DeMo led to more tax collection, higher growth: Jaitley

TIL Desk/Business/New Delhi/ Finance Minister Arun Jaitley has said the demonetisation of Rs 500/1,000 notes led to formalisation of economy, more tax collection and higher growth. His statement comes a day after RBI data revealed that almost all the scrapped notes were returned to banks.

He said the Reserve Bank has twice released its reports stating that the demonetised notes Rs 500 and Rs 1,000 have been substantially deposited in the banks.  “A widely stated comment has been that just because most of the currency came back into the banks, the object of demonetisation has not succeeded.

“Was the invalidation of the non-deposited currency the only object of demonetisation? Certainly not,” Jaitley said in a blog.  The larger purpose of demonetisation was to move India from a tax non-compliant society to a tax-compliant society, he said adding this necessarily involved formalisation of the economy and a blow to the black money.

“This is the positive impact of demonetisation. More formalisation of economy, more money in the system, higher tax revenue, higher expenditure, higher growth after the first two quarters,” the Finance Minister said.