Economy

Jaitley pooh-poohs demonetisation critics, says tax collections up

Our Bureau New Delhi | Updated on January 16, 2018 Published on December 29, 2016

Finance Minister Arun Jaitley celebrating his 64th birthday at Lodhi Gardens in New Delhi, on Thursday   -  PTI

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More money is now coming into the banking system: Finance Minister

A day before the government’s 50-day window for demonetisation ends, Finance Minister Arun Jaitley said tax collections have remained high and the ability of banks to lend has increased.

Brushing off concerns that demonetisation of high-value currency has impacted the economy, he said net direct tax collections had risen 13.6 per cent till December 19.

On the indirect tax front, the mop-up had risen by 26.2 per cent till November 30.

Excise duty collections had surged 43.5 per cent, service tax receipts rose 25.7 per cent and customs duty had grown 5.6 per cent by November end.

An examination of the revenue collections to assess if there was any adverse impact due to currency replacement revealed that that indirect tax mop-up was much higher in November 2016 against November 2015.

Expressing confidence that the situation would improve in the coming weeks, he said, “assessment can be unreal but revenue is real.”

“A lot more money has come into the banking system. Cash has an anonymity attached to it. What has come into the banking system gets identified with the person and, therefore, its impact on taxation and revenue collection is already being seen,” he added. “Many of these (data) indicate that now, with the critical part of the demonetisation already behind us, and there being a significant impact in a large number of these areas, it should be much better in the weeks and months to come than it was in the last six weeks.”

He said data with State governments for November reveal that the impact of demonetisation has not been very significant.

Signs of revival

Refuting claims of distress in rural areas due to demonetisation, Jaitley said rabi sowing for all crops is 6.3 per cent higher than last year.

Other data indicators also show an upswing in the time period, he said. “Life insurance businesses have increased, international tourism has increased, air passenger traffic has increased, petroleum consumption has increased, and the flow into mutual funds has increased by 11 per cent,” he said.

‘Liquidity as needed’

Announcing the decision to withdraw ₹500 and ₹1,000 notes on November 8, Prime Minister Narendra Modi had asked citizens to bear with him till December 30 by when the replacement currency would have been circulated.

The Finance Minister said that more currency is now coming into the system.

“The RBI has very large amounts of currency available and it will continue to support the market to the extent that the market needs that kind of liquidity,” he said.

Published on December 29, 2016
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