Rubbishing critics, Finance Minister Arun Jaitley on Thursday said that the effects of demonetisation were not as adverse as was predicted and asserted that there has been a sharp jump in tax collections and economic activity including in winter crop sowing. Ahead of expiry of the 50-day deadline for depositing the junked 500 and 1,000 rupee notes on Friday, he said that the remonetisation process has substantially advanced, significantly without a single incident of unrest anywhere in the country.
He refused to hazard a guess on the GDP growth for the year or the possible impact on tax proposals in the his Budget for 2017-18 on account of increased revenue collections. Replying to questions on when customers can see easing of curbs on cash withdrawals, Jaitley said: “That is a decision the central bank will take in consultation with everyone.”
Asked about fears expressed by critics that the note ban decision will hit the economy and the GDP growth, he said, “I think one is clear, there could have been some adverse impact for a quarter or so. It doesn't appear to be as adverse as it was being predicted. But in the long term, you have to plan the economy in the long term, the changes in the system which are coming about will certainly mean more money in the banks, more money with the revenue and probably a much larger and cleaner GDP.”
To a query about whether the rising revenue collections would have any impact on taxation in the coming Budget, he said, “I think you will have to wait for that.” Asked whether the government would take a conscious decision to reduce the quantity of money in circulation in the remonetising process, the Finance Minister said: “that is a decision RBI will take and they will be certainly guided by the requirements of the market.”