NEW DELHI: On the fourth annniversary of demonetisation, Prime Minister Narendra Modi came out with a strong justification of the move, arguing that it triggered higher compliance and detection of black money, while helping improve tax collections and slowing the growth of currency in circulation.
“Demonetisation has helped reduce black money, increase tax compliance and formalisation and given a boost to transparency. These outcomes have been greatly beneficial towards national progress,” he tweeted.
His remarks on social media came a couple of hours after Congress leader Rahul Gandhi attacked the government for “destroying” India’s economy and accused Modi of helping a select group of businessmen.
Using a series of graphs, the PM said the government followed demonetisation with ‘Operation Clean Money’, resulting in payment of Rs 13,000 crore tax by those who were not filing returns.
The scrapping of Rs 500 and Rs 1,000 notes, which forced people to deposit notes in banks, also threw up identities of over three lakh depositors who had parked over Rs 10 lakh each in their accounts but had not filed their returns. Nearly 2.1 lakh paid self-assessment tax of Rs 6,531 crore after they were found out.
Modi also cited chief economic adviser K V Subramanian’s analysis to argue that the tax-GDP ratio had “drastically improved” post-demonetisation. He claimed that it reduced incremental growth in currency in circulation by over Rs 4.2 lakh crore as people took to digital payments.
Further, the introduction of new features in currency notes and lower detection of counterfeit notes post-demonetisation helped put brakes on “anti-national activities” such as terror financing and left-wing extremism, one of the graphs said.
Gandhi, however, said demonetisation hit the economy hard and created a situation where the Bangladeshi economy “surpassed” India’s. “The reason is not Covid-19, the reason is notebandi and GST. Four years ago, Prime Minister Narendra Modi began an assault on the Indian economy,” he said in a video posted on social media.
Hitting back, BJP said demonetisation was good for the country and resulted in cleaning up of the economy, formalisation of the informal sector and revenue aggregation.
Nisham Ismail