A day after Prime Minister Narendra Modi announced his government’s stunning decision to withdraw ₹500 and ₹1,000 currency notes, Finance Minister Arun Jaitley had to step in to assuage public concerns over the short-term inconvenience.

Stressing that the move was part of the NDA government’s steps to tackle the black money menace, Jaitley said it will be a significant setback to the parallel economy as it will bring in much of the currency outside the banking system into the economy.

He also said the exercise was not linked to elections. “But if elections become cheaper as a result of this, it will be a good beginning,” he added.

Terming it as a significant economic reform, Jaitley said the measure will benefit economic growth, boost tax collections and bank deposits, ease inflation and check black money.

“In the medium and long term, tax revenues will increase. Bank deposits will increase and they will have more capacity to support the economy. It will boost growth as it will expand and clean the formal gross domestic product,” he said, adding that it will also push the economy towards becoming cashless.

He said that it would not impact growth or consumption in the third quarter of the fiscal year. States too would benefit as the revenue kitty would increase, he noted.

“The long-term benefits to the economy are so significant that the relatively minor inconvenience should be borne. And we will try to minimise these,” he promised in an attempt to ease concerns over how promptly banks would replace the currency notes with those of the new series of ₹500 and ₹2,000 notes. Banks and post offices will begin replacing the old notes from Thursday.

To mitigate the inconvenience to the public in the transition period, the government has also decided to extend the exemption for accepting old denomination notes for 72 hours to more services — purchase of metro rail tickets, toll plaza, purchase from government and private pharmacies based on a doctor’s prescription, gas cylinders, railway catering and entry tickets to ASI monuments.

Financial Services Secretary Anjuly Chib Duggal said the government and the RBI have been monitoring the preparedness of banks to ensure there is no chaos or inconvenience to customers while replacing notes.

“ATMs will be filled. Bank branches will have more tellers. The banking correspondent network has been very strongly energised,” she said.

While the government said that CCTV camera footage will be maintained of customers exchanging currency notes at banks in order to keep a check on transactions, it assured that there would be no undue harassment of taxpayers.

“There is no need to worry. You can go to the bank and deposit your money up to ₹2 lakh with no questions asked. Tax authorities will look into cases of higher deposits,” said an official, while stressing that this is not an income declaration scheme. All deposits of unaccounted wealth will face tax and penalty.

For public convenience, banks will remain open this Saturday and Sunday, Economic Affairs Secretary Shaktikanta Das tweeted.

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