Demonetisation has shaken the financial system, says Jaitley
THE FM, HOWEVER, SAID THE MOVE WOULD INTEGRATE SHADOW AND PARALLEL ECONOMIES WITH THE FORMAL ECONOMY
VISAKHAPATNAM: Finance minister Arun Jaitley on Friday admitted that the demonetisation of highvalue currency had shaken the financial system for some time, but said it would gradually integrate shadow and parallel economies with the formal economy.
Jaitley was delivering the inaugural address at the second edition of the Partnership Summit in Visakhapatnam under the aegis of the Confederation of Indian Industry (CII) in association with the Andhra Pradesh government .
The finance minister said tax evasion in India was a major concern for the economy of the states and the Centre, which were struggling to generate revenues to run the system that created an unfair enrichment in favour of the evader. “It also becomes very unfair for the normal taxpayer because what the evader manages to evade is what the compliant has to pay more,” Jaitley said.
That was precisely the reason the government had to go in for demonetisation of high-denomination currency. “For some time, this move has shaken the financial system. But it has gradually increased the process of integrat- ing the shadow, parallel and informal economies in far greater number with the formal economy. The size of the formal economy is expanding, so are the transactions in the banking system and through the digital mode,” he said.
On the roll-out of Goods and Services Tax (GST), the finance minister said the most contentious issues between the Centre and states were sorted out and the new indirect tax regime was in the final stages of implementation. It would make India a single market, eliminate multiple assessments, check evasion and bring more revenues into the system, he said, adding that the government plans to implement GST from July 1.
Delivering the keynote address, Andhra Pradesh chief minister N Chandrababu Naidu said the fruits of demonetisation would start when the digital transactions pick up.