This is a major setback to parallel black money economy: Jaitley

A day after Prime Minister Narendra Modi banned Rs 1000 and Rs 500 notes, Finance Minister Arun Jaitley defended the decision by saying that it was good for those who are honest.

Describing the decision as a “gamechanger”, Jaitley said, “It’s the people with black money who are worried and not people who are honest. The decision to withdraw Rs 500 and Rs 1000 notes will move the country towards a cashless economy. Also, those who had lawful money would have nothing to fear.”

Jaitley further said that the bold move would put an end to the parallel economy and the government would keep a hawk’s eye on transactions in real estate, gold and hawala businesses.

“This is a major setback to the parallel black money economy because a lot of currency operating outside the system will now have to be brought into the banking system. The government believes that this decision has been welcomed everywhere. This major step will help India’s credibility,” Jaitley said.

He dubbed the government’s sudden withdrawal of Rs 500 and Rs 1000 banknotes as the country’s biggest crackdown on black money, corruption and counterfeit currency.

In reply to a question as some time should have been given prior to the announcement, the minister said, “If a longer window was given, people would have found ways to evade tax.” On the question whether he was aware of it or not, the minister said that he was involved in the whole process right from the beginning.

“This one decision will change the way people spend and keep their money. It will take India towards a cashless economy, it doesn’t merely push the country in that direction, but significantly pushes it,” the minister added.

“The long-term advantages to the economy are so significant that we would appeal to the people to bear the relatively minor inconvenience for a short period of time and we will try to minimize these inconveniences,” Jaitley said.

Jaitley also made it very clear that the deposit of the now-defunct notes in bank accounts will “not provide any relief from taxation.”

“It should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. 

The law of land will apply,” Jaitley said, adding, “If the money is legitimate which had been previously withdrawn from the bank or earned legally and saved and had been disclosed, there is nothing to worry about.”

However, he said, if it is illegal money, the source will have to be disclosed, and it could land a person in 

trouble. The Finance Minister also said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.