.
Though he admitted that it was painful to see people waiting in queues to get their own money, he believed that people had now forgotten the pain. Their confidence in Mr. Modi had increased.
Mr. Naidu also dismissed speculations that the government intended to put money into people’s accounts as an incentive after the demonetisation exercise.
“Though, I am not the final word, knowing the Prime Minister’s mind, he is not for giving anything free. He is for incentivising schemes for development. Already, he has announced interest subvention for housing”.
Mr. Modi, he said, believed in giving more power to the States as part of “cooperative federalism.” “The system has changed now. States come forward with their development plans and the Centre sanctions the plan if it is in accordance with the guidelines,” he explained.
