Normalcy has been restored to a large extent: FM on demonetisation

ON THE last day of the 50-day window since the government's decision to scrap old currency notes of Rs 500 and Rs 1,000, finance minister Arun Jaitley said the currency situation has stabilised to a great extent but refrained from indicating any timeline for easing of limits on cash withdrawals from banks and ATMS.

"RBI has sufficient stock to inject a lot more currency which they will continue. Yesterday, I had gone around Delhi and we're getting reports from all over the country the crowds at the banks have eased significantly," he said. When asked when the cap on withdrawals would be lifted, Jaitley said, "Please wait. When we decide, we will let you know."

The RBI will continue remonetisation exercise which is market driven depending on how much currency is required, he said.

"RBI keeps in releasing that money. There are three categories. One, legitimate currency which continues to be a legal tender...the second category is that Rs 500/2,000 notes are being added every day by the RBI. There is third category which is not new currency, but with effect from tomorrow the entire currency in recirculation will be the legitimate permissible currency," he said.

On the sharp rise in searches and seizures conducted by the tax department, Jaitley said, "...that only shows the mass scale and manner in which people have indulged in currency racketeering itself justifies the Prime Minister's decision of November 8."

Responding to former finance minister P Chidambaram comment regarding the currency withdrawal on GDP growth, Jaitley said, "I would like to learn that economics where lower GDP leads to higher tax revenues."

Giving reasons for surge in revenue collections, Jaitley said direct taxation is related to economic environment and economic activity, and expansion of economic activity leads to higher revenue.

As far as indirect taxes are concerned, he said there has been modest increase in customs duty due to reduction in gold imports among other things. Till December 19, net increase in income tax collections has been 14.4 per cent and even after accounting for large refunds, the net rise in collection is 13.6 per cent, Jaitley had said.

ARUN JAITLEY