On the second anniversary of demonetisation, Finance Minister Arun Jaitley on Thursday said demonetisation was a key step taken by the Government to formalise the economy.

In a Facebook post, the finance minister said the government had effectively targeted the menace of black money inside and outside India.

Advertisement

“The Government first targeted the black money outside India. Asset holders were asked to bring this money back on payment of penal tax. Those who failed to do so are being prosecuted under the Black Money Act. Details of all accounts and assets abroad which have reached the Government resulted in action against the violators,” he wrote.

Jaitley also commented on the widespread criticism of the government after RBI’s annual report showed that 99.3 per cent of the banned cash had returned.

“An ill-informed criticism of the Demonetisation is that almost the entire cash money got deposited in the banks. Confiscation of currency was not an objective of Demonetisation. Getting it into the formal economy and making the holders pay tax was the broader objective. The system required to be shaken in order to make India move from cash to digital transactions. This would obviously have an impact on higher tax revenue and a higher tax base, he wrote.

Defending demonetisation and Good and Services Tax (GST), Jaitley said both the steps helped in curbing cash transactions in a big way.

The Congress earlier in the week said that it will hold a nationwide protest on Friday to mark the second anniversary of demonetisation. It also demanded that Prime Minister Narendra Modi should apologise to the people for “ruining and wrecking” the economy.

Congress leaders and workers would be out on the streets to voice their protest against the “complete demolition” of the Indian economy unleashed by the “Tughlaqi farmaan” of demonetisation two years ago, Congress spokesperson Manish Tewari said at a press conference.

On 8 November 2016, Prime Minister Narendra Modi announced the biggest-ever demonetisation exercise India has ever seen by abruptly withdrawing Rs 500 and Rs 1,000 notes from public use in a bid to clamp down on black money, fake currency menace, terror funding and corruption.