Note ban brought back illicit money into the banking system: Shah

BJP president Amit Shah on Saturday tried to brush aside criticism about the NDA government’s note ban decision, saying the move has brought illicit money within the banking system and it could now be used for country’s welfare.

Addressing the national executive meeting of FICCI here, Shah said the size of the formal economy will grow after demonetisation and the number of taxpayers has increased. “Modi government does not believe in taking decision that looks good to people, it takes decision that are good for people,” Shah said.

His remarks came in the backdrop of criticism about the move to recall high value currency notes. The RBI has declared that 99% of the notes have returned to bank account, and critics say his defeat the purpose of the noteban.

Former RBI governor Raghuram Rajan revealed he did not favour demonetisation as he felt the short term economic costs associated with such a disruptive decision would outweigh any longer term benefits.

Rajan told HT the failure to stop dodgy cash coming back into the banking system after demonetisation has likely burdened RBI with additional interest payments running into tens of thousands of crores.

In his address to industry leaders, Shah claimed that Modi government was moving toward providing a stable policy for industry for the next 30 years.

“After coming to power, Modi government has formed policies that tries to achieve long terms gains, instead of short term achievements,” Shah said.