For only 3 months: FM

Jait­ley pre­dicts a big­ger and cleaner econ­omy, more money in banks, wider tax base in a year

Hindustan Times ST (Mumbai) - Live - - FRONT PAGE - Su­veen Sinha

NEW DELHI: Fi­nance min­is­ter Arun Jait­ley said on Fri­day the re­call of 500- and 1,000-ru­pee notes will cause just three months of dis­rup­tions be­fore yield­ing sub­stan­tial ben­e­fits for the econ­omy.

In a year, he sees a big­ger and cleaner econ­omy with less pa­per cur­rency, a wider tax base with lower rates, and more money in the banks re­sult­ing in cheaper loans. All of this will help the coun­try’s am­bi­tion of be­com­ing a mod­ern and dig­i­tal econ­omy be­fit­ting its sta­tus as the world’s fastest grow­ing ma­jor econ­omy.

“If you switch over from a par­tic­u­lar way of life and con­ducting­ex­pen­di­ture,thereis­dis­rup­tion.ButI­donot­see the dis­rup­tion last­ing long, maybe a quar­ter or so. But if you look at the nex­t12or15­months, theim­pactwill beben­e­fi­cial,”Jait­ley­sai­datthein­au­gu­ralses­sionof theHin­dus­tanTimes Lead­er­ship Sum­mit in New Delhi.

The­gov­ern­men­tre­called500-and 1,000-ru­pee notes on Novem­ber 8, culling 86% of cash in cir­cu­la­tion to purge the econ­omy of il­licit “black money” and fake bills.

The move, said Jait­ley, will prove a wind­fall in many ways. Banks, flush with money from new de­posits, will be able to give so­cial, in­fra­struc­ture, in­dus­trial, and trade loans at lower rates. He, how­ever, said the amount of new ban­knotes be­ing re­leased will not touch the Novem­ber 8 level, and that will help the coun­try along the path of be­com­ing a dig­i­tal econ­omy.

“The vol­ume of for­mal trade and busi­ness will grow in size...What­was­nor­ma­l­inIn­dia?Yougoand­buyaprop­erty, you pay some amount in cash, some in cheque. You start a trade, whole­sale or re­tail, there is so much in kachcha khaata and so much in pucca. Do de­vel­oped economies be­have like this?” he ar­gued in de­fence of the so-called de­mon­eti­sa­tion.

HT PHOTO

Fi­nance min­is­ter Arun Jait­ley speaks at the Hin­dus­tan Times Lead­er­ship Sum­mit in New Delhi on Fri­day. Jait­ley stressed that the govern­ment’s de­mon­eti­sa­tion move will be ben­e­fi­cial in the long run.

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